It never ceases to amaze me how people can possibly think that the guy behind the counter at pretty much any store - whether it's a gas station or a Kroger or en Eddie Bauer or whatever - has any control whatsoever over the price they're paying.

$6.50/hr isn't what the CEO makes. :P

On the radio this morning, I also heard that part of the hike in gas costs is attributable to the cost of including ethanol production and distribution, together with the usual gasoline production and distribution, to accommodate increased demand for fuels with less gasoline.

should continue to rise throughout the summer.

And far beyond that.

I also heard that part of the hike in gas costs is attributable to the cost of including ethanol production and distribution

Which doesn't explain the hike in crude oil commodity prices.

greg

ethanol is included in the 4.5 percent dedicated to "distribution, marketing, and storage," if I read the WaPo chart correctly. Can't blame environmentalists here.

If the enviros won't let us build new refineries in the US, can we build 'em in Mexico just inside the border?

"Which doesn't explain the hike in crude oil commodity prices."

True, but the point was that the production and distribution costs of providing ethanol blends and ordinary gasoline are adding to other costs.

Don't want to build refineries in Mexico, government their has a bad habit of nationalizing industries.

Another reason not to build more refineries in Mexico, or anywhere for that matter: they will only help us use a nonrenewable energy source faster.

"Which doesn't explain the hike in crude oil commodity prices."

The price of crude oil is determined in the futures market. It looks like speculators are betting that we Americans will be willing to pay just about anything for a gallon of gas. THAT may be the big factor in driving up gas prices...

Of course, the oil companies would have to actually want to build more refineries in order for there to be more refineries built. They're instead trying to shut them.

Well, that's interesting. Why is that?

I must say, after learning the oil companies made record profits after the gulf hurricanes, I am far more open to hearing accusations of corporate malfeasance in gasoline prices. If the price spike had been due only to refinery outages (as I had presumed), then how did they make record profits when their refineries had sustained millions of dollars in storm damage?

How weird to be the guy defending the oil companies! However, their windfall profits are largely due to the spike in oil per/barrel prices that are determined on the futures market. The majors' profit margin is still only hovering around 8 or 9%. If they were holding back production, that would contribute somewhat, and of course the hurricanes have contributed somewhat to rising prices at the pump, but those GIANT spikes are mainly attributable to speculators, who are betting that Americans will continue to burn the more expensive gas at typical rates. That in turn will cause per/barrel prices of crude oil to continue to climb towards $100/barrel. And is something that politicians have little control over, other than to perhaps impose a windfall tax.

OK, but how do Mobil and Exxon benefit from increases in crude oil prices? They have to buy crude oil on the market, so their raw material cost has been increasing. Sure, if they set the wholesale price of gasoline as a percentage over the price of crude, their profits are going to go up, but doesn't it make more sense for their cut to be a fixed amount per gallon? Doesn't cost them anymore to refine $70/barrel crude than it does to refine $50/barrel crude.

Huge oil companies like Mobil and Exxon are both the producers AND the buyers. (And they are also big players in the futures markets.)

I think that the reasons for the gas price spike this summer are different from the price spike post-Katrina.

Post-Katrina, spikes were probably due to supply/demand on a local level. That is, there may have been a normal supply of crude on the international market, but it wasn't getting into the US (or refined either? - I'm not sure) because of the post hurricane problems/destruction in NO, a major oil port city.

What's happening this summer is a response to international supply/demand, with an eye on instability in the Middle East, particularly the saber rattling between major oil producer Iran (and also considered is their chokehold on crucial Strait of Hormuz) and the US and the possibility that the world is at, or approaching, it's peak oil producing capabilities.

The futures market determines the cost per barrel of crude on paper, the actual trade happens via spot markets, which is a collection of buyers and suppliers, and long term contracts between buyers and producers. Considering that the major oil companies both produce AND buy the crude oil that gas is derived from, they are determing the supply/demand ratio and setting the prices they want.

"doesn't it make more sense for their cut to be a fixed amount per gallon?"

Not if you're an oil company and there's no reason to expect large decreases in the price of oil in the near future.

Balta, I meant "makes sense" as in "seems like an ethical business practice."

Who said anything about ethics? We're talking about profits here.

And if the company does its job of providing profits to its shareholders and debtholders -- who provide its capital -- pay their employees and delivers products to its customers that doesn't damage their health (in the sense of damage to engines), then the company is filling its moral obligations. Companies aren't obligated to regulate their profits because an Eric Seymour thinks they're obscene.

And by the way Eric, would you reduce his income because he makes far more money than a homeless guy or a high school dropout flipping burgers? No. And why should you? You've earned every dollar, don't do harm to your fellow citizens and take care of your obligations to family, friends and employer. As with an oil company, contributions to charities both in terms of money and volunteering, beyond your normal work, is a bonus to society, but not necessary to do so.