Would Gas prices hurt CP??

Down here in Orlando some places are at 3.51 and some are 4.99 depends on what area you are in. I am making the 1,000+ mile trip to the north on wednesday I hope that prices drop! This could really kill my bank account.

I am going this Friday. Hopefully it has an effect on the crowd and less people are there.

I have some $3.56 gasoline and $3.99 gasoline in my car now. Had half a tank of $3.56 and had to top it off before it went up (4.19 yesterday in every location or more).

I can get to Cedar Point on 3/4th of a tank of gasoline (with a 17 gallon fuel tank). So the trip isn't too horrible on gasoline.

We battled it out earlier this summer. We payed about $100 in gasoline it seemed every time we went.

Also I bought a boat so I just basically spend all my money on gasoline now. Hooray gasoline! It sucks spending $100 a week in gas though and consider that a "normal week".

I remember hearing the gouge reports before leaving on Friday, but we filled up here in Grand Rapids for 3.80.

I think the cheapest we got that night was 3.30ish in Jersey. Yesterday was a different story though, almost everywhere was upper 3's to 4.20.

Ben, I agree. The AG needs to step on this stuff now. The big problem is finding actual evidence (a picture, receipt, etc.) showing the date and price. How many people who posted only "heard it on the radio"? That's almost as bad as "I read it on the interwebs."

Gas at the duty free at the Ambassador Bridge was 4.07 yesterday.

The gouging is even worse with today's market moves AND damage reports.

Oil is down over 4 dollars to 96ish and there are about 10 oil platforms that have been destroyed. That's 10 out of 3500. About the only thing slowing the refineries down from powering back up is that the power is still out.

There is really no reason for gas to have taken the price spikes that it did over the weekend. Too bad no one will do anything about it and its still the public that took it in the rear.

This is a case where the price of crude oil and refined gasoline are legitimately going in different directions. Final market demand for crude is down already, and with over 40% of American refinery capacity (temporarily) down, it only exacerbates that situation. But gasoline prices are conversely rising because there is less gasoline coming out of refineries to meet demand at the retail market.

All those shut down refineries are acting as a market bottleneck, depressing the price for crude before it gets to the refineries, and increasing the price for gasoline after it leaves the refineries.

^ - true, but the damage was minimal. From some of things I've heard, some of these stations jumped the gun and played on peoples fears.

Hey, if you own 2 or 3 stations in town, why not jack the price up on 1 to create a run to your other 2 that are .50 cheaper?

Not disputing there is an element of greed.

As far as the refineries go, it doesn't matter for the moment whether the damage was insignificant or massive. The point is that they're not operating now. Gasoline inventories have dropped substantially, which raises prices on delivery contracts through the law of supply and demand. Prices probably won't equilibriate until refineries are back up and firing on all cylinders.

http://tonto.eia.doe.gov/oog/info/twip/twip_gasoline.html

Not really. Stocks are right about where they were last year (190 million barrels) that equates to a 20 day supply before gas is gone. So why, in a few days, does the price jump 40-50 cents? The supply is still there and available.

Yes the refineries are going to be a bit slow getting back up, especially since there is a disruption to the crude flow on the other side, but nothing that would have an impact, except for those who feed off the fears of people.

And there's always the argument that the sudden rise in gas prices caused people to fill up sooner, and possibly more (extra cans and whatnot) than they would have normally. Thus affecting the available supply a little bit more than normal.

I notice those inventories were from 9/07, before Ike hit. I'd like to see the updated number in a few days. I'll bet you'll see a larger decrease. (How much, I'm not sure, but I'm guessing it will drop to 160 - 170 million barrels, maybe a bit less.) And according to what I've read, U.S. gasoline consumption has been running at about 18.5 million barrels/day, down from 20 million/day in 2007. So you're only talking about ten day's supply.

Gulf refineries account for 42% of U.S. gasoline production -- from both domestic and imported sources; it mostly all gets here as crude. So when Gulf refineries are shut down for four days (as they've already been now), that means that gasoline supplies have dwindled by nearly two days -- from our rough estimate of ten days to now eight. That's a pretty hefty decline that does impact delivery contract prices.

I do agree, though, that a lot of the rise can be attributed to human factors. Mostly, I think it's group psychology. Gas station owners, even larger companies, attach a good deal of weight in their pricing decisions to the competition. If Joe Exxon down the road raises his price ten cents, then I have freedom to match his price or exceed it. It's a positive feedback cycle that is absolutely unscientific and not even all that related to profit. Most gas stations make very little if any profit off the actual gasoline, using the gas as a loss leader to bring consumers into the convenience store to buy goods at a huge markup.

My friend from Chicago snagged this on his cell phone on his way to CP over the weekend. There's no date on it, but it's the best I got.

http://photos-a.ak.facebook.com/photos-ak-sf2p/v337/189/23/99600717...0_6297.jpg

Ack! So that's what the future looks like.

Personally, I'm heading back to 1985.

Mike, that same site also showed the "days supply", i.e. how many days it would take to run through that supply of gas. It amounts to 9.34 million gallons/day.

And the only disruption is to the Gulf coast refineries. Stuff in the Northwest and Northeast (not to mention inland Texas) is not disrupted quite as much. So its not like we have a complete shut down of the pipeline.

As an anectdote to your story, my grandpa was telling me about a station owner back when he was younger who would stand outside with a pair of binoculars to check the stations down the street. If they went up, we matched them. He never moved first, but always kept his price in lock-step with everyone else.

I think you meant 9.34 million barrels/day, not gallons. You're right, though. My figure of 18.5 million bbl/day, now that I think of it, is total crude usage, not just finished gasoline. That includes diesel, heating oil, asphalt, polymers, solvents, plastics . . . everything that crude goes into (which is pretty much everything). So that would be more like 20 days' supply.

Back in my jo-job days, working at a variety of gas stations, my managers would often send me down the street to observe our competitors' prices, and we would match them cent for cent. So obviously the practice is alive and well.

Yeah, barrels. Not sure why I was thinking that was in millions of gallons.

In Houghton, MI, a rather remote area of the Midwest, all of the gas stations within a 30 mile radius regularly communicated any changes in price. During my entire college career, there was never a gas station with prices that were out of line with anyone else.

Well, when both stations are owned by the same guy.... ;)

Whoa whoa whoa...
the same TWO guys, you mean. ;)

If CP gave it some thought, considering how many families drove the Detroit/Cleveland/Pittsburg/Chicago, etc. to Florida for a visit to you know where, CP could use high gas prices to their advantage.

Gas in Sandusky this Friday the 19th was $3.62 at Shell