Can anyone explain gas prices to me?

Oil is $8 a barrell cheaper than it was a year ago, but gas Prices are 20 cents a gallon (or more) higher than last year. I read that lowered production and high demand are driving up gas prices but wouldn't that lead to shortages? Has anyone seen a station "Out of Gas"? (Don't laugh it happened in the 70's)

I am reading that experts project prices to hit $4 a gallon across the country this summer (I saw $3.99 in San Francisco last week) and the oil companies are making RECORD profits.

What I draw from this is that oil companies are abitrarily jacking prices as high as they want and making mountains of cash. Can anyone see any other scenario?

It's not just the cost of oil that drives gas prices, it's also the refining costs. That's why prices jump so high when a hurricane comes through and destroys refineries. We don't really have adequate refinery capacity in this country to handle increased demand in the long run, but it's hard to convince people that no really, this big industrial complex will be just great in your backyard. (I know I wouldn't want to live next to one.)

- your friendly neighborhood chemical engineer

Oh, and of course the oil companies are out to maximize profits. That's the job of any corporation. The sad thing is we're stuck using gasoline and have to pay pretty much whatever they charge. We (as a society in general) have to drive everywhere because our culture has evolved to that point. We can get as fuel efficient as we like, but the majority of people still commute to work, shop, etc. by car.

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You know..I've been thinking a lot about the refinery issue.
It's quite interesting, definite fodder for conspiracy freaks like me...it would been in the best interest of the oil companies to build more refineries a long time ago -- so why didn't they?
Greed absolutely factors in ...but I always get the feeling that there's more to it than that.....

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I don't know -- there have been a number of recent stories on people walking, biking, taking the bus and car-pooling...consumer revolt may in fact reduce that demand..however, probably not enough to scare the oil companies. Actually I think it is more likely there is a finite amount of oil to be produced ...so why invest in a short term venture. Afterall, what's a 150 years or so to a corporation?

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I can't find any reports that US Gasoline consumption has declined. World Wide consumption is up considerably. US consumption doesn't even decline when prices soar. Consumers buy less when prices climb, but buy gasoline more often. Meanwhile:
"Last week's U.S. Energy Department report showed an unexpected drop of 2.8 million barrels in U.S. gasoline stockpiles and said U.S. refinery use declined to 87.8 percent of capacity."

Refineries are runing at less than 90% capacity.

It's just fascinating how linked everything is. Regulations and emissions caps and that sort of thing are good for the environment, but cause price increases which are bad for consumers.

As more and more people buy cars with higher fuel economies that's again good for the environment, but many states depend on the money they get from gas tax for road repairs, etc. That isn't an easy revenue source to replace, so there's the potential for highways to fall into a greater state of disrepair, causing accidents which will make people spend more time in their cars on the road burning more gas.

Most of the oil companies are also global ventures, so even if American demand drops, there's no guarantee that demand worldwide would drop enough for them to change their behaviors significantly.

Problems like this really interest me, because they involve the intersection of seemingly unrelated arenas: science, business, and public policy. Sadly, not enough people are fluent across all three arenas for there to be an easy solution.

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Solar power people! we need alternate fuels stat!

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Have you seen the amount of tax the government slaps on gasoline? Cut the taxes and the price will come down.

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That's probably because the prices at the gas stations are displayed so you can choose at a glance before you even drive into the place. People will go to the cheapest option and the local market settles on a certain price.

If milk prices were displayed at the side of the road in front of the different grocery stores the same thing would likely happen. Once you're already in the store, fewer people will leave for the cheapest option. Of course if one store is always more expensive, you'll learn not to shop there.

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