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Economic times being what they are who would expect the price of gas to rise? What could consumers learn about the last time the prices fell after reaching near five dollars a gallon at the pump? From the basics of supply and demand to specific world events that affect the markets the consumer sometimes has a significant effect on prices. A huge decrease in demand as gasoline prices peaked last year is often cited as why the price eventually fell. Wouldn’t it be nice if consumers did not require such a severe price increase to encourage cutting back on gasoline purchases? A small reminder of the power of the consumer was illuminated last year but will likely be forgotten in times ahead. That is one reason for this post being published now.

The excerpt below links to an interesting analysis of how the price at the pump is determined. This blog cannot speak to the validity of this appraisal but it is interesting nonetheless. In other words it is worth a read.

Did you know that gas price gouging almost never occurs as prices rise? Rather, it’s most often when dealers keep prices artificially high even as their costs fall. As gas costs were near $5 a gallon until falling and oil companies earn around $100 billion each year, it’s a good time to question what really goes into the price of gas. The numbers on the gas station sign hide a complex set of transactions. Before gas can power your car, it must be discovered as crude oil, traverse three markets, and be refined from crude into gas. Inside, we’ll explain the three markets, walk you through the role of refineries, and show how oil companies use creative tactics to manipulate gas prices…

The piece below is what renewed the interest here on gas prices and how it all works and who is in control a few weeks ago. It mentioned one of the big players.

Lack of Spending Kills US Jobs, Profits
By VOA News
27 January 2009
(brief excerpt)

Valero, the largest U.S. oil refiner, said it lost more than 43 billion as the recession dampened demand for gasoline.

The item below simply describes this major player and is from Wikipedia.

Valero Energy Corporation (NYSE: VLO) is a Fortune 500 oil and gas refining and retail company based in San Antonio, Texas. The company owns and operates 18 refineries throughout the United States, Canada and the Caribbean with a combined throughput capacity of approximately 3.3 million barrels per day, making it the largest refiner in North America.[1] Valero is also one of the nation’s largest retail operators with more than 5,000 retail and branded wholesale outlets in the United States, Canada and the Caribbean under various brand names, including Valero, Diamond Shamrock, Ultramar, Shamrock, and Beacon.

A piece from Motley Fool expands on the list of player and how things are going right now.

Along with Valero Energy and pint-sized Calumet Specialty Products (Nasdaq: CLMT), Holly possesses the ability to process sour-crude feedstocks that provided a competitive advantage during oil’s last climb. With expansions and improvements nearly completed at both refineries, Holly will not only face the next rise in oil prices with about an 18% increase in refining capacity, but also an enhanced ability to process sour crude. In fact, the Navajo refinery will soon be equipped to rely entirely on sour crudes if needed. Although I’ve been cool on the refining sector lately, as the majors have been cutting production, I am intrigued by the company’s competitive refining spreads and the steps underway to enhance that sour-crude advantage.

And who can forget the large campaign by the man below suggesting what we should do about energy? So what has he been doing lately?

T Boone Pickens buys Peabody Energy Corp., Chesapeake Energy Corp., sells ABB Ltd., Westport Innovations Inc, Valero Energy Corp., Tenaris S.A., Talisman Energy Inc., Schlumberger Ltd., The Shaw Group Inc., SANDRIDGE ENERGY INC, National Oilwell Varco Inc., Petrohawk Energy Corp., Halliburton Company, The Greenbrier Companies Inc., Foster Wheeler Ltd., Fluor Corp., DresserRand Group Inc., Chevron Corp., Clean Energy Fuels Corp., BPZ RESOURCES, INC, XTO Energy Inc. during the 3-months ended 12/31/2008, according to the most recent filings of his investment company, BP Capital. T Boone Pickens owns 9 stocks with a total value of $40 million. These are the details of the buys and sells.

This is just a little public service feature that will hopefully keep people’s minds on some of what falls to the back burner these days. Notice what is focused on in the news lately and what has been pushed aside. Not like the current economic conditions will make those items pushed aside a non-issue for the future. Can those we elected to serve in Washington keep their eye on all important issues? Or will they falter and obsess on the most popular while dropping the ball on others?

What could happen or what could be ignored to cause another damaging rise in energy prices? Just a little food for thought on a lazy Sunday in February 2009.

Stanford Matthews
MoreWhat.com

This entry was posted on Sunday, February 22nd, 2009 at 1:41 pm and is filed under Public Affairs, Money Matters, wordpress, oil, America, United States, Public, Opinion, Minimum Wage, Energy. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.