What really determines the price of gas?

[undeterred]

And don't tell me Karl Rove.

[dkofos]

1. GREED

[Virginia Dare]

2. Mostly speculation...

and the market can be manipulated.

[sandnsea]

7. You bet it can

With the amounts of money that are being compiled into the hands of a few, there's no doubt in my mind that the price of oil can be manipulated.

[Junkdrawer]

3. Al Gore on "Oil is a free market:

...

It is, in other words, time for a national oil change. That is apparent to anyone who has looked at our national dipstick.

Our current ridiculous dependence on oil endangers not only our national security, but also our economic security. Anyone who believes that the international market for oil is a "free market" is seriously deluded. It has many characteristics of a free market, but it is also subject to periodic manipulation by the small group of nations controlling the largest recoverable reserves, sometimes in concert with companies that have great influence over the global production, refining, and distribution network.

It is extremely important for us to be clear among ourselves that these periodic efforts to manipulate price and supply have not one but two objectives. They naturally seek to maximize profits. But even more significantly, they seek to manipulate our political will. Every time we come close to recognizing the wisdom of developing our own independent sources of renewable fuels, they seek to dissipate our sense of urgency and derail our effort to become less dependent. That is what is happening at this very moment.

....

http://www.changetheparty.com/index.php?option=com_mamblog&Itemid=47&task=show&action=view&id=171&Itemid=47

[Selatius]

4. My econ classes say it's supply and demand

If quantity supplied > quantity demanded, then price will be relatively low.

If quantity supplied < quantity demanded, then price will be relatively high.

In general, the more competition exists within a market, the less able one firm or a small number of firms can artificially suppress or inflate the fair market price.

In an oligopoly, the firms are able to influence the price a fair amount to their advantage even without explicit communication between the firms. In a monopoly, prices are completely controlled by the firm. In these two environments, one can maximize profit by artificially suppressing the supply.

There are, of course, laws outlawing explicit price collusion between firms, but there are no laws against, for instance, deciding to forgo some short-term profit for the sake of long-term interests. I'm referring to cutting prices beyond what the market justifies to keep Bush and friends in power.

[AngryAmish]

9. There is routine supply and price collusion

OPEC is a price-fixing club.

[Selatius]

10. That's true, but an OPEC nation is a different beast than Exxon-Mobil

Yes, it's true one has to factor in OPEC's moves into the equation as well, but I think there was an article where the House of Saud promised Bush they would cut oil prices ahead of the elections to help shield his allies in Congress.

[AngryAmish]

11. What is really happening

Lots of investors (hedge funds, institutional investors) for a long time had a one-way bet with oil futures. Folks all over the world but especially in the East were buying their futures at a premium no matter what for a few years. They were attempting to get price certainty (and the internal gasoline politics of China is screwed up beyond belief but that is another story). If they bought too much oil it was not a big deal because they could always store it for later use. Well, the world is running out of places to store oil other than in the ground. There is a big oversupply right now. Also remember that the demand curve for gasoline and most energy is very flat. Small changes to supply make big changes on price.

[IowaGuy]

5. Well, I got a feeling...I'm sure we could get a lot into...

discussions re: the force of world markets, peak oil theory, supply and demand, speculator pressure . etc.....

however, curiously enough...gas prices are plummeting locally here (from what I hear the lowest in the nation and going lower every day - despite oil prices remaining relatively high). Curiously enough, there are a lot of hot, close political races going on here in little ol' Iowa w/ a lot of repug money flowing in from all over (RNC, 527's etc)...far beyond what makes any common sense...

I've been kind of casually ggogling around in my free time the last couple of days, trying to get a handle on ..Is their a correlation between regional gas prices and the possibilities and risks of a repug seat turning blue...haven't found any good sites yet that have a good listing nationally by zip code or some other regional variable that could allow the comparing of gas prices to the closeness of that regions political race.

Like I say, just a feeling...and probably not the answer your looking for, judging from your comment re: Rove. I'll continue to look and report back on what or if I find anything.

[Strelnikov_]

6. Karl Rove

In consultation with Big Oil and Big Refinery, of course.

Following is an article that takes a more nuanced view of the current suspiciously low prices.

Aren't flooding the market with diesel/heating oil, are they.


Cheap Gas Until The Election?
http://www.augustafreepress.com/stories/storyReader$40623

"The Republicans are in a bad situation, even soccer moms know this. The best chance they have now is lower gas prices," says Michael Kane, energy affairs editor at From the Wilderness Publications, which publishes a daily e-mail newsletter on world energy and political news.

"When it comes to heating oil and natural gas, your bill may go up, but you pay what you pay for it. The price is not on billboards around the country. But people shop comparatively for gasoline. It's a real billboard sticker. Cheap gas is about the only push that the Republicans have right now, given that their backs are against the wall in Iraq."

. . .

"Following what the storage numbers say, each week the amount of oil and gas reserves is going up," says Kane. "The people who are involved at the refineries know the market, they know the cycles and they know that they don't need that much gas. By flooding the market when you know that demand is low, and then on top of that when the economy is slow, you know that there's even less demand." Even though supplies are high and prices are falling, refineries have continued to run at higher than 90 percent capacity in recent weeks.

. . .

Most oil executives, Kane says, are Republicans, and they feel that the GOP will protect their interests on Capitol Hill better than Democrats would. Yet, Kane does not see an organized conspiracy to manipulate voters before the election. "I doubt there was even one phone call," he says. "We're seeing a coordinated campaign, but it's not a conspiracy. It's just everybody knowing what benefits them. It's a question of all the parts of the machine turning in the same direction at the same time."

[Trailrider1951]

8. The duration of time

that dumbya's lips meet the Saudi royal family's collective ass.

[undeterred]

12. but how does that explain recent fluctuations?

[HiFructosePronSyrup]

13. You ask an honest question.

But then you tell me you don't want the honest answer.