Crude $66 a Barrel a 50% Decline. Why is Gas at the Pump Still High?

Crude closes at $66 a Barrel a 16-month Low. Why is Gas at the Pump Still High?

I see the price per barrel of oil dropping daily yet the price at the pump seems to stay the same. Every time I fill up my car I ask myself what’s up with gas prices not going down? In downtown Seattle gas is still going for $3.53 at the 76 Station on 351 Broad St N & Denny Way and $3.39 at the Shell on 1500 Broadway Ave E & E Pike St. Why does it take so long for the gas price to drop yet if there’s a hurricane developing in the gulf the price at the pump jumps overnight?

I’m been doing some research that surprisinglyis contradicting my perception regarding the correlation between prices at the pump and price per barrel. In Seattle since we have such a high tax on fuel the numbers might be skewed so they don’t accurately reflect a decline in gas prices at the pump. Here’s a list of all US States and total taxes on gas http://www.seattlegasprices.com/tax_info.aspx. Washington State is one of the highest, check out your state’s total taxes on fuel. The price you pay at the pump, is based on the projected supply and demand months out.

The WTRG.com http://www.wtrg.com/daily/oilandgasspot.html has a very useful graph that maps the relationship of crude vs. gas prices. This number of course will vary by region. There seems to be a direct correlation between price per barrel and price at the pump even though sometimes it feels otherwise. Here’s another graph out of the UK demonstrating the correlation http://www.whatprice.co.uk/petrol-prices/petrol-oil.html.

Another surprising fact about oil companies I discovered is that after taxes the big oil companies with their so called “windfall profits” only keep a fraction of their initial profit. http://seekingalpha.com/article/63131-exxon-s-2007-tax-bill-30-billion For example in 2006 Exxon Mobile had $39.5 billion in profits, but had a tax bill of 28 billion. Leaving a 2006 profit of 11.5 billion. Walmart to give you a comparison posted a profit of 11.23 billion http://money.cnn.com/magazines/fortune/fortune500/snapshots/1551.html. In 2007 Exxon Mobil had a profit of 40.6 billion and a total tax bill of 30 billion. Total profits for 2007 were 10.6.

Don’t get me wrong 11.5 and 10.6 billion is a ton of money, but perception of a totally corrupt oil market doesn’t always equal reality. I withhold judgment at this point… where there’s billions of dollars there’s got to be some corruption and/or manipulation. There’s no don’t that the market/price for crude oil is controlled just look at OPEC who called an emergency meeting this past Friday spooked by the 50% decline in the price per barrel from $147. The 13-nation group might cut production by millions of barrels in order to get a price spike. Iran is looking for a price of $100 a barrel, and Venezuela at $80-$90 (http://ap.google.com/article/ALeqM5iTKFqY44EEha_Fb9CRDMjU692BWgD93VLFI00).” They have to be careful though not to further fan the flames of a global recession with the help of high energy prices. Doing this will decrease demand even further thus lowering the price per barrel even more.

More Ways to Save on Gas… Buy a 120 MPG Scooter

  • June 23, 2008
  • Offline Savings
  • Comments Off on More Ways to Save on Gas… Buy a 120 MPG Scooter

You don’t have to buy a Toyota Prius or wait until the GM Volt comes out in 2010. You can get 120 miles to the gallon right now with a scooter! “The size of a scooter’s engine can range from 50 cc’s to 650 cc’s. A scooter with a smaller engine of 50 cc’s can get up to 120 miles per gallon with a top speed about 48 miles per hour. A larger scooter with an engine of 650 cc’s can get 50 mpg and reach 115 mph (Herald-Zeitung.com). From 2002 to 2007 scooter sales have doubled. In the first quarter of 2008 scooter sales are up 24% (MercuryNews.com).” The purchase of a scooter seems like a very sensible solution to high gas prices.

Gas Saving Strategies That May Surprise You

Lights

1) Turn off your lights during the day time. Electrical equipment is powered from the alternator which will increase its burden on the engine to produce more power.

Speed Limit

2) Drive the speed limit. “Every 5 mph you drive over 60 mph is like paying an additional 21 cents per gallon for gas (Sawyers-Specialties.com).”

Cruise Control

3) Use cruise control which can help improve fuel consumptions rates up to 10%.

Maintenance

4) Check air filters, spark plugs, and tire pressure. “For tires, every pound under the recommendation accounts for a loss of 2% in miles per gallon (Greenlivingideas.com).”

Weight

5) Reduce total car weight by taking out your spare tire, tire jack, and general clutter. Anything you can do to make your car weigh less will improve its gas mileage. This includes not completely filling up the gas tank. Instead try filling it ¼ of the way to reduce total weight.

Gas Grade

6) Switch from premium to regular gas. This works for many vehicles that recommend premium only. According to Clark Howard of the Clark Howard radio show, “Only about 5 percent of cars in the country really need premium gas, yet 20 percent of all gas sold is premium (ClarkHoward.com).” Edmunds further backs up Mr. Howard’s statement in this article Edmunds.com.

Warehouse Clubs

7) Only buy your gas from discount clubs saving you 5-15 cents a gallon.

Air Conditioning

Try not to use the air conditioner if you don’t have to.

Tires

9) “Use steel-belted radial tires. They increase gas mileage up to 10% (FinancialPlan.About.com).”

Credit Card

10) Look into discount gas card offers like the one offered by Discover Card which offers 5% cash back on gas purchases.

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