Slate: "The Paradox at the Pump"

[GRClarkesq]

The Paradox at the Pump
If oil prices are rising, why are gas prices falling?
By Daniel Gross
Posted Tuesday, Aug. 24, 2004, at 3:06 PM PT

Investors, traders, and American drivers are puzzled by a seeming paradox: The price of gas in the United States has been falling in recent weeks even as the price of crude oil has rocketed to historic highs. The two charts on the upper left-hand side of the Energy Information Administration's latest edition of This Week in Petroleum illustrate the conundrum. The price of a barrel of crude has been flirting with $50 while retail gas prices have dropped 19 cents from the record $2.06 per gallon price of early summer.

The diverging charts seem to defy rational explanation. If the price of the main input (crude oil) of a product (gasoline) is rising very rapidly, you'd expect the price of the product to rise, unless actors at different stages of the supply chain (refiners, distributors, gas station owners) decide to accept reduced profits. But it turns out the explanation for the dichotomy lies in the more or less rational functioning of markets.

http://politics.slate.msn.com/id/2105598/

[Warpy]

1. Oil companies had intended to keep prices low until

November 3. However, this latest surge in prices is at near panic levels, and they really can't afford to do as they'd expected to. Pump prices here in NM have started to rise, and I would strongly expect it to be the same elsewhere.

This is the first time that a hike in the futures prices, however small, hasn't resulted in an immediate hike in the price at the pump, weeks before the expensive oil actually hits the refineries. Yes, the market has been gigged. No, they're not going to keep it up they way they'd intended.

This article is a bunch of bullpoop.

[Dogmudgeon]

2. The Official date of the first price shock

Here are four guesses:

1. Weekend after Election Day. An early scenario that would happen in response to industry anxiety, most likely to a Kerry victory. If it hits then, be scared -- the oil companies are certain to be.

2. Before Christmas. This would be another Kerry-wins scenario. It will be the way the oil industry punishes us for voting incorrectly. It could be fused with #1.

3. 5-20 days after the Inauguration. If Bush wins, that is. This is the peak Winter heating season, though. It will take a lot of restraint, but the oil industry will be, in the words of Dennis Miller, "taking care of friends."

4. Before Memorial Day. No vacation! Sorry, kids, you'll have to work all this Summer. And no overtime. Ever again.

Even in the event Bush wins, after mid-winter, there will be no point in the oil industry trying to control prices. The know they lost the "end game" when the measured reserves of Caspian and Northern Iraqi oil came in at less than 30% of their estimates. Their "ace in the hole" wasn't.

The assault on the remaining Alaskan oil will begin forthwith.

--bkl