Mike Zamarocy

Over on the MHaven Forum there is a lot of talk about how or gas prices are going SKYHIGH and more again tonight! It is getting kinda crazy with these prices!<p>Also it seems that in some states there is 93 and 94 octane gas forsale. I have not seen 93 or 94 here in SoCal, but there are Union 76 stations that have 100 UNLEADED and 110 LEADED. Here is a partial list (all Union 76) - also this was as of a MONTH ago:<p>Yorba Lind **** ALSO THE CHEAPEST!!! PUMP<br>San's 76 on Imperial a bit north of the 91<br>This guy is DAMN COOL TOO!!! Last time I was there (3-4 weeks ago) his 100 was $3.53 a gal<p>Osborne 76 in Redondo Beach PUMP<br>This guys is not very nice at all! Told me he was the ONLY 100 octane 76! Also his price was near $5 a gal!!!!!!<p>South Pasadena at the end of the 110 PUMP<br>Not too bad a guy, but recently changed owners, and around $4.50 a gal<p>Norwalk on Firestone DRUMS<br>this was a relative of the old S Pasadena owner, still kinda high<p>Newport Beach 76 & car wash<br>on San Miguel Rd behind the Fashion Island Mall in the hills - supposedly cause Reggie Jackson lives nearby and is a car nut, this will ALWAYS have 100! Price is still over $4<p>West Covina on Citrus (never been here)<p>Agoura Hills on Dorothy Dr (never been here)<p>Pomona Beach - Doherty (???) on Village Loop Rd (never been here)<p><br>Now the KILLER!!!!! A lot of states with LOW gas prices are actually using OUR GAS/OIL!!!! So how the HELL do they get it CHEAPER than we do, and it even had to be transported to there too!!!???<p>Perhaps what we all need to do is STOP buying gas from ALL stations for a few days! All of us, everywhere. There is no BETTER way to tell the oil companies our being pissed off at their RIPOFF's than not filling their pockets! Imagine if everyone all across the USA stopped buying gas for even a day??? How much you think they'd loose in one day??? So if there can be a so called "smokeless" day, why not a GASSLESS day?

Sandy

While it's true that some states import gasoline from California, they only buy conventional (non-CARB)gasoline that cannot be sold within our borders. As you would expect, CARB gasoline is more expensive to produce and so commands a higher price. Also keep in mind that California gasoline taxes are higher than most of our surrounding states, which contributes to the discrepancy at the pump.<p>Our current situation, especially in the Bay Area, has been exacerbated by serious problems at 3 of the 5 refineries in this area. It will take some time for alternative supplies to relieve the pressure.<p>I understand (and share) your frustration with gas prices, but I hope this answers some of your questions.<p>Thanks<br>Sandy (Tosco/76 Products)<br>98.75 2.8Qtip

Steve S.

:-)<p>Steve S.<br>97 2.8QM

Sean G

Sandy,<p>I can understand why prices would fluctuate based upon the availability and world pricing of oil as well as refinery capacity but I do have an issue with oil companies with respect to their responsiveness to these events. Specifically, why is it that when a negative event occurs (oil price increases or refinery fires, for example), prices at the pump increase virtually overnight yet when the oil prices drop or a refinery comes back online, gasoline prices only decrease over a period of weeks? If you listen to the oil companies, the prices slowly come down because they have fuel that was more expensive to produce already "in the pipeline" and it needs to be distributed before the "cheaper" fuel makes it to consumers. If this is the case, why then doesn't the original spike occur gradually over a period of time in response to negative events? Logically, there is more cheaply produced fuel already "in the pipeline" at the time the event occurs.<p>Any light you can shed would be greatly appreciated.<p>Thanks,<p>Sean<br>97 1.8tqm

Paul N

Sandy did a great job of explaining why gasoline can be $1.50 in Ca, but $1 in a nearby state is often due to varying taxes on the fuel. It can even vary by county within a state. <p>Now the big question of why does the price jump suddenly when there is an event? The answer is the value of the fuel in stock just went up. Not the cost of fuel already purchased but its value. Lets give an example. Station #1 just filled received a shipment at $1/gallon. Now a refinery as an explosion. Station #2, across the street needing purchases it at $1.50/ gallon. What should station #1 charge its customers? The answer: $1.50/gallon. (I have ingored the markup to keep it simple.) If he didn't he would be making a poor business decision. The value of his fuel is now $1.50/gallon, he could sell it to his customers at $1.50 or he could sell it to another station for $1.50/gallon. This is economics in action and the forces of supply and demand.<p>The answer to why don't they come down fast is fixed is more difficult to answer. As you suggested it takes time for the cheaper supply to make its way to the pump. The other reason is the accounting method for fuel inventories may use a last in-first out method. That means if I buy 100 gallons at $1.00, then 200 gallons at $2.00. When I remove from inventory the value is $2.00 until the 200 gallons are used up. Remember this is for the cost of their product not its value.<br>Another reason is what I call sticky prices. (I wrote a paper on the subject and used this as my title.) Its basically that a seller has no problem rasing a price quickly when his costs rise and people will continue to buy. However, the reverse a seller is heistant to reduce prices fearing his costs may go back up. In addition, maybe they can make a little more profit as prices adjust in the market. Ie, its takes a while for people to realize they could get it cheaper elsewhere.<p>I hope this LONG explain helps!<p>Paul N<p>P.S. In case your wondering, I am an Economist.

Sandy

The only comment I would add to your very clear explanation is that, in this particular case, the increase was extremely quick for one additional reason: this was the third refinery-crippling problem in the Bay Area in just over a month. Prices increased fairly gradually after the Tosco accident since the effect to supply was not perceived to be immediate or unrecoverable. After Exxon's hydrocracker went down, the increases were a little more quick in coming. By the time Chevron had their fire, a feeling of panic was starting to unfold in trading circles due to the extremely tight supply, and retailers responded accordingly.<p>I know this situation stinks, but barring any more refinery mishaps in California, prices WILL come down again. Unfortunately it won't be in time for our long drive to Las Vegas.<p>Sandy<br>

Sandy

:-)

Steve S.

I gotta drive what I gotta drive...I buy gas...period. If gas is at $1.55/gal or $1.80/gal..it doesn't change anything in my driving habits...I gotta go to work...to the grocery store...etc....<p>All that is affected is my wallet. And I don't like it...especially when you here gas is $1.30/gal for Premium in Colorado and elsewhere.<p>Simple minded as I am...can't they truck gas up from SoCal refineries? Probably a stupid question....but I ask it anyway.<p>Steve S.<br>97 2.8QM

Sandy

No, that's not a stupid question. From what I understand, oil companies are shipping up some gasoline from SoCal. One of the bigger refineries in L.A. (Arco) is also having some mechanical problems. Their situation is not as drastic as ours, but it does contribute to the overall problem. <p>In answer to your first question, raising prices does have an effect on sales. There is a certain baseline usage, but overall sales vary above that volume. Some stations (especially independents) are having to raise prices higher than their competitors simply to avoid draining their tanks. This would be similar to letting your gas tank become completely empty. Not a good idea.<p>

Sharon

Are they fed by the same refineries?<p>At least there will be no MTBE, that'll be an interesting experiment.<p>Sharon<br>(cheapest gas along my commute right now: $1.81 @ a Chevron in Los Gatos)