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Politics : GOPwinger Lies/Distortions/Omissions/Perversions of Truth -- Ignore unavailable to you. Want to Upgrade?

To: jttmab who wrote (28392)	10/10/2004 1:01:53 PM
From: Mighty_Mezz	Read Replies (1) \| Respond to of 173976

The model that says the oil companies are willing to reduce their profits for a little while to help get their man re-elected. re What economic model do you have that explains why the price of crude has gone up nearly 30%, and the average price of gasoline has dropped by nearly 5%?

To: jttmab who wrote (28392)	10/10/2004 6:08:50 PM
From: bearshark	Read Replies (1) \| Respond to of 173976

>>>What economic model do you have that explains why the price of crude has gone up nearly 30%, and the average price of gasoline has dropped by nearly 5%?<<< I have been waiting for someone to notice that. Maybe we will get $2.50 to $2.60 for regular after the election.

To: jttmab who wrote (28392)	10/10/2004 10:01:04 PM
From: Selectric II	Read Replies (1) \| Respond to of 173976

It might be related to the age-old adage that straw hats are cheaper in the winter, among other things. During the summer, demand for gasoline increases as drivers hit the road on vacation. Demand for other products, like #2 heating fuel oil slacks off. Refineries attempt to balance product supply and demand by changing their refinery product mix to produce more gasoline and less of other products, e.g. fuel oil. You'll have to ask a refining expert or do your own research to get the specifics. And I'm sure there is some friction in timing and efforts to meet equilibrium between supply and demand. Have you ever driven past a huge production and storage facility where product storage tank levels visibly expand and contract, vertically? After the peak summer driving season, gasoline demand lessens and refineries switch their equipment to produce e.g. more #2 heating fuel oil for the winter heating season. That would explain why gas prices can be stable or marginally lower even though crude prices are up. The demand for gasoline isn't there. With rising crude prices, I would also expect fuel oil prices to increase even though gasoline prices are decreasing or staying stable. There are other factors that an oil economist could talk about in detail, such as the price and volume difference between sweet crude, which is what we're talking about, and that of sour crude. For instance, refineries are somewhat specialized in their ability to refine different qualities of oil, and even if huge volumes of one type of crude were available at a given place and price, it wouldn't necessarily mean that there is refinery capacity available at a given point in time to handle it. Refineries themselves are built to handle certain types of crude, believe it or not, and would be helpless to make any product out of even a super-tanker load of the wrong stuff. As to your extra credit question <lol, professor>, I think the question has already been answered inasmuch as I've shown above that your generalizations might be overbroad or simplistic when you state that, "It seems that most people believe that the price of crude has some relationship to the price of gasoline. Seems reasonable as an average of 19.2 gallons of gasoline are extracted from a barrel of crude." What most people believe, "some relationship," and reasonable averages don't tell the whole story.