<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by PARAGON:
<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by HUMMERDOGG:
Paragon-
To address a few of your commments...
The price at the pump "is" raised due to the fear of future "production" disruption "because" future production disruption affects futures pricing which ultimately affects retail pump prices. Keep in mind, pricing at the pump originated on the Nymex where heating oil and unleaded gas futures trade. Refineries contract to buy their crude supplies with their purchase price tied to either the daily Nymex settle plus a fixed basis or a daily fixed price basis cash market, in turn, retail gas stations contract out to either petroleum distributors or directly with refineries and this price is tied to the current spot rack price.
World supply/demand balances "have" tightened significantly in the past four years due to the unbelieveable economic growth in China and India in 03/04.
OPEC is no longer a factor when discussing the ability to manipulate pricing. We ran from $41 to $72 this year. The last $15 of that move was driven purely off of trading technicals which continued to give these program and hedge fund traders "BUY" signals. It wasn't driven off of OPEC, supply/demand balances, the oil majors, etc...
Diesel prices at the pump have come off where I'm at however there continues to be a 60 cent/gallon spread at the pump between diesel and unleaded. However, there is also a 22 cent/gallon spread between heating oil and unleaded gas futures. The balance of that pricing is due to cash diesel basis prices, issues with transportation logistics, continued downed refineries, current distillate storage levels, and maybe a little "major" price gouging.
And to try to correlate price action and demand, and argue that price has no business increasing 100% since demand hasn't increased by 100% is a difficult correlation for me to follow. Price always overshoots to both the upside or the downside because it's never readily apparent when supply/demand fundamentals have fallen back in-line. Plus, in the interim there are so many other factors other than global and local supply/demand balances that traders look at when trading...
Ultimately, I agree with your assessment that there is some market manipulation being done by the majors which affects pricing, however, I can't agree with you that this is the sole reason for the price action we have seen this year. The various factors I have mentioned in previous posts do play an influence on price.
However, I am a believer in free markets and capitalism and do not believe it is wise to try and cap the majors or have them fix their pricing. Immediate relief would be offset by long term grief... </div></BLOCKQUOTE>We're on the exact same page. I am not obtuse enough to think that retail pricing is only set by some sort of conspiracy. While everything I've posted here is fact, I could help but play with the village idiot attempting to discuss something over his head. </div></BLOCKQUOTE>
So Paragon. . .what did the village idiot say that was in any way different from what you just agreed with?
11-01-2005, 12:39 AM
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