eli5: why the current price of gas is much higher than in 2008 when the price of brent barrel was quite higher?

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eli5: why the current price of gas is much higher than in 2008 when the price of brent barrel was quite higher?

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Anonymous 0 Comments

It’s complex. It depends on where the oil is and how do you get it to where you need it. Not all oil is the same. Saudi Arabian oil is really easy to refine because there’s not a lot of sulfur. You don’t need specialized equipment to refine it. Oil from Canada or from Venezuela has a lot of sulfur. The US is basically geared toward refining this type of oil but not oil out of Saudi Arabia. Europe on the other hand mostly refines Middle Eastern oil but not the type of oil produced in Canada/Venezuela. Refining Saudi oil is a lot cheaper than refining Venezuelan oil and refineries can’t freely switch between the types because they require different equipment. This also means that a barrel of crude oil isn’t the same globally. There are different types of crude and demand for those types varies based on a lot of factors. When we say crude oil prices, we’re using a really high-level average of all the oil markets and types of oil out there.

Also people seem to think that crude oil = a fixed amount of gasoline. It doesn’t. Crude oil is a mix of a lot of different fuels such as gas, kerosene, diesel, etc. And depending on where you get the crude oil, there can be huge differences in what fuels are in it. in other words crude oil isn’t just crude oil. It’s extremely complex and there’s a lot of different types and the prices for those types will have different effects on the price for gasoline. Not to mention that gasoline isn’t the only product refiners are interested in. For example, kerosene is used mostly in jet fuel. Diesel for transport. Gas for passenger vehicles. Refineries will prioritize different fuels based on demand and gas isn’t always the most profitable one for them to aim for. And they can change some fuel types through hydrocracking.

Yes oil prices effect gas prices. Because oil is a raw material to make gas. But there’s a ton of other factors that come into play between that barrel of crude oil and your local gas station. From the EIA, a barrel of crude oil (42 gallons) will produce an estimated 11-20 gallons of gas in the US dependent on a lot of factors. https://www.eia.gov/tools/faqs/faq.php?id=327&t=9. Then you need to include the cost of the various additives required for the gas before you can put it in your car. Then the cost to get the gas from the refineries in Texas (Most US refineries are in the Gulf) to your local gas station which includes drivers/trucks, trains, or pipelines. The price of all that other stuff, from the additives to the truck drivers, cost more today than they did in 2008. Not to mention everything else going on in the world that wasn’t happening in 2008 causing all sorts of chaos in market prices.

Anonymous 0 Comments

The price of gas is not only gas itself, it also contain shipment price. And shipment went more expensive as gas prices went up.

Anonymous 0 Comments

There was half as much money then, literally.

They have printed all currencies to levels that cannot be controlled (inflation).

Anonymous 0 Comments

The price of all goods is determined by two, *and only two* things: supply and demand.

A higher cost of crude oil impacts the supply side of the analysis, making it more expensive to make the gasoline. But if enough people demand the product, then that can easily make up for the difference.

At the end of the day, if enough people are willing to buy gas at $5.00 instead of $4.00 (i.e. you don’t lose more than 1/5th of your sales by raising the price) then the price will be $5.

Another way to put it: Gas companies are gouging you and telling you that it’s because of supply chain issues, when they are really just trying to maximize profits.

Anonymous 0 Comments

You want a reason?

The price of freedom… No regulations, no limits, no oversight, no checks and balances…

Now corporations can exploit employees and customers freely…

The Ukrain War is a “good justification” for a price increase…

Anonymous 0 Comments

It’s not. It appears to be because you aren’t taking into account inflation. The peak in July 2008 was around $4.17 per gallon (nationally). That’s about $5.30 in 2022 dollars.

Anonymous 0 Comments

Don’t know where you are, but in Canada, in the last 15 years, we’ve added about $0.30/l in taxes. There were taxes before, but these are all additional. At $C$1.75/litre at the pump, tax is not an insignificant part of the increase.

Anonymous 0 Comments

2 words.

War profiteering.

Anything else is corporate propaganda.

You can’t convince me different.

Anonymous 0 Comments

If a gas station wants gas, it has to order it. If they think the price might be going up, they try to lock in a lower price early. Their supplier, of course, also has to guess what the price is going to be in the future when they’re filling orders, so they also raise their prices steadily for those delivery contracts. So the price of gas today is less based on the price of oil today, but rather on speculation. on what the price may be in the future (to exacerbate matters “futures” are bought and sold like stocks — so people are effectively bidding on the contracts, driving the prices up anticipating prices will rise.

So, speculation. People guessing and driving the price up.