10/5/07
Little logic to arbitrary fuel prices
By STEPHEN H. SUTHERLAND - THE GAS MAN
Crude oil is hitting record highs in the $80-plus per barrel range, yet the rack price for gasoline continues to fall. As I've said before, in the past couple years the price is more arbitrary than governed by formulas, logic, responsibility and the sense of fair play.
As logic would have it, the crude price goes up and the rack price would follow — that is if margins at all levels of the oil industry were not at record highs! Downstate rack prices are now down to $2.089 (plus applicable taxes, less discounts). It was not long ago when crude oil was priced in the low-to-mid $70s per barrel, yet rack prices for gasoline were at $3-per gallon plus.
This just backs up my claim — oil companies wanted more, so they took it! The difference is in the margins. Hmmm, what could cause this sudden change in attitude?
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Fall is here. How many of you have not yet filled your oil and propane tanks? We often get snow in October; don't wait until the last minute.
I did a short heating-oil price survey for you that shows Schmuckal Oil Co. was on the high end at $2.929 per gallon, Crystal Flash is at $2.899 while Blarney Castle was at a low of $2.839 per gallon. I can remember the days when I was a child riding on my father's delivery truck when the prices ranged from less than 10 cents per gallon in to the teens. Currently, rack prices for #2 fuel oil were at $2.40 cents per gallon, yielding margins in the range of 40 to 50 cents per gallon.
Now, in all fairness to the suppliers, 40-cent margins are not unusual for heating oil and they were actually about the same even 20 years ago. You need to remember that each gallon needs to be loaded, transported and delivered to your home.
I also checked some propane prices. Blarney Castle was at $1.94 a gallon. I also checked Crystal Flash but they would not quote me a price out of Traverse City.
Keep the questions and comments coming!
The GasMan -