Petrol prices in the USA

Submitted: Sunday, Nov 02, 2014 at 09:19
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Just got back from a quick trip to the USA and was amazed at the drop in petrol and diesel prices, lowest I saw was $2.49US/USG which equated to about $0.75AU/Litre. Most was around $2.80-$2.90/USG

The USA will be completely self sufficient in oil/gas by 2020.

Pity the pollies here couldn't takes some initiatives from the Bush Presidency.
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Reply By: MEMBER - Darian, SA - Sunday, Nov 02, 2014 at 09:52

Sunday, Nov 02, 2014 at 09:52
We all deserve cheaper fuel (and vehicles), but hell........
[Quote]....."The USA will be completely self sufficient in oil/gas by 2020.......
Is this all going to stop in 5 years ?
http://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_ep00_im0_mbblpd_a.htm

Pity the pollies here couldn't takes some initiatives from the Bush Presidency.".........
Shirley....you can't be serious !
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Reply By: Ron N - Sunday, Nov 02, 2014 at 11:03

Sunday, Nov 02, 2014 at 11:03
There's a number of factors at play in the oil prices tumbling. Primarily, it's the Chinese economy slowdown (if you can still call 7% annual growth, a "slowdown"!).

The secondary factor has been the massive increase in fracking and the huge natural gas reserves found in the U.S. in the last several years.
This has the effect of reducing demand for oil products such as heating oil, because people are now using local NG for heating.

Thirdly, is the U.S. Govts constant drive for improved fuel economy from IC engines.
It's making the manufacturers get serious about fuel efficient engines - despite the Americans love of big block V8's.

Fourthly, it's surprising the uptake of electric vehicles in the U.S. It's not huge by any means, but it's on a steady upward graph.
Elon Musk is intent on making electric cars a wholly viable alternative for city dwellers, and he's got the money to make it happen.

As with anything, the application of large amounts of $$'s as Musk is quite capable of doing, will make Li-ion batteries much cheaper - and coupled with increased amounts of charging stations, and cheaper electric cars, they will eventually become a serious choice against an IC-engined car for suburban use.
I don't see IC-engines ever becoming totally redundant, but they will lose their total domination of the vehicle market.

Why Elon Musk is building a gigantic battery factory in the desert

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Reply By: Member - Silverchrome - Sunday, Nov 02, 2014 at 11:13

Sunday, Nov 02, 2014 at 11:13
Our prices have come down as well but not like the USA. I filled up on Friday on the northside of Brisbane for $1.397 litre....the lowest diesel price for awhile.

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Reply By: Hoyks - Sunday, Nov 02, 2014 at 12:04

Sunday, Nov 02, 2014 at 12:04
And around .40c of that is tax.

US states have a wide variety state sales taxes added in to a lot of things, most aren't displayed as part of the price like they are here, they are added on at the register.

Not having to pay employees super or sick leave and a wage of around $7/hr will help keep overheads down too.
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Follow Up By: Member - John (Vic) - Sunday, Nov 02, 2014 at 19:39

Sunday, Nov 02, 2014 at 19:39
39 odd cents excise, plus GST.
If the price per litre is $1.55 then the GST component is about 14 cents.
So that's around 53 cents per litre in tax and excise.

The remaining odd dollar is broken up between crude cost, refining cost, transport and retail margin.
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Follow Up By: Zippo - Sunday, Nov 02, 2014 at 21:46

Sunday, Nov 02, 2014 at 21:46
Fuel - thankfully - isn't one of those where the tax is added after the advertised price.

We've spent 9 months driving around the USA since late '08, and found most places required a credit-card-at-bowser to activate the pump. The trick comes for us outlanders when the system demands a valid ZIP code to be entered, reputedly an anti-card-theft measure. Sometimes it would accept our four-digit Oz postcode prefixed by "0", sometimes "00000" worked, but quite often it required "negotiation" with the droid in the cage.

Overall though the prices there have been way less than $1A/litre for their lousy base-grade petrol.
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Reply By: Bob Y. - Qld - Sunday, Nov 02, 2014 at 12:05

Sunday, Nov 02, 2014 at 12:05
BD,

While nowhere near the U.S. price, but our diesel is now quite cheap.

Diesel at local servos has been 165.9c/L for most of this year. About 4 weeks ago it dropped to 157.9, followed by another fall to 155.9. Neither E10, ULP or premium have changed from their all year levels.

Interesting that US will be self sufficient. I read years ago that they'd began to reach the end of their resources. Amazing what new technology will do, and probably a few fibs told back then. :-)

Bob

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Reply By: Rangiephil - Sunday, Nov 02, 2014 at 13:49

Sunday, Nov 02, 2014 at 13:49
Last time the oil prices were as low as they were now , petrol and diesel prices were around the $1 mark. I was reading an article this morning which stated that when the 0.38 cents excise was frozen fuel prices were at that level.

Where is the extra 30 cents going? Into the pockets of the oil majors.

The previous poster shows that we are conditioned in Australia for prices to never go down to levels they were 10 years ago. Why not?

It is common in other countries as shown by the USA.
We are mugs in Australia and get what we deserve.
Regards Philip A
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Follow Up By: The Bantam - Tuesday, Nov 04, 2014 at 00:45

Tuesday, Nov 04, 2014 at 00:45
Alan cholar showed a graph on the ABC news a few nights ago of the australina retail fule price V the wholsale cost.

The fule campanies must be runbbing their hands with gllee, because they have not been making as big a profit from fuel in very long time.

Competition is suposed to drive prices down ...right...yeh right.

I supose it si not technically colusion if they haven't spoken to each other about it.

remember there are only 4 major oil companies in Australia.
Mobil is hardly a player any more.
BP operates a high profit margin operation and is almost never the chepaest.
and that leave shell and caltex........aligned with the two major food chains

Competition..what competition.

cheers
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Follow Up By: Member - John (Vic) - Tuesday, Nov 04, 2014 at 02:07

Tuesday, Nov 04, 2014 at 02:07
Mobil have disposed of their retail operations to 7 Eleven in Victoria at least, not sure about the other states.

So that leaves only BP retailing under their own brand.

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Follow Up By: The Bantam - Tuesday, Nov 04, 2014 at 08:04

Tuesday, Nov 04, 2014 at 08:04
With BP not being a price competitive player prefeering to place their service stations where they have little or no competition...like big highway sites.

That leaves Caltex and Shell..who with their association with one major food chain or the other and their voucher systems have run the independents pretty much out of business.

All it takes is one of them to not price agressivly and the other will cease to do so as well.

As far as I see it it has been Caltex who have been playing agressivly on pump prices and Shell has just been responding.

But this is what the analists said would happen...the two major players in conjunction with the two major grocery chains would run everybody else out of the business and then put the prices up.

This seems to be a common theme and happening in a number of markets.

Super retail group, baught both Amart and Jacks Outdoors to eliminate them from the market and allow them to put prices up in their BCF stores.

Fishing tackle discounting is now pretty much a thing of the past in this country.

I am sure there are other examples.

We can not rely on competition in the Australian market to keep prices down that is why we pay way over the odds for so much.

cheers
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Follow Up By: The Landy - Tuesday, Nov 04, 2014 at 09:02

Tuesday, Nov 04, 2014 at 09:02
Caltex is not an oil company it is purely a refiner of petroleum products and soon will only become a marketer of petroleum products when it closes Kurnell and imports all its refined product from Asia.

As the saying goes, if you want to make a small fortune out of refining oil in petrol, start with a large fortune - it is a high cost, low margin business.

If the refiners were making so much money out of it in Australia why is it that they all want to close the refineries?

If you want to become fuel efficient start with easing your foot off the accelerator!

Cheer's - Baz, The Landy
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Follow Up By: The Bantam - Tuesday, Nov 04, 2014 at 10:34

Tuesday, Nov 04, 2014 at 10:34
Caltex is most certainly an oil company..in Australia caltex is a subsiduary of the American Chevron group one of the 4 major worldwide oil companies.

While ya actual "Caltex" may not own oil wells, bet ya boots Chevron has their finger in a few.

While most of the Caltex branded stations are part of the 50:50 joint venture with woolworths there are still many non Woolworths, Caltex branded service stations. Nation wide

Mostly the Caltex / Woolworths service stations are concentrated in larger cities and towns where there is a Woolworths grocery retail presence.

Almost without exception, Caltex brabded large highway service stations are not joint venture operations neither are many reigonal and rural Caltex stations.


BTW, no matter how soft you tread on the accelerator pedal it does not make up for the large portion of the fuel price that is tax...AND the government has just decided to increase their tax take by about 25%.



cheers
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Follow Up By: The Landy - Tuesday, Nov 04, 2014 at 11:18

Tuesday, Nov 04, 2014 at 11:18
Hi Bantam


Caltex is not a subsidiary of Chevron, and nor is it an oil company. It operates independently of Chevron and it has its own board and management. Chevron is a major shareholder and does have board representation, understandably so given its expertise and investment.

Caltex has around 30,000 shareholders!

Tell you what, I'll stump "The Landy" up in a winner takes all on this one if you like, what have you got to offer ;) (tongue firmly in cheek - I'm happy with The Landy)

It is simply a refiner that buys crude oil on the world market, and if it buys from Chevron related parties there is strict governance guidelines around it.

And shortly Caltex won't even be be a refiner and will purchase all its refined product for other refineries in the region...

I can assure you, Caltex make more money out of selling you the coke, chips and chocolates when you pay for the fuel, than they do out of selling you the fuel.

Cheers, Baz - The Landy
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Follow Up By: BunderDog - Tuesday, Nov 04, 2014 at 11:42

Tuesday, Nov 04, 2014 at 11:42
Here you go..............sort it between yourselves LOL

Caltex Chevron relationship
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Follow Up By: The Landy - Tuesday, Nov 04, 2014 at 11:47

Tuesday, Nov 04, 2014 at 11:47
No need to worry, I had it well and truly sorted ;)
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Follow Up By: The Bantam - Tuesday, Nov 04, 2014 at 14:01

Tuesday, Nov 04, 2014 at 14:01
you can piss about with technicalities......but..chevron owns 50% of caltex australia.

I think that is what is called a controlling interest.

So Chevron by the complicated mechanism of company structures and the share market..... trading as Caltex Australia.... buys crude oil and other products off its self....and others.

nothing unusual here.

cheers
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Follow Up By: The Landy - Tuesday, Nov 04, 2014 at 14:50

Tuesday, Nov 04, 2014 at 14:50
What people "think" and the "facts" are often two very different things.

In this instance, Chevron Inc do not control Caltex Australia in any way shape or form; neither by stealth or technicality.

A 50% interest does not give them a controlling interest, but I'll leave you to do your own due diligence should you want to understand the relationship a little better.

The reason I am "hammering it away"" is that all too often debates in this forum on refining companies and oil companies are intertwined without regard for the facts - which usually leads to very incorrect assumptions being made...

Caltex has never been an oil company, and has no intentions of becoming one! In fact, it should really be considered as the biggest convenience store operator in Australia.

Let's keep to the facts in the interest of good debate, if that is what you are interested in.

But I'll leave it at that!

Cheers, Baz - The Landy





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Reply By: Bruce M - Sunday, Nov 02, 2014 at 14:07

Sunday, Nov 02, 2014 at 14:07
I was in the US between 1 September and 19 October. During that time the price of oil fell by around 20%, and the retail price of gasoline fell around 12%. Here in Canberra, the oil price drop resulted in a drop in retail petrol price of around 5%. I think we are being taken for a ride by the Australian oil majors.

Bruce M
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Reply By: BunderDog - Sunday, Nov 02, 2014 at 14:46

Sunday, Nov 02, 2014 at 14:46
Diesel at Costco in Brisbane was $139.7/l on Friday.
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Reply By: TomH - Sunday, Nov 02, 2014 at 14:47

Sunday, Nov 02, 2014 at 14:47
$2.49 a US gallon is actually 65.7c per L x 4.55= $2.92 AU per Gallon AU
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Follow Up By: BunderDog - Sunday, Nov 02, 2014 at 15:13

Sunday, Nov 02, 2014 at 15:13
Ummmm......

$2.50US = $2.84AUD

US Gallon = 3.78 liters

= $0.75AUD/Liter
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Follow Up By: TomH - Sunday, Nov 02, 2014 at 19:25

Sunday, Nov 02, 2014 at 19:25
Sorry I meant 65.7US and now realised you changed it into AU

When I was there in June we averaged about $3.53 US a gallon

Cost us $1100 for the 8500 miles we did
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Reply By: rocco2010 - Sunday, Nov 02, 2014 at 15:00

Sunday, Nov 02, 2014 at 15:00
Gidday

Of course any price comparison can be misleading if if doesn't take I to account factors like exchange rate and local wages.

What is cheap for Australian tourists thanks to our high wages and strong currency (though not a good as it was a year or so ago) is not so good for people in a low wage economy.

When I was in South Africa early in the year the fuel was much cheaper than Australia on a direct comparison but i suspect the locals found it horrendously expensive.

At about 9 rand to the dollar I also enjoyed the best steak I have ever eaten in my life for under $A20. I daresay the waiter who served me was probably getting the equivalent of a few dollars an hour. If that.

But that is not to say that fuel pricing in Australia is a mystery. There has never been a politician of either party who has had the wit, or the gumption to try and unravel that mystery.

Cheers

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Follow Up By: rocco2010 - Sunday, Nov 02, 2014 at 15:26

Sunday, Nov 02, 2014 at 15:26
...
But that is not to say that fuel pricing in Australia is NOT mystery...

Repeat after me: Read it three times before hitting submit.

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Reply By: kevmac....(WA) - Sunday, Nov 02, 2014 at 16:45

Sunday, Nov 02, 2014 at 16:45
The major problem with our fuel pricing is that it is linked to the Singapore price. So firstly we would need to find out how they establish their price i guess !

Over here in the west I would like to know how they can charge $0.74/75 in Perth for LPG yet only 400kms away in Albany, customers are asked to pay almost 30 cents more per litre. It cost 30 cents per litre to transport it here????? Come on now !!!
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Follow Up By: kevmac....(WA) - Sunday, Nov 02, 2014 at 16:47

Sunday, Nov 02, 2014 at 16:47
... and no i do not drive an LPG vehicle
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Reply By: get outmore - Sunday, Nov 02, 2014 at 21:37

Sunday, Nov 02, 2014 at 21:37
gotta say 12 months ago we didnt see fuel anywhere near the prices you mention from memory the cheaper places were about $3.80 and up from that to about $5
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Reply By: Albany Nomads - Sunday, Nov 02, 2014 at 23:31

Sunday, Nov 02, 2014 at 23:31
So here's a question
While being self sufficient in fuel sounds good, even if we were , Australia has its fuel price based on international prices
Eg: if it can be sold for more overseas that the price they charge us locals
We will always pay more if we are based on international fuel prices ?
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Follow Up By: Alan S (WA) - Monday, Nov 03, 2014 at 11:34

Monday, Nov 03, 2014 at 11:34
AN

It is a global commodity so why sell it in one market at a low price when you can get a higher price some where else.

But also hydrocarbons coming out of the ground are made up of a number of components ranging from the components for ULP right through the heavys that are used for bitumen. What typically comes out of the Mid East is heavy, where as most of Aust oil is lighter.

So if we just used our own oil, we would get a lot of wastage in the lighter componets and would still need to import oil for heavy uses.

So a lot of ours is sold Overseas and blended with other countries outputs.

Alan
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Follow Up By: Member - batsy - Monday, Nov 03, 2014 at 13:32

Monday, Nov 03, 2014 at 13:32
Alan, as Australia's oil production is mostly light crude I would have thought it was better for cracking to diesel or petrol as it gives a better yield per litre with less costs involved. Years ago I like many I suspect used "light crude" straight from the well (cleaned of course) in my diesel engine. Unfortunately Australia is tied to Singapore crude pricing & this has a negative effect on our internal price structure.
Cheers
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Follow Up By: Alan S (WA) - Monday, Nov 03, 2014 at 14:49

Monday, Nov 03, 2014 at 14:49
Batsy

I would say in theory you are right in that better for cracking to ULP & Diesel with better yields and therefore lower cost. But it would depend on the waste and output. Would it provide the market requirements for both. And would there be a market for the remaining products.

You would still be up for paying a global price as why would any one sell locally for a low price when you could sell for a higher one. So i dont think even uncoupling from Singapore Tapis pricing would see much reduction in our prices.


Alan
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Follow Up By: The Bantam - Tuesday, Nov 04, 2014 at 08:16

Tuesday, Nov 04, 2014 at 08:16
Alan that assumes that we are refining it here.

ALL the fuel companies are shutting down refineries in this country.....no one has built a new refinery in this country in decades...thus we have relativly small and inefficient refineries that have their days numbered.

We are getting large volumes of fuel shipped in from asia in particular Singapore.

I believe it is a matter of national security that inspite of having many plentifull resources, we process very little of it here and when we get it back we pay over the odds for it.

In QLD we have a gas fired power station that was built with government subsidies......it has or is due to be shut down because the company that runs it and extracts the gas can make more money selling the gas overseas.
SO we are deprived of this clean and economical soucre of power......the shortfall will be replaced by burning coal.

So much for the world economy.

cheers
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Follow Up By: The Landy - Tuesday, Nov 04, 2014 at 09:28

Tuesday, Nov 04, 2014 at 09:28
Bantam

Not really a national security issue as we import most of the oil, if not all that is refined into petroleum products. Australian oil doesn't cut it for refining in the Australian refineries.

So we are already exposed from a security perspective given the oil is imported...

cheers, Baz - The Landy
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Follow Up By: Member - batsy - Tuesday, Nov 04, 2014 at 10:10

Tuesday, Nov 04, 2014 at 10:10
Baz, you mention that Australian crude doesn't cut it for refining in the Australian refineries when in fact it does & does so extremely well. The problem exists with price. The Aussie light/sweet crude is able to be sold on the International market at a very high premium thus giving the producers here a far greater return than if sold to the local refiners.
If all previous eight (?) refineries were still operating here in Australia we would still have a net shortfall of product of some 40-45%. By 2025 this shortfall would be in the region of 70+%. The oil companies (refiners) are investing in refineries in the areas of supply & Australia doesn't have enoughreserves to warrant even one refinery.
The Govt. white paper currently suggests that all of Australia's refineries will become net storage operators for refined finished product sourced from Asia & the US. This is "supposed" to make our prices at the pump lower.
I won't hold my breath while Shell/Coles & Caltex/Woolworths are the dominant players.
Cheers
Batsy
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Follow Up By: The Landy - Tuesday, Nov 04, 2014 at 10:44

Tuesday, Nov 04, 2014 at 10:44
Yes, perhaps I could have qualified it to say that it is more beneficial economically to send it offshore, notwithstanding we have an oil deficit in any case.

We won't have any refiners in Australia in the future, the cost of upgrading the plants isn't worth the investment...

Cheers, Baz
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Reply By: mikehzz - Tuesday, Nov 04, 2014 at 18:55

Tuesday, Nov 04, 2014 at 18:55
What is very alarming about the US is the rate at which they use the fuel. They have only 5% of the world's population but use around 25% of the world's fuel. I like Americans but they need to put the price up so they use less in my opinion. It works in Europe, fuel is quite expensive there and this leads to more fuel efficient cars and makes alternative energies more viable.
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Follow Up By: Blacksta - Wednesday, Nov 05, 2014 at 22:29

Wednesday, Nov 05, 2014 at 22:29
Australia's oil reserves per head of population are more than double that of the U.S.( I hope my maths is correct) Maybe they'll have ours when theirs runs out first. If i was Canadian i'd be a little wary ,They've got heaps more per head.
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Follow Up By: mikehzz - Wednesday, Nov 05, 2014 at 23:26

Wednesday, Nov 05, 2014 at 23:26
If things ever get tight, then whoever has the biggest stick will take whatever they want.
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