Fuel Prices, here we go again :)

Is it the full strength stuff? It's still mid to high 20's in Sydney. Mike

G/Day Jon

Yes it's a mystery, up here at Elanora on the Gold Coast there is a Woolworths Servo that is always 4 cents a litre dearer for U L P, when they give the so called discount they are same as the dearest servo in the area, their site is located in an area where there is no opposition and near a on ramp to the M1, you see motorists cued up to by their fuel thinking they are getting a bargain, as for their diesel prices they are always charging the maximum with hardly any change, I fill up both our vehicles at the Matilda Servo at Tugun, most times it's the cheapest on the Gold Coast they have a very big turn over.

Cheers

Hey Wato,
Thats a pretty good price mate, If I give you my FTP details to my server, can you upload a lazy 1000 gallons or blu tooth me some?
Cheers :)

Morning Daza,
I think people blindly believe the Caltex Woolies servos are the cheapest, which as you know there not. The one in Grafton has cars everywhere on Thursdays, haven't put their diesel in for about 3 years now, then again we don't shop at Woolies.
Mark G will confirm this, 2 Easters ago at Evans Head the servo in town was about 10 cents cheaper for the whole weekend than the United at Woodburn on the H/way. A lot of campers traveled out to the H/way only to find that the one in Evans was cheaper, in doing so would of lost the difference in price anyway :)
Cheers.

Hi Mike,
Does Adelaide have a refinery? If it doesn't it would mean it still has to be either shipped by bulk carrier or road transport. Hmmm
It was one of the first things to cross my mind when they couldn't block the well from leaking. If every liter had 5 cents put on it, how much would that raise?
I realize the government can't set fuel prices, but they aren't going to be hassling the Oil Co's when they benefit soo much out of higher prices.

Never mind Tassie On Bribie Island fuel can be up to 15 c a litre more than at Caboolture which is only 20km away and over a bridge as well.

Cant tell me that cost is justified.

I never bought fuel on the island in the 7 years I lived there.

Hi Baz & Graham,
Refer to my post above in answer to Wato & Daza about the price difference between Evans head & Woodburn, Crazy stuff.
I've thought for along time now that the transport excuse for price differences was a crook.

¨i don't think we will ever be able to come up with the correct answer as to why we are charged what we are.¨

Actually the answer to quite simple: The oil companies charge whatever amount they think they can get away with.

When I worked for one of the major oil companies years ago, I had the opportunity to have contact with some of the young trainees that were sent out to Aus. from the head office in the States. Some of the insights they let slip would make your hair stand on end. e.g.

When the oil monopoly in the USA was broken up years ago, the execs. established the price (wholesale). The formula was in simple terms - costs plus profit margin, plus 1000%. (Yep, I have the correct number of zeros);

One guy made the statement: the money is made at the well head. We pull the s**t out of the ground so we have to get rid of it. If we could get away with it, we would happily pump it back down another hole and later suck it out again;

In the 1960s the powers that be determined that the world currency would be, not the US dollar, but OIL;

In the 1970s there was a meeting of oil engineers in Austria. (These are the guys who are on the coalface). They reported there were enough known reserves to keep the world supplied, including anticipated increases of use, for at least another 200 years;

Kissinger made a deal with the middle eastern oil producers that the USA and western world would buy all the oil produced, but the Arab countries had to buy the US debt!;

Enough oil has been found on one island off Alaska to supply the total requirements of the US for the next 200 years; Since then there are reports another island in the same area has reserves even greater;

Every morning the price of a barrel of oil is determined by ´faceless men´ in London, and that price is conveyed to all the oil producing countries;

The profitability of the refineries is a controlled profit. Funds can be shifted around the world simply by sending tankships of product from one country to another at a certain price, and then importing back a similar (or lesser quality) product at a significantly reduced price;

And there´s more, but that´s surely enough for one headache!

Finally, remember the golden rule: he who has the gold (oil is black gold) makes the rules.

Apologies if I have spoilt anyone´s day.

cheers
John

Hi John,
Last year, If my memory can be trusted LOL, was a story about an oil pltform in the gulf of New Mexico, Can't remember the name of it, anyway one of the workers mentioned that the rig cost 2 billion $ and that it would pay for itself in 18 months.
It is part owned by several oil companies. It walks across the sea floor. Wich I could remember it's name.
Here is a scary bunch of numbers, How many active platforms are in the Gulf of Mexico? Manned: 717, 244, 819. Unmanned: 4000
http://deepseanews.com/2010/06/oil-platforms-in-the-gulf-how-many-and-who-owns-them/
That site has many links that are interesting, Hmm
"but that´s surely enough for one headache! "
My head aches anyway and thats with out thinking LOL

Cheers.

This is often where the discussion goes awry.....

Exploring for oil, finding it, and pumping it out of the ground can be very lucrative, and it is where the money is made. But don’t confuse it with the business of refining it into a product that you can use to run your machinery as that is a completely different (low margin) business.

There are many refiners who are not oil producers, and Caltex in Australia is one example.

As for price setting mechanisms, sure OPEC can influence the direction of oil prices over the medium to long term by turning on/off the pumps, although there are many countries operating outside of this organisation that makes it more difficult for them (OPEC) to do this today.

But as for ‘faceless’ men in London setting prices on a daily basis; the reality is that oil is an actively traded commodity on futures exchanges with users, producers, and speculators all actively engaged in the market. Ultimately it is this market that sets prices......

As for shipping cargoes around the world by tankship; it is rare that one can do this simply because of the cost of shipping and insurance, but oddly enough the ‘arbitrage window’ has opened recently. This is when the discount of Asian (East) diesel prices to European (West) diesel prices is wide enough to ship cargoes from the East to the West, after freight costs. The East/West diesel spread has been driven wider by the glut of stocks in the East, and the scheduled autumn refiner maintenance in the West. But rest assured, this is rare and the arbitragers will close the gap very quickly – another example that market forces are at work, not ‘faceless’ men setting prices in London.

Cheers, The Landy

¨that is a completely different (low margin) business.¨

It may be a different entity that does the refining, but the oil industry has made itself sufficiently complex that tracing the connections is extremely difficult. The refining and marketing end is low margin because its margin is controlled by any number of factors.

Just one of those factors is the shipping intercountry of product. I got to know of just one incident where a tankship load of a premium base oil was shipped out to the same company in another country at a designated price. The same tankship loaded up with in inferior base oil and returned to Aussie. The price charged for the inferior product was about 3 times the price charged for the premium oil. Why?? Simple. Follow the money. It is a ´legitimate´ way for the company to transfer funds from one country to another. And it occurred at a time when there was a severe lube oil shortage here. I have no doubt that that was not an isolated incident.

)Caltex in Australia)

Yep. Know them well. The quotes I gave came from at least one of the exec. trainees sent out from US. His words were: ¨WE pull the stuff out of the ground.....¨

¨as for ‘faceless’ men in London setting prices on a daily basis; the reality is that oil is an actively traded commodity on futures exchanges..¨

It might be an actively traded commodity on exchanges. However I was referring to the price that is paid to the producer who pulls the stuff out of the ground. As I mentioned, the oil industry setup is purposely complicated. Oil sales do not just go directly from the well head company to the commodity exchanges to the refiners. There are middlemen (more than one), and, like in other industries, this is where most of the profit is taken.

¨Ultimately it is this market that sets prices...... ¨

And do you think for a moment that these prices can not be manipulated? Heck, even in Reagan´s time as US president, a high level group was set up to intervene when necessary in the Stock Exchange. (Commonly referred to as the Plunge Protection Team.)

To get another look at the dirty oil industry, just do a search on youtube.com for ¨Lindsey Williams¨, in particular ¨the energy non-crisis¨.

cheers
John

Morning Bob,
AHAHAHAH
Mate, I'm not so much as whinging about it, even thou I'm not happy about it, I'm trying to understand it, and make sense of why the differences.
Mate your right we can't change it, and those that can wouldn't care if fuel was $2.50 a liter.
The Oil Co's tell us what ever they like because they also know we can't change it, the Pollies can't change it either.
The Stuff is a necessary evil, and our reliance on it is our down fall.
Talking to people that don't live where they have a lot of competition feel screwed. As the cost of living rises, and this is also through higher fuel prices/transport, which effects everything, most people are tired of being a endless money pit for Governments/Councils and multinationals.

Sorry, had to reply,
You forgot to add: This post will self destruct in 5, 4, 3, 2, 1,

Cheers, Have a good one. ;)

Jon, i hear what your saying though i may add the EFFING GOV have us scewed all over & it wont get any better who ever is there.
Oh crap i sounds like the FUEL prices & the BLOODY weather,SIGH.I am sore from being SCREWED.:(

Have a good day.:)

Bob.

The Oil Companies are the only mob that can get away with it, we are in the Plumbing Business and all our suppliers send us e-mails at the first of the month re: price increases so we know what to charge ect, we only contract to the Federal Govt, but our material turn over is frightening, and it's good to know were you stand, we add on our percentage ect and those rates are set for the month, we don't use a lot of fuel so it dosen't effect us that much, but some of the Courier Businesses we deal with don't know if they are comming or going re fuel prices, it's a lottery.

Cheers

Certainly is a lottery.Can't wait till the Hyundai's coming out in 2015 with Hydrogen running their cars only some but should be full production 2018 they were saying on the box last week.
Will be interesting to say the least.


Bob.

Hi Landy,
How have you been?
Your right, it is a complex question and I guess I will never fully understand it.
I Believe your right to say "need to be a major revamp or most of our fuel will end up being imported" Our demand far out strips supply as it is.
Hope you haven't opened another can of worms with mentioning "The Carbon Tax" , A lot of people have NO IDEA how this will effect their lives. So I'll drop that hot potato l right now. ;)
Yes BP shareholders have already taken a hit from the spill. In regards to insurance, you have to go no further then after a couple of natural disasters to see increases in policies.
What we see at face value at the pump with pricing is inconsistencies from month to month even week to week. We all tend to watch the barrel price and our dollars value more so than we did ten years ago.
What a lot of people don't understand is, when the barrel price rises, the pump price rise is normally instant, overnight. Same as the banks raising rates. But when it swings the other way, there is no rush to drop the pump price, and I do realize the fuel in the ground was paid for at a higher price. I also understand we have to have profitable business to keep prices lower.
I guess to, it's like the banks, will tout about interest rates rising well before the reserve decides to raise them, so by the time they do we're all use to the idea. If you know what I mean ;)
Anyway, thanks for your thoughts.
Cheers

I’m very well thank-you!

It is frustrating to see prices vary from suburb to suburb on almost a daily basis, and it is probably the greatest cause of angst amongst consumers (us), but that is discounting at work, without that price tension we would be paying a higher price on average.

On banks, and interest rates, the way rates rises are articulated in the media or by the talk-back shock-jocks’ is far from the reality that banks face. And I can speak with some knowledge on the subject, but rather than go into it here let me simply say that banks’ funding costs are going to rise over the next few years, independent of any move that the Reserve Bank makes on interest rates, and there are a number of things that are going to influence that.

But also bear in mind that we only hear about the ‘borrowers’ woes, but what about self-funded retirees, or those with surplus cash. Bank deposit rates, and the way the banks have bid these rates higher in recent times to reduce their reliance on offshore funding has been a boon for these people....

The problem with housing finance and mortgages in Australia is that we all have houses that are far too big, built on blocks of land that are far too large, and it all comes at a cost best indicated by the average size of a mortgage......but I’m getting off topic!

Fuel discussions (or banks!) on EO tend to manifest into lots of angst, so I'll leave my comments at that, but clearly it is a topic close to everyone's...well wallet I guess!

Cheers, The Landy

Hi Andrew,

'Diesel prices are very much influenced by demand in Asia'
Yes, and if it is predicted that they will have a colder than normal winter, our price goes up at the pump.
Wasn't only a few months ago, diesel got to about 5-7 cents cheaper than ULP?
At the time I thought you little beauty, it's swinging back in my favor. Didn't last long :(

"so the Fed Govt is getting heaps of tax from vehicles that really should not be paying the surcharge"
Wasn't it about ten years ago or so the all governments were pushing for people to purchase diesel powered vehicles? Even motoring bodies like the NRMA jumped on the wagon pushing people in the market for a new car to consider a diesel powered one.

I understand your point, and I can remember Andrew, 1989, got paid Friday at 2pm, cash in a little yellow envelope, tax had been taken out. Jump in my XW 302 auto ute, head to the servo and pay my fuel & cig account, came to about 110 bucks, fill her up again, use to surf ever arvo when ever possible, would travel from Ballina to Ocean Shore looking for waves. Go put 100 bucks in the bank, go for a surf, go to the pub until about 10 pm go home rolling drunk and still have about 100 bucks in my pocket to get me through until the next Friday.
Hmmm, no mortgage, no kids(not that i'd be without them) and running around here there and everywhere with them,
Our money just doesn't seem to go as far as it use too, LOL

Hullo Jon

With respect to demand for diesel in Asia and China in particular, my understanding is that it is being pushed mainly by the significant growth in GNP which has been in double figures for some time (only dropping to single figure this year?) rather than cold winters, although this exacerbates the situation. The changes in production to more transport (diesel) consuming forms has meant that demand has been growing at at even faster rate than GNP.

I agree that often govt policy is contradictory - in this case re wanting to increase the use of more diesel passenger cars and yet keeping the surcharge.
One of the problems with having a diesel surcharge is that to remove it for light vehicles would require a 2 tier system - one for LVs, another for HVs. The Q is, how to do this efficiently and avoid rorting? Use a dye in the fuel? This is used in Europe for distinguishing heating fuel and up until recently, for diesel for boating. But it would require policing.

Mind you, some industries are surcharge free - mining, agriculture, fishing(?)

Regards
Andrew

You're right about demand in Asia & China has risen significantly in the past few years as their population & economy grows, it was only last year with a serve winter in some parts of the northern hemisphere that some commentators were using that as the reason why.

With, mining, agriculture, fishing(?) Being surcharge free, how do they(the authorities) determine & monitor this? is it because they buy bulk? and they can track diesel more easily within these industries?
Our tax system is so screwed it is wide open to rorting?
I don't know what the answer would be there.

Cheers

Your dead right,
I did read that some months back, but it hasn't made main stream news yet.
Again there is the government giving rebates for people to convert, only to be slug down the track.
OT, makes me think how they will screw me after I have 5.8kw solar system installed and fork out 30 odd K for it.