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      06-20-2008, 11:56 AM   #20

Drives: M3 Coupe
Join Date: Aug 2007
Location: Near Perpetual Rain

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Originally Posted by Purgatory View Post
I have to admit that this thread shows almost a total lack of understanding of how gas (as in gasoline) prices are determined. I work as a oil trader for a large multinational O&G company here in Calgary, AB. For those who don't know Alberta has enough oil in the ground today to supply the current WORLDs demand for oil for 50 years, (that's right I said 50!). Gettting it out of the ground is another story but we have access to about 65% of this currently.

Yes, it is true that high oil prices generally trend with higher gasoline prices, but they are not the direct contributing factor. In simple terms, there are two factors that impact gasoline prices the most, they are TAXES & REFINING CAPACITY.

Want to lower the price of domestic oil? The US needs more refining capacity, and in europe the US needs to stop blocking the flow of oil from Iran to countries that can refine it (Turkey, Turkmenistan etc.). It would also be great if China and India would adopt a higher gas tax, which would also serve to reduce demand.

Second, I am looking a research today that shows US gasoline demand is decreasing. Which of course isn't a big shock given falling housing prices, increased gas prices, decreased appetite for big SUVs, and a general weakening of the USD and economy as a whole. In the next few months I would actually predict a decrease in the overall US gasoline price but I am thinking more like .50-.75.

Please note that I am seperating out the political problems of allowing Iran to do whatever it wants. for instance allowing a pipeline from Iran to Pakistan would be in violation of current US sanctions etc. Even though it is badly needed.

Second, don't be upset with O&G companies, as we make almost nothing from downstream operations (putting gasoline in the pumps). Most of our money is made though marketing refining of petroleum products (midstream), and upstream operations which is getting the oil & natural gas products out of the ground.

If you read this post all the way through, I am impressed. Although, if anyone has any questions on how these things work let me know as I do this for a living.
At least we have a worker chiming in. And yes, the lack of refining on our part is part of the prob. We seem to have our hands tied by our government though, and it seems it may be getting worse on our front soon. Its been proprosed to drill more again, but its also been said that it will not help soon enough by the opposing side. Sounds stupid, it is, but its just really frustrating for all of us.