Exxon sad as gas prices fall in July by Microsoft Windows NT

Filed under: Products more services, Exxon Mobil (XOM), BP p.l.c. ADS (BP), Economic record, Oil

Gas prices have fallen 17 cents over the last two weeks, according to an AP report this morning. The average price is currently $2.88 a gallon for regular gas. Crude oil prices also eased a bit this morning, to $76.66 per barrel, down from over $77 last week. Analysts have connected the reductions to the calendar -- we are past the peak of the US summer vacation driving season -- and the lack of external shocks like hurricanes.

Gas prices peaked at $3.22 in May. These high prices contributed directly to the staggering $10 billion in profits reported by Exxon Mobil Corp. (NYSE: XOM). Presumably, there is some sadness in Houston as executives contemplate clearing only $9 billion this quarter. However, lower profits are not a sure thing. Gasoline retailers like Exxon can still rake in the profits even as gas prices fall. This is because a) gas prices are still quite high, and b) retail prices tend to fall more slowly than wholesale prices. Unfortunately for consumers, gas prices rise faster than they fall. As economics professor Richard Gilbert says, "Prices go up like a rocket and come down like a feather."

Further, the major producers charge more for their gas. No name gas is usually cheaper. Major retail suppliers like Exxon and BP (NYSE: BP) insist that their gas is worth a little more, because it has special additives that help clean a car's engine. But according to this piece at SmartMoney.com, virtually all gas has additives now, and the difference is frequently the addition of an additional quart of detergent in an 8,000-gallon tanker truck. Somehow I doubt that makes the higher prices worth paying.

If you need help finding the cheapest gas near where you live, there's an interesting site that can help: GasBuddy.com. It includes a gas temperature map that shows prices all over the country. The map shows that Ohio has the lowest prices right now, with lots of gas being sold at an average in the $2.60 per gallon range, and that gas is cheaper in the south for the most part. People living in the big coastal cities, though, are stuck paying the highest prices, still over $3.15 a gallon in many places.

 

Permalink | Email that | Linking Blogs | Comments