Refineries in Mid-West Have Fuel Glut

[washer111]

Yesterday, at least in Perth WA, we had cheapest fuel in 11 years at US$2.42 per gallon. It jumped significantly today (Tuesday) due to how the fuel market works here, but will likely be at a similar price next Monday.

Reports are saying the fuel chains entered into a cut-price war, and were actually *loosing* money on a lot of transactions, in a bid to increase customer loyalty.

 

[launderess]

Depending upon where you are sitting all this cheap

Oil and gas is a good thing.

However for coal miners et al all this cheap home heating oil and natural gas is killing their living/business model. In fact cheap natural gas is killing oil home heating market as well IIRC.

Here in the Northeast property owners where a choice was available often went with oil because it was cheaper for heating. With the USA now swimming in natural gas it seems that equation has been turned on its head.

 

[vacerator]

Washer 111,

I suspect it's always been a manipulated commodity and market in some aspect.
I never understood why Australia always had higher petrol prices even when the US still had low prices. They were shipping crude all over the world then as well.
Perhaps General Motors had it's hand in with the oil companies, as they had here as well.
How? Well, for one, GM needed a market for it's compact Buick which it designed for returning WWII vets. After doing extensive market research, their wives said it was too small for US families facing a baby boom. Behold the Holden 48/12 FE.
Second, in 1973, Chevrolet engineers right here near me fitted a stratified charge cylinder heads similar to the ones on a Honda Civic to a 4,000 LB. fully equipped Chevy Caprice 350 V8, and it achieved 35 m.p.g. highway.
Of course, with our petrol prices reaching 80 cents per gallon in the midst of the OPEC oil embargo, it never came to market. Now what does that tell us?
Now GM, along with Ford says it's too costly to manufacture cars at all in Australia.

 

[vacerator]

But wait, there's more; Re; Holden, etc.

After my second cup of coffee that is.
In order to make a profit margin, a business needs either high volume, or a higher margin.
Not an issue in the USA then. With the higher fuel efficiency of smaller Australian cars in addition to a way smaller populous, for oil companies to profit they had to jack up the price for petrol.
Compact cars from the big 3 makers never came on the American market until 1960, at the time the first baby boomers were just old enough to learn to drive. Their parents were now middle class, and most could afford a second car, as the VW beetle proved as the first Import and had sales success.

 

[washer111]

Well, the other issue is our cost of living as a whole is just higher than the USA. Google the "average salary for USA" and then the same for Australia and you'll see what I mean. Just where our currencies work out to, and where the oil comes from (and which currencies are used) that probably count.
Add in the fact that we are no longer self-sufficient for fuel, and hey presto.

The way I see it, Ford and Holden (in particular) have been having issues for a long time. They have relied on the government protecting their industry with ridiculously huge tariffs, getting handouts and just hoping that the "average Ford/Holden family" is going to keep buying.

The thing is, I think Holden/Ford left it too late with introducing a feasible medium-sized car like the Camry, which had the option of a I4 or V6 (the latter actually making the Camry a "large car" by Australian standards).

Still, they're both interested in pushing large sedans like the Commodore (with V6 or V8 engines straight from Chevrolent/Buick) and the Falcon (I6), neither of which are particularly frugal in comparison to the competition, more so historically.
Coupled with rising fuel costs, increasingly tight city parking and better competition (which was often built quite a lot better and didn't nickel and dime the owner for its lifespan), have resulted in these two leaving the Australian market.

While I feel sorry for everyone that lost their jobs (including at Mitsubishi and Toyota, too), I have to say "Serves you right" to Holden and Ford. Build what the people want to buy, not what you want to keep building for 'historical value,' and rely on the government to save your behinds. Thats not business, its laziness.

The European manufacturers, despite costing a fortune due to their luxury-orientation, are still largely assembled and partly manufactured in Germany and other countries. These markers have diversified their products from the zippy, no-frills vehicles, right up to the fully-loaded, top-of-the-range, fuel-guzzling sedans some people want. Business is booming. There is no reason we couldn't do that too, except the market locally was a no-frills fuel-guzzler, or an "even bigger" fuel guzzler with all the modcons.

 

[tomturbomatic]

That is what happened here in the US in the mid 70s to mid 80s. Car makers had been running the show for so long that they refused to respond to people's desire for smaller, more economical cars when the cost of gas went up so the people went with Japanese cars. Auto workers lost jobs and towns went bust because the executives refused to change production to match the needs of the times.

 

[vacerator]

USA, petrol, curremcy, cost of living, cars,

A few years back, all we heard was how the minimum wage in Australia was $15 per hour.
So I figured skilled and higher educated people do way better than here.
I knew housing was more expensive.
A 30 year fixed mortgage here now is about 4.5% with 20% down.
As for cars, A Camry is full size here as well. Also not inexspenive.
US car makers did respond in the 70's with smaller models, but they were not roomy, because they were rear drive.
Design and quality eventually caught up with Imports from Asia.
What killed them was over outsourcing, so I only applaud Australia for protecting it's auto industry as long as it could.
Flint Michigan lost a two mile row of Buick and Chevrolet plants, and does not even have safe drinking water today. Tainted with high lead concentration.
Hind sight is 20/20. When the Holden EJ and HR models debuted, they bragged about 92% domestic content.
Can't means wont. China's labor is cheaper and that is the bottom line.
It bit us back in the US with 15% unemployment last decade in several states.

 

[davey7]

I've been hearing that India is also driving demand for oil and that they are changing how oil is priced (more volatility due to less reliance on futures, iirc).

As a sidenote comment about Australia. Long term Australian friend of mine came with her husband and daughter to visit the States a couple years ago. He was originally from Nepal and now, obviously (or not) married to my friend and living in Australia. One of our mutual friends felt he was on a "scouting" trip to the US to see how they would like it here (I think it was his dream to see Hollywood). He was shocked at the low wages for his job as well as most other jobs he would have been able to get as an immigrant - he was asking our friend, what do people in this store work, and this one? . The job he has in Queensland plus hers allows them a middle-class lifestyle with an owned home, cars, etc, while they would be struggling here. I think he realized they're in the right place for them. I'm not sure where this is going, so I'll shut up now.