100LL

[Richie the C]

Has anyone else noticed that car gas is under $2 and oil is under $20 a barrel yet 100LL hasn’t budged off of $4-7 a gallon? You would think that even adding in the refining premium built into avgas that the price would drop some. Any thoughts out there in the ether?

[MooneyMitch]

$3.88 self-serve locally [SBP, L52, PRB].  Admittedly, as with our auto fuel, prices in our area are more than likely some of the highest in the nation, yet were are currently under the $4 mark.

My observations, fuel prices are quick to increase at any given time, yet quite slow to decrease.  And that could be based on the fact that a fuel vendor quantity load is purchased from a supplier at a certain price, and reductions might be reflected in the next load....... or not.  Just guessing here. 

I'm headed to airport this AM and I'm going to see if our per gallon price is under $2...............yeah, right, I wish.............

[toto]

My understanding from FBO folks is that their prices lag way behind the auto pumps because they buy in bulk, and don't do enough 100LL volume to take quick advantage of price breaks.  They're always paranoid about buying too much when the market is moving rapidly, but also paranoid about losing out on a deal.  I suspect that av pump prices will come down in a month or so if oil prices stay crazy low.

[carusoam]

This topic arises at least once a year with seasonal fuel prices...

What we learn... some places sell lots of fuel and their inventory turns over quickly...

Some places sell so little fuel, their prices are high already... and don’t turn over very much at all...

So expect a lag... in some places expect a BIG lag...

The guys stuck with high priced fuel will sell even less... making the inventory challenge even bigger...

 

Economics 102 kind of stuff... real life in strange economic times...

The cost of oil will have long term benefits for the end users...

 

The commodity price for gas is quite telling...

Have a look at this one year graph...

RBOB tends to hover around $2... the retail price is typically less than $3... and 100LL typically less than $4...

Fear of the economy stalling shows up  in the price of oil and gasoline...

Stretching this out over time... it looks like 100LL can approach $2 over time...based on today’s RBOB value...

This is a pretty extreme wave in the economy... don’t expect it to last...

When things are priced less than it costs to produce... factories shut down... quickly.

PP thoughts only, not an economist...

 

[GDGR]

2 minutes ago, carusoam said:

 

PP thoughts only, not an economist...

 

Okay.... I’ll bite. Just what the hell do you do for a living? You have a vast Cliff Cleven knowledge on a ton of material. Now I’m just curious.....

Mooneyspacer curiosity, not trying to start a fight. 

[MooneyMitch]

2 minutes ago, GLJA said:

Okay.... I’ll bite. Just what the hell do you do for a living? You have a vast Cliff Cleven knowledge on a ton of material. Now I’m just curious.....

Mooneyspacer curiosity, not trying to start a fight. 

Anthony is everything he humbly professes not to be.........

And, never, ever start a fight in MS.... another  !   

[carusoam]

I am a...

...non-stop reader/writer.

It says so in my avatar data fields. 

 

The thing that would be interesting... is to take this knowledge and be able to do something useable with it...

By the time we have discussed it here... it may be old news... sometimes milliseconds count...

Energy prices are similar to a stall horn sounding for the economy... 

A hedge fund manager (Bill Ackman) made 2Bln in profit this week... based on this knowledge... and some other financial strength he has...

Financial rules make it a requirement to publicly document this otherwise private detail...

The rules supporting this type of strange profit... are to balance the forces that promote economic bubbles... somewhere the balance gets pushed one way or the other...

PP thoughts only, not a financial genius...

Best regards,

-a-

[Parker_Woodruff]

Many gas stations handle their inventory far differently than FBOs.  Many gas stations don't even own their fuel inventory as opposed to many FBOs which purchase it by the truckload.

[N201MKTurbo]

As said above,

Auto filling stations set their price at the pump according to the spot market price Plus some fudge factor according to local competition.

The pump price of Avgas is set by what was paid for the gas in the storage tank.

So to reduce the pump price of Avgas buy as much of the expensive gas as possible to drain the tank!

[carusoam]

In many places... gasoline is shipped by pipeline...  going into trucks for very short distances...

Even shipping crude oil above ground has its safety challenges...

Best regards,

-a-

[N201MKTurbo]

Just now, carusoam said:

In many places... gasoline is shipped by pipeline...  going into trucks for very short distances...

Even shipping crude oil above ground has its safety challenges...

Best regards,

-a-

I believe all Avgas is shipped by truck. They cannot guarantee the quality if they put it in a pipeline. I don't think any of the feedstock gets there by pipeline either except from one end of the refinery to the other. So yes, all Avgas arrives by the truckload. The Avgas we get here in central Arizona is driven from the refineries in California directly to the FBOs.

That's why it cost so much, not what's in it...

[carusoam]

100LL is in the specialty chemical area... not much of a commodity at all... (I don’t believe anyways...)

Made to certain specifications... and screws up any other fuel it gets put in... requiring a clean-out process when it happens...

Similar to cleaning out our fuel tanks when improperly filled...

 

Didn’t mean to imply that 100LL would be shipped by pipeline... 

Best regards,

-a-

[RLCarter]

1 minute ago, N201MKTurbo said:

The Avgas we get here in central Arizona is driven from the refineries in California directly to the FBOs.

That's why it cost so much, not what's in it...

Transportation is a huge cost of 100LL, the farther away the more you pay. We use to get ours from 3 hrs up the road, they stopped producing aviation fuels an the prices went up accordingly 

[N201MKTurbo]

This price decline is as much the price war between the Saudis and Russia as the virus thing. The price would be tanking even if we didn't have the current craziness.

[GeeBee]

35 minutes ago, Parker_Woodruff said:

Many gas stations handle their inventory far differently than FBOs.  Many gas stations don't even own their fuel inventory as opposed to many FBOs which purchase it by the truckload.

Bingo! I've worked at both, was a fuel manager of an FBO. Your local Shell dealer not only does not own the fuel in his tank, the price on the street sign and pumps is controlled by Shell.....directly. He just collects the money. On the other hand, most FBO's pay cash on the barrelhead. You better have a check ready for the truck driver or he has "paid" on the off load bill. It used to really hurts cash flow to write a check for a load of fuel because it comes back so slowly. By the time you pay for the load, sell the load and get paid by VISA or AMEX (who take their sweet time) you can find yourself in a cash flow bind real quick.

Equally so FBO's do not have milk, beer and high margin snacks to sell. I was recently informed by a RaceTrac VP that their number one profit centers is....an ATM. Their number two is lottery tickets. He says, "gas is just to get you in the door."

 

[carusoam]

Really strange supply and demand challenges have occurred over the last couple of years...

 

Supply side...

(everyone benefits when supply is in excess... except the producers...)

The supply of shale oil has been increasing... making the US the largest producer of  oil...

Price being set by supply vs. demand... in place of OPEC deciding in Vienna... and how much to pump, by country... opec cheaters pump more than they agreed to...

It is always a question to who wants to be part of OPEC... and who wants to be outside (uncontrolled output)...

Russia seems to be able to pump a lot of fuel... Both oil and nat gas... And not want to be part of the OPEC team...

Each country has an average cost of production...

The US is not the cheapest Producer...

Trading with the Saudis has often include price control in trade for arms...

It has been Hard to trade arms with Russia... 
 

 

Demand side (economy driver)

When the economy is booming... fuel is in high demand.

An increase in price, leads to a slowing force... (felt by everyone...)

 

Combining supply and demand is important... (monopolies exist, and demand is often not accurately measured...) 

Oddly enough stock markets are driven by the price of energy...

Price models use the demand curve and mostly ignore the supply curve!  
 

Following these ideas... it is readily obvious why the stock markets have dropped so dramatically...

 

Now we add the real challenge underlying the price of energy...

Everyone sitting home because of CV19....

This has at Least temporarily destroyed the General demand of fuel...

 

The important follow-up... how temporary is this destruction...?

I can say personally... I’m ready to get out of this funk!

Getting past the virus is key...

Make it quick, and long term, pain free...

Stay healthy!

Best regards,

-a-

[larryb]

Maybe FBOs should start selling snacks and sandwiches.

[Davidv]

$2.78 at 28J here in Florida as well as new Smyrna beach.  I think it’s going to go lower by next week too.

[EricJ]

1 hour ago, N201MKTurbo said:

I believe all Avgas is shipped by truck. They cannot guarantee the quality if they put it in a pipeline. I don't think any of the feedstock gets there by pipeline either except from one end of the refinery to the other. So yes, all Avgas arrives by the truckload. The Avgas we get here in central Arizona is driven from the refineries in California directly to the FBOs.

That's why it cost so much, not what's in it...

My (potentially flawed) understanding is that one reason avgas doesn't go through the pipelines is because the lead will contaminate the pipes and ruin the purity metrics (which are tracked) for other, unleaded or lead-free loads.    So if we ever do get a lead-free substitute for 100LL, if it can be transported via pipeline the relative cost from transportation may come way down.

 

[aviatoreb]

2 minutes ago, Davidv said:

$2.78 at 28J here in Florida as well as new Smyrna beach.  I think it’s going to go lower by next week too.

Avgas?!

[Davidv]

12 minutes ago, aviatoreb said:

Avgas?!

Yes, and when I say lower next week I mean the other places in Florida that usually have cheap gas will follow suit as they restock with lower wholesale prices.

Edited March 28, 2020 by Davidv

[0TreeLemur]

19 hours ago, GLJA said:

Okay.... I’ll bite. Just what the hell do you do for a living? You have a vast Cliff Cleven knowledge on a ton of material. Now I’m just curious.....

Mooneyspacer curiosity, not trying to start a fight. 

According to a consent decree after his 20,000th post, Anthony ( @carusoam ) is the Dean of Mooneyspace.   First to welcome new folks, often first with the best correct answer.  Don't think Cliff Claven.  Think Dumbledore and you'll be closer.

Not a psychoanalyst.  PP-SEL IR only.

Edited March 29, 2020 by 0TreeLemur
props to -a-

[GDGR]

2 minutes ago, 0TreeLemur said:

According to a consent decree after his 20,000th post, Anthony is the Dean of Mooneyspace.   First to welcome new folks, often first with the best correct answer.  Don't think Cliff Claven.  Think Dumbledore and you'll be closer.

Not a psychoanalyst.  PP-SEL IR only.

I guess I should expect someone who resembles Gandalf to appear through a fog at OSH one day, only to reveal that’s its Anthony

[yvesg]

19 minutes ago, GLJA said:

I guess I should expect someone who resembles Gandalf to appear through a fog at OSH one day, only to reveal that’s its Anthony

I checked through my iPAD pictures and yes I do have a picture of Anthony from OSH beside Mike’s aircraft. Is it OK to post it here Anthony?

[Hank]

1 minute ago, yvesg said:

I checked through my iPAD pictures and yes I do have a picture of Anthony from OSH beside Mike’s aircraft. Is it OK to post it here Anthony?

Paging @carusoam. He doesn't keep the same hours as us normal mortals . . . .