Where is the US economy headed?

It looks like state and federal taxes make up $.62c (or 14.4%) of the total cost per gallon. It's probably the lowest tax rates of the developed countries, and the reason gas prices have remained relatively lower. The condition of our roads and bridges are the result.

I got my data from a quick google of "cost of a gallon of gas in 2011." I suspect there is a better explanation to be found for the fluctuations in refining cost and the distribution costs. It does not happen to be a sub-topic I am following right now. Maybe later.
Profit at the convenience store is typically at the low end of the spread, I think.

That's because the state and local taxes keep being stacked on top of the price per gallon. Same thing goes for a pack of cigarettes.

Can't blame the tax rate entirely for the condition of our roads and transportation systems. California keeps swiping money from the transportation fund to help fill the holes in the general fund.

One question I had always had is why, if as I hear is correct, that most crude oil supply prices are lock up in long term contracts and have nothing to do with the rapidly changing spot market for oil price the spot market prices still have such a large and rapid affect on our price of energy.

That's true too! But all levels of government has a way to "steal" money from sources that are supposed to be dedicated to what the tax collection was authorized for.

That is a good question, BillRM. Let me give it a shot.
Short term speculation in a commodity such as oil is considered "bad." Politicians and some economists deride the impact it can have on markets. That is not the issue that I am talking about here.
Suppose though that you are the US Postal Service or FEDX. Fuel is a big component of your cost. You can't go changing the price of a stamp or the cost of delivering a package from Amazon on a daily basis. You need to set a price for the next year. So you (the USPS or FEDX) have economists who try to project where the price of oil will go in the next year and then you sign contracts (with speculators) to get that oil at a set price.
If you at FEDX come to a different conclusion then the economists at UPS, you may win or you may lose. So it goes.
Does that make any sense?

Airlines do the same thing; they have to speculate on oil prices to stabilize the price they pay for fuel, because that's one of their biggest variable expense.

When the price of gas goes up to and over $4/gallon (Californians pay this now), demand drops and supplies increase. If and when it goes up to $5/gallon, demand will drop dramatically.



The problem with higher gas prices is how it affects our economy, because consumer spending will drop, and our GDP will also slow down. Since consumer spending makes up 70% of our economy, any price change in gas prices affects our total economy.

Oy. Markets around the world had a bad day today down 1.5 to 2% in Asia, Europe and the U.S. While much of it was blamed on another concern about a possibility of bond defaults in Greece (anyone remember the Perils of Pauline?), there is new concern about the possibility of recession in Europe and reduced growth in Argentina and China.
As noted earlier, oil dropped close to 2%.

Actually John it is a species of hypnotism. Instead of a shiny object being swung from side to side with a mush muttering mumbo-jumbo in a mesmeric monotone you have technical explanations couched in language of incomprehensible incantations guaranteed to impress any lower-middle-class doxie, at a barbecue or cocktail party, sufficiently to get her to put out.

It's not only the Greece problem that's affecting world markets. China is also slowing down, and their pay structure is increasing fast relative to world labor costs.

The interesting diversion from all this bad news is the fact that the US economy is slowly showing improvement in most sectors of our economy.

We'll have to "wait and see" what happens through the summer months to see if the bad news from Greece and China will affect our economy. Most economists are looking at improvements for the US through 2012.

If consumer spending makes up 70% of your economy why don't you consume more in order to get back to 4% growth?

How do you define "economy" ci? Are blow waves for grannies and pedicures for posh A2Kers counted.

Can you not order them to have these things twice a week instead of just once?

Thank for the post however my point is that most contracts for oil or what ever do not come due over a short periods of times so why would short terms increasings in spot market prices had such an immediate affects on such things as the average price of gas at the pumps.

Is not most of the price of the bulk of the oil being used at any given time to product gasoline been set to the refineries in contracts long ago and any short term price changes should only raise the cost of a small percent of the oil being used to produce the gasoline.

Is that right ci? Who'd a thowt it? I am indebted to you for such a brilliant insight. The scales have been lifted from my eyes and I feel sure other A2Kers will have had too.

That you are not working on the President's economic team amazes me.

hmm. Good question. I think I think I know the answer to that but I will have to ponder a response.
I am following the Repub Super Tuesday thingee tonight. I will try to be back tomorrow.

The ADP report for February is teasing another good job growth month - they predict 250k+ jobs.

Cycloptichorn

Adding jobs creates more jobs, because it increases demand for more products and services. Established businesses can add staff to meet the higher demand. We're seeing two years of job growth now, but the problems in Europe and China will not be good for sustaining the current growth.

What's the problem then? What's a job? For the tenth time. What does that tripe mean if you don't know what a job is.

Study economics and simple English words.

I think they are simply looking at the replacement cost of each gallon sold. It is most likely to their advantage to use spot market on the way up. It has been noted before that gas prices go up like a rocket and come down like a feather. Maybe the marketers are not being consistant in chosing a benchmark.