Low Gas Price how long

brien23

brien23

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Brien
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How long will gas prices be as low as they are. Many blamed the high price of gas a few years ago as the demise of GA, now that the prices are low why has GA not recovered. I am sure someone will say GA is in great shape and recovered with lots of planes flying and things are as good as ever.
 
It depends on how long KSA needs to leave the throttle open on pumping, and I suspect that's going to be a while longer. The drop in gas prices hasn't really been reflected by a drop in rental costs around here that I've seen.
 
Henning said:
It depends on how long KSA needs to leave the throttle open on pumping, and I suspect that's going to be a while longer. The drop in gas prices hasn't really been reflected by a drop in rental costs around here that I've seen.
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Sure makes 400 mile trips with a MoGas STC awful cheap at $2.40/gallon.


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GA recovery is very very slow, whereas a decline can happen overnight.
 
Auto gas has dropped like a rock, but 100LL is steady at last month's price. I can get no ethanol for $2.25 (down from $2.60 last month) for my car, but 100LL has not changed.
 
Kiddo's Driver said:
Auto gas has dropped like a rock, but 100LL is steady at last month's price. I can get no ethanol for $2.25 (down from $2.60 last month) for my car, but 100LL has not changed.
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The price of AvGas doesn't usually drop until the tank runs dry and gets refilled.
 
It hasn't dropped much up here. Here and there we find $4.99'ish 100LL. Still many over $5/Gal. even been to quite a few recently that charged me over $7/gal.
 
$4.06 here at DMW. C'mon over...
 
If you rent a single engine light airplane that burns 8 gallons an hour, a $2 change in price either up or down is a $16 an hour difference. If the rental costs $120 or more per hour, would the $16 up or down cause either a demise or huge recovery? I would not think so. It would make a difference no doubt in the total hours flown but I think it would be somewhat marginal. Fuel costs are only one factor in the cost equation. Now if you are the owner of an aircraft that is bought and paid for and easy to maintain, then yeah it would be a higher percentage of your operational costs but still not enough to keep you totally grounded.
 
I filled up my car this morning for $1.859 per gallon. I could really get used to those prices.
 
Keep an eye on two things, crude oil inventory and the crude oil futures market. If inventories drop then prices will increase soon. If futures go up then there has been a real or imaginary change in supply or demand and prices will go up.

When will things change? I'm thinking it's about a year out. The industry has worked through the backlog of wells to complete in the Bakken and drilling has dropped. Supply out of North Dakota will start declining steeply now and take about a year to have an effect on prices.

There are some big wildcards out there: war on ISIS, Iran's return to the world market, other OPEC countrie' cash flow planing...
 
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Prices will stay artificially low,till I got out and buy another twin,or big engined single.
 
Clark1961 said:
Keep an eye on two things, crude oil inventory and the crude oil futures market. If inventories drop then prices will increase soon. If futures go up then there has been a real or imaginary change in supply or demand and prices will go up.

When will things change? I'm thinking it's about a year out. The industry has worked through the backlog of wells to complete in the Bakken and drilling has dropped. Supply out of North Dakota will start declining steeply now and take about a year to have an effect on prices.

There are some big wildcards out there: war on ISIS, Iran's return to the world market, other OPEC countrie' cash flow planing...
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There's another interesting wildcard in the mix, tanker capacity. A lot of tankers are under lease right now storing cheap crude, and there is starting to be a bind for capacity for immediate delivery. Interestingly enough this hasn't particularly affected the charter rates significantly, yet. It'll be interesting to see how KSA manages to keep pumping full throttle with China cutting contracts, and storage and refining capacity limited.
 
I haven't seen much a 100LL price change around here. Still at $6.10/gal.
 
LevelWing said:
I haven't seen much a 100LL price change around here. Still at $6.10/gal.
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How much gets flowed, and how big is the tank? Although unless it's a big tank and barely any usage, you would think the cycle would have caught up by now.
 
Henning said:
How much gets flowed, and how big is the tank? Although unless it's a big tank and barely any usage, you would think the cycle would have caught up by now.
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I'm not sure how big the tanks are, but there's two big FBO's here and it's a very busy airport, to include commercial traffic. I think once the FBO's realized that the pilots would pay the $6.25-$6.50 or so that it was before, they didn't need to lower it a lot. Lower it enough to show that the price is coming down a little but still increase the profit margin.
 
I haven't seen much a 100LL price change around here. Still at $6.10/gal.
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Where is 'here'?

Auto gas in Benbrook, Texas; someone posted a sign, "$1.69", today on FB.
Bought avgas $3.75 Sunday T82, central Tx.
 
3.80 for LL at the cheap airport here. The rest are around $5/gal
 
I think it may be fruitless for people to plan their airplane purchases based on the price of oil. It seems as if the prices go up and down at shorter intervals than many people own them. Not to mention the fact that these changes are unpredictable, at least to me.
 
In Renton (Seattle) AVGAS is about $5, autogas (off airport) is around $2.50.

I've seen rental rates at the FBO come down $10-15 on the 172s, which would be nice if you could find an open spot on the schedule.
 
Mx is a much larger share of the costs, due to the inflated price structure of parts and labor-hours required by the government in order to legally fly these old contraptions. I don't begrudge the shops labor rates, but at automotive-equivalent rates, the hours required are simply much too high for the hull value and utilization rate of these things.

As has been highlighted before, if you own a very simple airplane, fuel will be a larger share of the total operating costs, but it's still low enough that variations of a dollar won't fundamentally affect the overall yearly cost. MX is the game killer here. That's part of why 100K exAB 2-seater kites gain more traction than 50K piston twins. That is also why rental costs are not budging.
 
To paraphrase the reality: The date the 100LL is sold has no relation to the date it was produced. The price paid relates to the oil price at time of production + transportation cost +storage cost. Therefore, 100LL is never as expensive or inexpensive at would be in the "normal market"

I read somewhere that 1 year of 100LL for the entire GA fleet is produced in 1 week of refinery time, and then they purge the lead and go back to business as usual.

Get out that google button and see what you you come up with.
 
If you can predict this then you belong on Wall Street where you will make many millions. No one knows.
 
Henning said:
The price of AvGas doesn't usually drop until the tank runs dry and gets refilled.
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Acknowledging that this is an accurate observation, I can't help but wonder why it works so differently than the market for auto gas. That price will drop quickly even between station re-fills. I am not familiar enough with the various factors in play to noodle this one out. I suspect it's because its easier to drive to the next station than it is to refuel your plane if you are low on fuel such that they have more of a captive market. But I honestly don't really know.
 
PPC1052 said:
Acknowledging that this is an accurate observation, I can't help but wonder why it works so differently than the market for auto gas. That price will drop quickly even between station re-fills. I am not familiar enough with the various factors in play to noodle this one out. I suspect it's because its easier to drive to the next station than it is to refuel your plane if you are low on fuel such that they have more of a captive market. But I honestly don't really know.
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The market for avgas is much different than autogas. Many of the gas stations around get what amounts to a flowage fee and they never buy the gas.

One thing that impacts avgas is that it is an infrequent batch run at the refinery compared to mogas and diesel so it can take longer for prices to drop (but magically, not to rise...).
 
LevelWing said:
I haven't seen much a 100LL price change around here. Still at $6.10/gal.
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Noted 3.80-ish at the SS pump at KDTO. KSWI (Sherman, TX) reporting $3.35 via Airnav.com.
 
Clark1961 said:
The market for avgas is much different than autogas. Many of the gas stations around get what amounts to a flowage fee and they never buy the gas.
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Ah, that would explain it.
 
PPC1052 said:
Acknowledging that this is an accurate observation, I can't help but wonder why it works so differently than the market for auto gas. That price will drop quickly even between station re-fills. I am not familiar enough with the various factors in play to noodle this one out. I suspect it's because its easier to drive to the next station than it is to refuel your plane if you are low on fuel such that they have more of a captive market. But I honestly don't really know.
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Different business model. Typically an FBO buys the gas and then sells it. Gas stations the oil company maintains ownership of the fuel and pays a flow fee to the station owner.
 
PPC1052 said:
Acknowledging that this is an accurate observation, I can't help but wonder why it works so differently than the market for auto gas. That price will drop quickly even between station re-fills. I am not familiar enough with the various factors in play to noodle this one out. I suspect it's because its easier to drive to the next station than it is to refuel your plane if you are low on fuel such that they have more of a captive market. But I honestly don't really know.
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From what I understand, the refineries only produce 100LL in batches - maybe a couple of times a year, so it's going to take a while for it to reflect price changes in oil. If they paid X per barrel to produce it back in August, they aren't going to give it to you at today's Y price.
 
paflyer said:
And the higher the price the longer it sits in the tank unused. Catch 22.
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And that's why autogas dealers drop the price, regardless of what the purchase price was. They sell it out at the market price, and bring in fuel at a lower cost to sell. They may lose a bit in the short term when the prices drop, but its best to take the loss and move on so that you can make your profit back selling more fuel at a lower acquisition cost.
 
My home FBO is Hill Aircraft at FTY Jet-A is $5.11/$4.71 with AirBoss, 100LL is $6.01/$5.81
Cherokee County where I do all my maintenance has Jet-A for $3.08 and 100LL for $3.72
Two bucks a gallon is a huge difference! :mad2: I don't fly the 425 there for fuel, because it burns 15-20 gallons on the trip, but I always buy as much as I can when I am there. I will be flying the 182 tomorrow to check on the ongoing inspection of the Conquest and I will fill it up! :yes:
Heck I just looked at the math, if I need 125 gallons for a trip I can fly to Cherokee and buy 145 for $185 less!! I may start more trips with a short flight to KCNI!! :D
 
Henning said:
Different business model. Typically an FBO buys the gas and then sells it. Gas stations the oil company maintains ownership of the fuel and pays a flow fee to the station owner.
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The FBO I CFI out of has a greedy owner. The last major fuel price drop a few months or so ago, he kept the fuel prices nearly the same while other airports dropped a significant amount. So the airport tenants went elsewhere for fuel for a long time.

The FBO owner also owns several farm equipment dealerships in the county and is suspected of some shady things by a lot of people to include the Prosecutor in town. They want to catch him but have not quite been able to. I cal him the ******* County Mafia.

FBO owner is too cheap/greedy to put a "Learn to Fly Her" sign out by the road. It took me a while but I have finally persuaded the FBO manager to buy the sign on the company credit card. That is just one of many reasons I don't have enough students to fly with there.
 
N747JB said:
My home FBO is Hill Aircraft at FTY Jet-A is $5.11/$4.71 with AirBoss, 100LL is $6.01/$5.81
Cherokee County where I do all my maintenance has Jet-A for $3.08 and 100LL for $3.72
Two bucks a gallon is a huge difference! :mad2: I don't fly the 425 there for fuel, because it burns 15-20 gallons on the trip, but I always buy as much as I can when I am there. I will be flying the 182 tomorrow to check on the ongoing inspection of the Conquest and I will fill it up! :yes:
Heck I just looked at the math, if I need 125 gallons for a trip I can fly to Cherokee and buy 145 for $185 less!! I may start more trips with a short flight to KCNI!! :D
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Maybe you should just relocate the planes. :D
 
$3.70 at 35A.
Watch out for the crop dusters
 
Everskyward said:
I think it may be fruitless for people to plan their airplane purchases based on the price of oil. It seems as if the prices go up and down at shorter intervals than many people own them. Not to mention the fact that these changes are unpredictable, at least to me.
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True, however planning your aircraft purchase around a MoGas STC makes a heck of a lot of sense. If you need a load hauler, I guess you're stuck in a Beech 18.:D
 
fly-me.jpg


flhrci said:
Good catch! I will be honest and not claim that was on purpose. :mad2: But its funny though!

David
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