Yet another "gas prices" thread.

Discussion in 'Fred's House of Pancakes' started by roflwaffle, Mar 17, 2012.

  1. roflwaffle

    roflwaffle Member

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    I've been looking for a Gen 2 Prius for a good month now and it's been bugging the crap out of me how high the "gas price scare premium" has driven these things up. I've even seen a couple flipped on CL from CL. Fortunately, it looks like gas prices are falling on the West coast'ish.

    Here's Why Gas Prices Could FALL This Spring

    Bloomberg 85.5 Octane CARBOB Prompt Gasoline Price/Los Angeles Analysis - MOGLCB85 - Bloomberg

    The LA area spot prices bounced back up to $3.40 as of the time of this post, but it looks like CA can at least look forward to a ~$.25c/gallon decline over the next couple weeks, and probably a little bit more after that since gas prices are about $.50c to $.75c per gallon higher than they should considering that oil prices have been at ~$100/bbl +/-$10/bbl for the last year and change.

    There's even a slight chance that prices will drop going into memorial day since demand is down nearly 7% from this time last year, but I suppose that depends on how the east coast refinery situation progresses and whether or not oil prices retreat after people get wind of how much demand has dropped in the US/stop worrying about Iran.
     
  2. dogfriend

    dogfriend Human - Animal Hybrid

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    Seems like speculation may be driving gas prices and Prius prices. :madgrin:

    I haven't seen any indication of a price drop here; I look at the gas pumps for info.
     
  3. ETC(SS)

    ETC(SS) The other One Percenter.....

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    The only two things that are bothering me (and my CinC) about currently high gas prices are the facts that we're coming off of a very mild winter, and we're still over ten weeks away from the start of the summer driving season.
    The former means that refineries didn't have to shunt a bunch of oil production into home heating, and the latter means that we're still weeks away from our peak gasoline usage.
    I'm thinking that it's going to be a bad summer to plan an automobile trip OR to buy a Prius...new or used.

    Of course all of this may be further exacerbated if the Israelis break the agreement that they didn't make about forestalling any Iranian attach until after the fall elections....OR the Iranians become emboldened by the fact that we're getting ready to push the "escape" button on one of their neighboring countries. No...not Iraq, one of the other ones.... ;)

    Either way...it's going to be a good summer for a "Staycation". :D
     
  4. wjtracy

    wjtracy Senior Member

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    According to Daniel Yergin on TV, the prices are rising because USA is asking its allies to stop taking Iranian oil. The starting date for this action is not until approx July_2012. Thus we have some more months to wait to see how this plays out.
     
  5. zenMachine

    zenMachine Just another Onionhead

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    A brief look at how today’s “paper oil†markets function is useful. Since Goldman Sachs bought J. Aron & Co., a savvy commodities trader in the 1980’s, trading in crude oil has gone from a domain of buyers and sellers of spot or physical oil to a market where unregulated speculation in oil futures, bets on a price of a given crude on a specific future date, usually in 30 or 60 or 90 days, and not actual supply-demand of physical oil determine daily oil prices.

    In recent years, a Wall Street-friendly (and Wall Street financed) US Congress has passed several laws to help the banks that were interested in trading oil futures, among them one that allowed the bankrupt Enron to get away with a financial ponzi scheme worth billions in 2001 before it went bankrupt.

    The Commodity Futures Modernization Act of 2000 (CFMA) was drafted by the man who today is President Obama’s Treasury Secretary, Tim Geithner. The CFMA in effect gave over-the-counter (between financial institutions) derivatives trading in energy futures free reign, absent any US Government supervision, as a result of the financially influential lobbying pressure of the Wall Street banks. Oil and other energy products were exempt under what came to be called the “Enron Loophole.â€

    In 2008 during a popular outrage against Wall Street banks for causing the financial crisis, Congress finally passed a law over the veto of President George Bush to “close the Enron Loophole.†And as of January 2011, under the Dodd-Frank Wall Street Reform act, the CFTC was given authority to impose position caps on oil traders beginning in January 2011.

    Curiously, these limits have not yet been implemented by the CFTC. In a recent interview Senator Bernie Sanders of Vermont stated that the CFTC doesn't "have the will" to enact these limits and "needs to obey the law.†He adds, "What we need to do is…limit the amount of oil any one company can control on the oil futures market. The function of these speculators is not to use oil but to make profits from speculation, drive prices up and sell."1 While he has made noises of trying to close the loopholes, CFTC Chairman Gary Gensler has yet to do so. Notably,Gensler is a former executive of, you guessed, Goldman Sachs. The enforcement by the CFTC remains non-existent.

    http://www.globalresearch.ca/index.php?context=va&aid=29803
     
  6. roflwaffle

    roflwaffle Member

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    I think the problems were for the most part caused by refinery shut-downs. At one point about 25% of west coast refining capacity was down. Two in CA are re-opening/coming fully online, which is where the 50+c drop in finished gas in LA came from, and a big one is WA is scheduled to come back online in April. Once Cherry Point, which is about 12% of west coast refining capacity, comes back, gas prices should drop back down to ~$3.60+/gallon or so on the west coast.

    California Gasoline Tumbles on Refinery Start, Scheduled Cargoes - Businessweek

    That said, the east refinery situation isn't as easy to remedy because a couple of those shut-downs were permanent, and on top of that they buy a bunch of crude from Europe, which apparently has it's own refinery trouble, so that may increase in price by another dime or so. Prices there depend on how much oil and gasoline gulf coast refiners can get to the east coast, but that's kind of akward because of restrictions on using foreign ships. Buyers/sellers have to send some US crude/refined products to other countries, and then those countries redirect crude/refined products bought elsewhere to the US. :juggle:
     
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  7. roflwaffle

    roflwaffle Member

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    I wonder how much gas people can store to drive up prices? It looks like gasoline stocks are near five year highs, so that's gotta bring down prices a little bit.

    [​IMG]

    In terms of the dollar's impact on oil prices, that's not accurate. it's been at around 80 for almost a year, and it's up from a low of ~73 in 2011.

    U.S. Dollar Index (DXY), DXY Index Quote - (NYE) DXY, U.S. Dollar Index (DXY) Index Price
     
  8. ChipL

    ChipL Active Member

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    Amen!

    Our refinery capacity is the killer. We are rewarding in the stock market holding back on capacity. Keystone WILL NOT. Give us lower gas prices or REAL jobs for the long term...
     
  9. roflwaffle

    roflwaffle Member

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    Exactly. Keystone will only hurt US gas prices. Build an east-west pipeline so that US refiners on both coasts can have access to cheaper domestic/Canadian crude before they need to go with crude from overseas. We should do the same thing for electricity (national smart grid) to further enhance energy security. It's more expensive in the short term but cheaper in the long term. An ounce of prevention is worth a pound of cure.

    US Needs An East-West Pipeline
     
  10. ETC(SS)

    ETC(SS) The other One Percenter.....

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    I hate to be the one to tell you this, but the KPL is going to get built. This despite the fact that neither importing crude oil from a friendly neighbor nor encouraging new refinery construction is part of this administration's "all of the above" energy policy...at least for the present.

    I'm not sure what vehicle that the administration will use to do it with, but eventually they're going to have to cave on the pipeline.
    In spite of the fact that we're being spoon fed a bunch of stories about social issues, and there's a major diplomatic flap about the goings on in the Stan, the administration is still taking heat rounds about high gas prices and the KPL, and it’s an election year.
    Gas prices were even higher on the left coast because of capacity problems (since you guys have to burn "special" gas) that aren't going to go completely away once the refinery situation improves in April. That’s true as far as it goes, but the folks in fly-over country are also paying about twice as much to fill up their rides as they did three years ago...AND we're still about ten to twelve weeks away from peak gasoline use during the summer driving months.
    IF high prices cause demand to go down, that may ameliorate the increase in the price of gas this summer however (comma!) that reduction is going to come at a price. People stay at home more....and shop less.
    Not so good for the economy, especially if you consider that the additional diesel fuel costs will cause prices at your local Whole Foods to go up, since very little of the stuff that you buy there gets delivered by EVs (yet.)
    Not everybody in the studio audience is firmly convinced that the economy is roaring back to life as it is. An economic slump this summer that can’t be swept under the rug for a few months might cause a few folks to get pissed off. Presidents loose elections that way. Ask Jimmy or George Sr.
    So....depending on how Iran shakes out, or whether or not OPEC decides to open the spigot a little more, or about 10-zillion other things, I think that it's safe to say that gas prices this summer will be at least as high as they are at present---if not higher.
    The budding petroleum engineers in the class may be able to convince themselves that the icky stuff that they're pulling out of the ground in Alberta cannot possibly be used for gas, diesel or kerosene---BUT you're also going to have to also convince the electorate, which isn't quite as educated about why the Canadians are pulling the stuff out of the ground at a rate of millions (1.5 IIRC) of barrels a day when you can't use it as......a fuel. I’ve heard no less than three podcasts from NPR (not a hotbed of right winged Republican propaganda!) that the administration is deeply concerned about something that they actually have very little rudder input over, but for which they’ll get much of the blame for.

    Like I said....the pipe is going to get built.
    Bet on it! It’s not like this administration has been held hostage by the fringe left in other issues, and it wouldn’t be the first (or the second…or the third…or….) time that they flopped on an issue that they originally flipped on.

    Don't worry though...the Waskly Wepubwicans haven't pulled their heads out yet, and the future looks even bleaker for them this fall (so far) than it does for my CinC----so I think that we'll get O2.0.

    After a loooooooong hot, nasty, and probably very expensive summer. :(
     
  11. roflwaffle

    roflwaffle Member

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    It terms of oil consumption it's not an "if", it's a "have". High gas prices (plus a warmer winter) have dropped US oil demand by about 7% year on year. There can also be a slight increase in local economic activity from a staycation because people dump whatever they would have spent on gas into the local econmy, but who knows if the lower levels of oil consumption will persist. Considering how inelastic gasoline is, less left coast demand and more production may also serve to bring down prices in all the other padds too. For example there's no way that padd 4 should be at $3.50/gallon, WTI prices were nearly identical last year but gas is still about 20c/gallon more thanks to demand from the nearby padds. And demand from the coasts is driving up prices there (gulf coast/midwest) too. Once supply eases in multiple places, prices should too. Barring more refinery accidents or Iran going all nuts in the gulf of course.
     
  12. ETC(SS)

    ETC(SS) The other One Percenter.....

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    ...or a hurricane in the (other) gulf...or a terror attack in _____ (you name the place, but a refinery would be a be a nice, soft target!)...or Korea blowing up....or the economy suddenly shifting into high gear...or OPEC closing the oil spigot a little more....or....;)
     
  13. zenMachine

    zenMachine Just another Onionhead

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    Turns out the place where gas prices tend to be the highest in the nation, San Francisco....

    ... is just across the Bay from five major oil refineries that together are the largest exporters of petroleum products in the nation (Brookings Institution, New York Times, March 8, 2012). In 2010, the period of the report, the five refineries exported $7.8 billion in petroleum products, an increase of 10% over prior year. Other refineries on the West Coast have also experienced booming export sales. Last December alone, West Coast refineries exported over one million barrels of gasoline, eight times as much as in 2007.

    The Census Bureau's trade report confirms the trend nationwide: in January exports of petroleum products jumped 16.8% to $8.9 billion from December's $7.6 billion, and were up 8.8% from January last year.

    Why? Because that’s where the money is. Domestic demand is stagnating. In California, based on data from the State Board of Equalization, which collects taxes on motor fuels, gasoline sales have actually slid 14% from 2006 through last year:

    http://www.zerohedge.com/contributed/2012-11-12/astounding-fuel-price-conundrum
     
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  14. roflwaffle

    roflwaffle Member

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    Refineries aren't as soft as you think. Check points, barbed wire, and so on are mandatory these days. I imagine anyone caught "hanging out" around one would be subject to a lot of LE scrutiny. There are thousands of terrorist attacks each year, but because oil infrastructure doesn't present a soft, or scary target (like bombing a pipeline or something), it's not very common. Terrorists want to terrorize people, and taking down buildings/marketplaces does that. Damaging oil refineries and/or pipelines probably won't.
     
  15. zenMachine

    zenMachine Just another Onionhead

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    Front page of today's Wall Street Journal:

    [​IMG]
     
  16. roflwaffle

    roflwaffle Member

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  17. ETC(SS)

    ETC(SS) The other One Percenter.....

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    With profound apologies to refinery security forces...
    I didn't mean to piss in anybody's potted plant, and I'm not going to get into a stare and compare WRT refinery security and whether or not they're high value assets or soft or hard.
    Let's just say that in my very uninformed opinion that represents absolutely nobody but myself, refineries are overworked, overly volatile, and they're not protected as much as saaaaay a nuclear reactor or a weapons depot.

    High gas prices, right?
    Looke like Energy Secretary Cu is going to get his wish! :D
     
  18. zenMachine

    zenMachine Just another Onionhead

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    Although many US refineries export petroleum products overseas, only a portion of those products (around 20%) is gasoline for cars. Thus the impact of exports on the domestic supply/demand curve and the price of petrol is probably small compared to the impact caused by speculators.

    The Obama administration would do well by enforcing existing rules regulating those speculative traders who, by some reports, are pushing up crude oil prices by about $25/barrel.
     
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  19. qbee42

    qbee42 My other car is a boat

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    It's $4.99 here, and we aren't California.

    Tom
     
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