Gasoline at $4 Coming to a Pump Near You, Unfazed by Rising Tab

[Donger]

http://www.bloomberg.com/apps/news?p...d=afOlUzd30YOo

Pretty alarmist, IMO, but possible.

Spoiler!

April 23 (Bloomberg) -- Whether it's $50 to fill up your Prius or $130 for the Ford Expedition, $4-a-gallon gasoline is coming to a pump near you.

Fuel prices are rising at a pace not seen since Hurricanes Katrina and Rita knocked out a third of the U.S. oil refining industry in 2005. Gasoline consumption is climbing twice as fast as last year and will accelerate when summer travel begins late next month.

``What we're surprised by is the increased demand,'' said James Mulva, chief executive officer at ConocoPhillips, whose refineries from California to New Jersey produce 56 million gallons of gas a day, enough to meet 14 percent of the country's needs. ``Even though the price of gasoline is up, the demand is up,'' he said in an April 12 interview in Houston.

Population gains and U.S. economic growth are causing an increase in fuel purchases, according to Orlando, Florida-based AAA, the nation's largest organization for motorists. The U.S. economy will expand at a 2.4 percent annual pace in the second quarter, up from 1.8 percent in the first three months, according to the median estimate of 74 economists surveyed by Bloomberg. Gasoline use is rising almost 5 percent above the five-year average.

Americans are resigned to higher prices, says David Pursell, a principal with Pickering Energy Partners, a consulting firm in Houston.

``Last year, we had pump prices well over $3 for the summer and gasoline demand was up,'' Pursell said in an interview. ``Would $4 gasoline cause demand contraction? I think it will, but I also thought $3 gasoline would.''

Pump Prices

Gasoline inventories, measured by the days of demand they will cover, are at the lowest level in two decades for this time of year because of refinery fires, power failures and maintenance work oil companies failed to complete in 2006. No new U.S. refinery has been built in three decades, increasing the strain on existing plants.

Pump prices in the U.S. may increase to $4 a gallon from a nationwide average of $2.87 today, especially if hurricanes threaten Gulf of Mexico refineries, says Peter Beutel, an analyst at Cameron Hanover Inc. in Stamford, Connecticut, who helps industrial consumers manage energy costs.

``Hurricanes are always the huge wild card,'' said Beutel. ``We're all praying for a year like 2006 rather than 2005.''

The June-to-November Atlantic Ocean hurricane season may produce 17 tropical storms, with nine reaching hurricane force and four becoming major hurricanes whose winds exceed 111 miles per hour (179 kilometers per hour), London-based forecasters at Tropical Storm Risk said. Some of the storms will strike the Gulf Coast this year after a benign 2006, AccuWeather.com predicted.

Inflation Risk

Higher pump prices will make winners of refinery owners such as ConocoPhillips, San Antonio-based Valero Energy Corp. and Royal Dutch Shell Plc of The Hague. Shares of Valero and Sunoco Inc., whose only business is refining, are rebounding after a decline at the end of last summer.

The increase in fuel costs threatens to quicken inflation and restrain consumer spending in the U.S. An appreciation to $4 a gallon would add more than $10 for a driver who fills the 12- gallon tank of a Toyota Motor Corp. Prius. The owner of an Expedition, a Ford Motor Co. sport-utility vehicle with a 34- gallon capacity, faces an increase of almost $40.

Many Americans have no choice but to drive more, says Christopher Knittel, an economist who studies fuel consumption at the University of California in Davis.

More Commuters

``We live farther from our jobs than we did in the 1970s, and with the rise of dual-income households, we now have two people who drive those distances every day,'' Knittel said.

Consumers also do more driving for things such as taking children to soccer practice, which they are unlikely to quit, he said. The U.S. population has increased 1 percent a year in the past decade to 301 million in 2007, adding to demand for gasoline, economists said.

Rising fuel prices make it less likely that Federal Reserve policy makers, who have cited inflation risks for the past year, will cut interest rates to spur economic growth. Before the hurricane-induced peak in 2005, U.S. gasoline topped out at $1.42 a gallon in March 1981, or $3.21 when adjusted for inflation, according to the Energy Department.

Economies in Europe and Asia are less likely to be hurt by gasoline prices because fuel already is subject to high taxes designed to encourage conservation. A gallon of unleaded costs about 3.25 pounds a gallon ($6.49) in the U.K., and in Japan it's 130.3 yen per liter ($4.16 a gallon).

$4 Barrier

U.S. consumers will get little relief on gasoline prices from Europe this year, unlike 2005, when oil companies shipped more across the Atlantic after the hurricanes. Europe's gasoline inventories in February were 114.2 million barrels, down 11 percent from two years earlier, according to the International Energy Agency in Paris. The drop in Europe was almost twice the 5.7 percent decline in U.S. supplies in that time.

``Just as we used to think $3 a gallon was an impenetrable barrier, now it's $4,'' said Peter Morici, a professor at the University of Maryland School of Business in College Park and former chief economist for the U.S. International Trade Commission. Gasoline at $3.50 is likely, Morici said, and a conflict with Iran or any event that disrupts crude supplies may push it to $4.

Pump prices rose 33 percent in the past 11 weeks, the fastest rate of gain since a six-week, 34 percent rally to the record $3.069 in September 2005, Energy Department data show.

Bodman's `Worry'

U.S. Energy Secretary Samuel Bodman in an interview last week said the national average pump price could break the record this summer. While his agency's official forecast is for gasoline to peak next month at about where it is today, hurricanes, refinery closures or crude oil supply cuts may send prices higher, he said.

Higher prices are ``a legitimate worry,'' Bodman said. ``We have trouble spots all over the world'' that could boost crude oil prices. ``We're in a very tight situation.''

Spending on fuel in the U.S. consumes half as much household income as in the early 1980s, which means gasoline would need to reach almost $6 a gallon to have the same effect on the economy as in 1981, according to the Federal Reserve Bank of Dallas.

Storage tanks at U.S. refineries, terminals and ports hold enough gasoline to cover almost 22 days of domestic demand, 8.2 percent less than the five-year average and the lowest for this time of year since the 1980s, Energy Department figures show.

Shortages

Valero-owned filling stations in Denver and Colorado Springs, Colorado, ran dry after a Feb. 16 explosion and fire shut the company's McKee refinery in Sunray, Texas. A day earlier, a blaze at an Exxon Mobil Corp. plant in Nanticoke, Ontario, slashed output, resulting in shortages and higher prices across eastern Canada.

The McKee shutdown strained supplies so much that ConocoPhillips postponed maintenance at its Borger, Texas, refinery north of Amarillo to prevent shortages in the region.

``Refineries are becoming more complex,'' Mulva said in the Houston interview. ``What we're finding is it's more difficult keeping reliability up with more sophisticated pieces of equipment that are highly integrated.''

Tesoro Corp. of San Antonio, the second-largest refiner in the western U.S., said first-quarter refinery use dropped because oil companies delayed until this year maintenance that could have been done in 2006. The portion of U.S. refining capacity that was in operation in the first quarter declined to 87.3 percent from 88.9 percent a year earlier, according to Energy Department data.

`Refineries Blow Up'

``Prices will depend entirely on whether we have a couple of refineries blow up,'' said Philip K. Verleger, an economist who runs a consulting firm in Newport Beach, California. ``It's almost impossible we'll get to $4 a gallon if all the refineries run well this summer. But if something happens and there are problems, then anything's possible.''

The average share gain for Valero, Tesoro and six other oil-refining companies is 26 percent this year, outperforming the 4.1 percent gain for Exxon Mobil and a 4.7 percent increase for the Standard & Poor's 500 index.

The shares will continue to rally, said Paul Carlson, who helps manage $3 billion at HGK Asset Management in Jersey City, New Jersey.

``Refiners are doing very well these days,'' said Carlson, whose holdings include ConocoPhillips, the second-biggest U.S. refiner. ``There will be lots of demand for any new refining stocks.''

`Back in Favor'

As recently as August, investors were selling oil refiners on concern an economic slowdown would slash fuel demand in the U.S., the world's largest energy market. During seven weeks last August and September, Valero shares fell 29 percent, wiping out $12 billion in market value.

``Refining is very much back in favor,'' said Douglas Ober, who helps oversee $2.3 billion at Baltimore-based Adams Express Co. ``Even with higher prices, we haven't seen any substantial cutback in demand. They're cranking out as much of this stuff as they can, and we're throwing it in our tanks as fast as we can.''

The margin earned from processing crude oil into fuels rose to $24.68 a barrel on April 11, the highest since right after the hurricanes in September 2005. The margin has since retreated to $22.12 a barrel, still about double the five-year average.

``It'll be a fairly tight gasoline market all through the summer,'' said Robert Hinckley, an analyst at Rochdale Securities in New York.

[Donger]

I thought this was an interesting take on it:

http://money.cnn.com/2011/03/09/news...dex.htm?hpt=C2

NEW YORK (CNNMoney) -- Hey California, stop whining about $4 gas. As gas prices have surged 13% over the last month, Mississippi is feeling the worst pain at the pump.

Sure, Californians pay some of the highest gas prices in the nation at $3.92 per gallon. But for economic reasons, the Magnolia State has it much worse, even with prices at $3.42.

[BigMeatballDave]

Originally Posted by Donger

Wow. Gasoline now approaching $10/gallon in the UK.

Hey, the Royal family has to get their cut.

[BigMeatballDave]

Oh, shit... http://news.yahoo.com/s/ap/20110309/...re_af/af_libya

LANOUF, Libya – Forces loyal to Moammar Gadhafi struck an oil pipeline and oil storage facility Wednesday, sending a giant yellow fireball into the sky as they pounded rebels with artillery and gunfire in at least two major cities.
Gadhafi appeared to be keeping up the momentum he has seized in recent days in his fight against rebels trying to move on the capital, Tripoli, from territory they hold in eastern Libya. State television claimed Gadhafi's forces had retaken Zawiya, the city closest to Tripoli that had fallen into opposition hands.
There was no was to immediately verify the claim. Gadhafi forces have been waging a heavy siege on the city since last week, and phone lines there have not been working for days. State TV showed a crowd of hundreds, purportedly in Zawiya's main square on Wednesday, carrying images of Gadhafi and shouting "The people want Colonel Gadhafi!"
The fall of Zawiya to anti-Gadhafi residents early on in the uprising that began Feb. 15 had illustrated the initial, blazing progress of the opposition, which has now been blunted.
In the east, an Associated Press reporter at Ras Lanouf near the front line of fighting saw an explosion from the area of the Sidr oil facility, 360 miles (580 kilometers) east of Tripoli. Three columns of thick smoke rose from the area, apparently from burning oil.
Mustafa Gheriani, an opposition spokesman, said the government artillery hit a pipeline supplying Sidr from oil fields in the desert. An oil storage depot also was hit, apparently by an airstrike, he said.
Gadhafi's successes have left Western powers struggling to come up with a plan to support the rebels without becoming ensnared in the complex and fast-moving conflict. On Wednesday, a high-ranking member of the Libyan military flew to Cairo with a message for Egyptian army officials from Gadhafi, but no further details were known.
President Barack Obama's most senior advisers were meeting Wednesday to outline what steps are realistic and possible to pressure Gadhafi to halt the violence and give up power.

[Donger]

Originally Posted by BCD

Oh, shit... http://news.yahoo.com/s/ap/20110309/...re_af/af_libya

LANOUF, Libya – Forces loyal to Moammar Gadhafi struck an oil pipeline and oil storage facility Wednesday, sending a giant yellow fireball into the sky as they pounded rebels with artillery and gunfire in at least two major cities.
Gadhafi appeared to be keeping up the momentum he has seized in recent days in his fight against rebels trying to move on the capital, Tripoli, from territory they hold in eastern Libya. State television claimed Gadhafi's forces had retaken Zawiya, the city closest to Tripoli that had fallen into opposition hands.
There was no was to immediately verify the claim. Gadhafi forces have been waging a heavy siege on the city since last week, and phone lines there have not been working for days. State TV showed a crowd of hundreds, purportedly in Zawiya's main square on Wednesday, carrying images of Gadhafi and shouting "The people want Colonel Gadhafi!"
The fall of Zawiya to anti-Gadhafi residents early on in the uprising that began Feb. 15 had illustrated the initial, blazing progress of the opposition, which has now been blunted.
In the east, an Associated Press reporter at Ras Lanouf near the front line of fighting saw an explosion from the area of the Sidr oil facility, 360 miles (580 kilometers) east of Tripoli. Three columns of thick smoke rose from the area, apparently from burning oil.
Mustafa Gheriani, an opposition spokesman, said the government artillery hit a pipeline supplying Sidr from oil fields in the desert. An oil storage depot also was hit, apparently by an airstrike, he said.
Gadhafi's successes have left Western powers struggling to come up with a plan to support the rebels without becoming ensnared in the complex and fast-moving conflict. On Wednesday, a high-ranking member of the Libyan military flew to Cairo with a message for Egyptian army officials from Gadhafi, but no further details were known.
President Barack Obama's most senior advisers were meeting Wednesday to outline what steps are realistic and possible to pressure Gadhafi to halt the violence and give up power.

That's not good, but I would say that a good chunk of the Libya premium is already in crude pricing now.

[ROYC75]

THIS IS NOT THE 'DON'T BUY' GAS FOR ONE DAY, BUT IT WILL SHOW YOU HOW WE CAN GET GAS BACK DOWN TO $1.30 PER GALLON.
This was sent by a retired Coca Cola executive. But it came from one of his engineer buddies who retired from Halliburton. If you are tired of the gas prices going up AND they will continue to rise this summer, take time to read this please.

Phillip Hollsworth offered this good idea.

This makes MUCH MORE SENSE than the "don't buy gas on a certain day" campaign that was going around last April or May! It's worth your consideration. Join the resistance!!!!

I hear we are going to hit close to $ 4.00 a gallon by next summer and it might go higher!! Want gasoline prices to come down? We need to take some intelligent, united action.The oil companies just laughed at that because they knew we wouldn't continue to "hurt" ourselves by refusing to buy gas. It was more of an inconvenience to us than it was a problem for them. BUT, whoever thought of this idea, has come up with a plan that can Really work. Please read on and join with us!

By now you're probably thinking gasoline priced at about $2.00 is super cheap. Me too! It is currently $3.08 at Arco and Costco for regular unleaded in Salem , Oregon and climbing every week. Now that the oil companies and the OPEC nations have conditioned us to think that the cost of a gallon of gas is CHEAP at $1.50 - $1.75, we need to take aggressive action to teach them that BUYERS control the marketplace..not sellers. With the price of gasoline going up more each day, we consumers need to take action.
The only way we are going to see the price of gas come down is if we hit someone in the pocketbook by not purchasing their gas! And, we can do that WITHOUT hurting ourselves.

How? Since we all rely on our cars, we can't just stop buying gas.
But we CAN have an impact on gas prices if we all act together to force a price war.
Here's the idea: For the rest of this year, DON'T purchase ANY gasoline from the two biggest companies (which now are one), EXXON and MOBIL.
If they are not selling any gas, they will be inclined to reduce their prices. If they reduce their prices, the other companies will have to follow suit.

But to have an impact, we need to reach literally millions of Exxon and Mobil gas buyers. It's really simple to do! Now, don't wimp out on me at this point...keep reading and I'll explain how simple it is to reach millions of people!!

I am sending this note to 30 people. If each of us send it to at least ten more (30 x 10 = 300) ... and those 300 send it to at least ten more (300 x 10 = 3,000)... and so on, by the time the message reaches the sixth group of people, we will have reached over THREE MILLION consumers .
If those three million get excited and pass this on to ten friends each, then 30 million people will have been contacted!

If it goes one level further, you guessed it..... THREE HUNDRED MILLION PEOPLE!!!

Again, all you have to do is send this to 10 people. That's all!

(If you don't understand how we can reach 300 million and all you have to do is send this to 10 people.... Well, let's face it, you just aren't a mathematician But I am . so trust me on this one.

How long would all that take? If each of us sends this e-mail out to ten more people within one day of receipt, all 300 MILLION people could conceivably be contacted within the next 8 days!
I'll bet you didn't think you and I had that much potential, did you! Acting together we can make a difference.

If this makes sense to you, please pass this message on. I suggest that we not buy from EXXON/MOBIL UNTIL THEY LOWER THEIR PRICES TO THE $2.00 RANGE AND KEEP THEM DOWN. THIS CAN REALLY WORK. PASS THIS ON WE CAN BEAT THEM!!!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Seriously, I wish something like this could work, but people just will not get on the same page to do this.

[Donger]

[Mr. Flopnuts]

WE'RE GONNA BEAT THEM THIS TIME!!!!!1!11!

[Bugeater]

[Donger]

I'm going to switch to Pepsi and put Coke out of business.

[CrazyPhuD]

Originally Posted by Bugeater

What kind of ****ing 'tard needs a blind spot mirror on the driver's side?

Heh while I don't have a blindspot mirror, I have something far superior. I have a Japanese passenger side mirror as my drivers side mirror. For me with the top up on the 2 seat convertible the blindspots are pretty massive. With the convex drivers side mirror the blindspots are nonexistant. Using just my 3 mirrors I have pretty much 100% coverage of my car. Personally I can't stand using regular drivers side mirrors anymore. Convex is the only way to go. What want to know is what tard thought that we shouldn't have convex drivers side mirrors too. Probably the same one who thought americans couldn't realize that objects are closer than they appear so we have to scribble it on the mirror.

[Buck]

Originally Posted by Donger

I thought this was an interesting take on it:

http://money.cnn.com/2011/03/09/news...dex.htm?hpt=C2

NEW YORK (CNNMoney) -- Hey California, stop whining about $4 gas. As gas prices have surged 13% over the last month, Mississippi is feeling the worst pain at the pump.

Sure, Californians pay some of the highest gas prices in the nation at $3.92 per gallon. But for economic reasons, the Magnolia State has it much worse, even with prices at $3.42.

This idea can go **** itself.

I am nearly empty and can't afford gas for another 2 weeks. Its going to be $5/gal by then. Its already $4/gal now.

[Ugly Duck]

Paid $4.20 today.

[Donger]

Originally Posted by Buck

This idea can go **** itself.

I am nearly empty and can't afford gas for another 2 weeks. Its going to be $5/gal by then. Its already $4/gal now.

It's not really an idea.

[Bwana]

I'm glad my company buys my vehicle AND gas.

[Buck]

Originally Posted by Donger

It's not really an idea.

I fail to see how $3.42/gal is worse than $4/gal