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.

[googlegoogle]

Originally Posted by JimBaker488

I think alot of the blame is on the dumbasses who keep restricting access to domestic petro supplies which raise the gas prices. **** those guys! I don't have anymore ****ing money.

Thanks Obama!

[Donger]

Exxon: Global gasoline demand to fall over 20 yrs

http://news.yahoo.com/s/ap/20110127/...energy_outlook

NEW YORK – There will be 400 million more cars on the world's roads 20 years from now, yet gasoline consumption will decline, according to a projection from Exxon Mobil Corp. in its long-term energy outlook released Thursday.

The world's biggest investor-owned oil and gas company expects energy use overall will grow 35 percent by 2030, But that growth would be three times higher if people used as much energy per capita as they do now.

Nowhere is that more apparent than in projections of gasoline demand. People in developing countries, especially China, will drive millions of more cars and gas demand will grow, but the cars will be more efficient than those of the past.

Meanwhile, improvements in fuel efficiency in the U.S. and Europe will create a drop in demand that more than matches Asia's growth. Demand for passenger vehicles will decline by 20 percent in the U.S. and by one third in Europe by 2030.

Exxon's long-term energy analysis, updated and released to the public every year, paints a picture of what Bill Colton, vice president, Corporate Strategic Planning called a "tale of two worlds."

In developed countries like the U.S., Japan, and the nations of Europe, demand for energy will stay flat even as economic activity increases by 60 percent. In developing countries like China, India and Brazil, demand for energy will rise more than 70 percent as more and more people gain access to electricity and transportation.

Exxon's annual analysis differs from similar projections done by the U.S. Energy Information Administration in that it incorporates expected policy changes in its forecasts.

"The degree of analysis that goes into their projections is as rigorous as you get from any other institution," says Lawrence Eagles, an analyst at JP Morgan, of the Exxon report. "It provides a good framework to look into the future."

While demand for gasoline is expected to stay flat, demand for oil is expected to grow. Diesel, jet fuel, and other oil-derived transportation fuels are expected to more than make up for the small decline in gasoline demand.

Exxon projects annual oil demand of 100 million barrels per day by 2030. Worldwide demand for 2011 is expected to be about 88 million barrels per day, according to the analysis firm Wood Mackenzie.

Colton said Thursday that the oil industry will have "no problem whatsoever" meeting the increased oil demand. He expects the industry to have 5 million to 6 million barrels per day of excess capacity throughout the next twenty years.

Despite the BP oil spill in the deep waters of the Gulf of Mexico, much of the new supplies needed to meet growing demand will come from deep water drilling throughout the world. By the end of the decade, Colton said, deep water production will outpace production from Saudi Arabia.

BP PLC also issues an annual energy forecast. BP's forecast, which was released January 19, predicts a 39 percent jump in global energy demand, also driven by the growth of developing countries. Like Exxon, BP predicts large improvements in energy efficiency.

Exxon does predict a few other major shifts in energy demand. Natural gas is expected to displace coal as the second most important worldwide fuel by 2020.

Exxon has already acted on that projection: Last year it completed a $31 billion purchase of the natural gas producer XTO.

The shift to natural gas is being driven by new drilling technology that allows companies to tap huge reserves of natural gas. And Exxon expects that clean air and climate change regulations around the world will make coal more expensive.

Nuclear power will grow steadily, Exxon says, and renewable power will grow fastest of all, about 10 percent per year. Still, by 2020, Exxon predicts only 2.5 percent of global energy demand will be met with renewable power.

Among the biggest wild cards that could upset Exxon's forecasts: Batteries for electric cars. Colton said a cheap, lightweight battery that stores a lot of energy and can be easily recharged could cut sharply into demand for transportation fuel.

"We don't see breakthroughs coming," he said. "But we're watching it closely."

[KurtCobain]

I still don't have anymore ****ing money, and I still keep getting charged SIX ****ING DOLLARS for enough gas to go to work and home every ****ing day.

[Donger]

Originally Posted by KurtCobain

I still don't have anymore ****ing money, and I still keep getting charged SIX ****ING DOLLARS for enough gas to go to work and home every ****ing day.

Next time you buy gasoline, go inside and negotiate with the "person" behind the counter. Offer, say, $2.00 per gallon instead of what the have listed.

[BigMeatballDave]

Gas jumped 19 cents today. 3.14 here

[KurtCobain]

Originally Posted by Donger

Next time you buy gasoline, go inside and negotiate with the "person" behind the counter. Offer, say, $2.00 per gallon instead of what the have listed.

Or I could just offer to not shoot him for a full tank.

[Donger]

Originally Posted by BCD

Gas jumped 19 cents today. 3.14 here

No, it didn't.

[MadMax]

Originally Posted by Bugeater

Well for one, it's still not as bad as it was then, I think some of you are forgetting how absurd the prices got in a very short amount of time. Add to that it was at the end of a lame duck trainwreck of a president's term, and the prices came back down as he was leaving office, and it's not a crazy theory.

But yeah, Obama is just as big of a tool, if it makes you feel better.

Yea it's all Dick cheney and Bushes fault, oh yea how bout that damn Rumsfeld? Idiots Halliburton, we invaded countries for oil? Where are our spoils of war? **** em all. Blobama is the biggest tool of all of them imo. Why in the **** can't we use our own natural resources???? Oh yea left wing tree huggin ****pods. Piss on all these clowns.

[AirForceChief]

Just got done for $3.79/gal on the way back from camping at Morro Bay this weekend (SoCal). Pulling a camper trailor blows at times...

[BigMeatballDave]

Originally Posted by Donger

No, it didn't.

Yesterday, I filled up @2.95/gal. Today its 3.14. I believe thats a 19 cent difference.

[Donger]

Originally Posted by BCD

Yesterday, I filled up @2.95/gal. Today its 3.14. I believe thats a 19 cent difference.

At the same station?

[teedubya]

These are the lowest gas prices we will see for a long, long time. #sadbuttrue

[Donger]

Crude up 4.3% today at $89.34

[BigMeatballDave]

Originally Posted by Donger

At the same station?

Yes. Every station on my way to and from work increased 15-19 cents.

[BigMeatballDave]

Originally Posted by teedubya

These are the lowest gas prices we will see for a long, long time. #sadbuttrue

Possibly. But then no one thought we'd see sub-2 dollar/gal. before crude collapsed 2.5 yrs ago.