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.

[BigMeatballDave]

Originally Posted by Donger

And you are the third person (or more) to apparently not realize that my doing so is done in jest. I'm well-aware that prices can explode.

Trolled!

[Ted Theodore Logan]

Stop the music...What I would like to have right now is for all you SUV driving,gas price complaining,sorry looking loosers to keep the noise down while I show your ladies what makes thier engines purrrrr! HIT THE MUSIC!

[007]

Originally Posted by jd1020

Do you also pay attention to the last updated time?

I've only gone to a station a couple of times and the price wasn't the same because no one had updated it in like 6 hours.

yep. I do. I've seen price quotes an hour old be wrong.

[Frazod]

Originally Posted by Donger

And you are the third person (or more) to apparently not realize that my doing so is done in jest. I'm well-aware that prices can explode.

Yeah, sure you were.

[HemiEd]

Originally Posted by Donger

I see. You are incorrect, of course. I've posting nothing which to any reasonable person could be considered a rant. I've speculated on the future pricing of gasoline, explained when asked about how pricing works in the industry and so on.

Your point is therefore summarily dismissed.

Shouldn't that word be "posted?"

I had to drive quite a ways to find 4.15 gas last Saturday, most of it was 4.39 around here.

[Imon Yourside]

Hey Donger, you still doubting 4-5$ a gallon gas by the end of 2012?

[BigMeatballDave]

Donger already admitted he was trolling, but I'll put this here anyway...

http://mcalesternews.com/statenews/x...-price-average

August 7, 2012
Midwestern states skew national gas price average
By Mark Huffman
ConsumerAffairs.com

Gasoline prices are headed up again, but maybe not as much as the statistics seem to suggest. Surging pump prices in five Midwestern states may be distorting the picture.

Last week motorists in Illinois and Indiana were shocked as gas prices jumped more than 40 cents a gallon almost overnight. There were similar price surges in Ohio, Michigan and Wisconsin.

While consumers fumed, industry analysts explained a pipeline rupture and equipment problems at three regional refineries were mostly responsible for the hike. While gas prices were rising in most states, the increases were nothing like these five states experienced.

On Sunday the average price of self-service regular was $4.05 a gallon in Illinois. That makes Illinois gasoline the second most expensive in the nation, behind Hawaii.

The price increase in these five Midwestern states has pushed the national average price of gas higher than it might have been otherwise. The AAA Fuel Gauge Survey puts the national average price at $3.61 a gallon. That's up 12.5 cents a gallon in the last week.

Prices rising just about everywhere

While the affected Midwestern states have seen prices at the pump rise at an abnormally rapid rate, prices elsewhere are rising, just at a more moderate pace. States like South Carolina and Mississippi, where prices are lowest, have seen price hikes in the last week of about 13 cents a gallon.

But in expensive states like Oregon, the price hikes have been even slower. The state-wide average price in Oregon is up three cents in the last seven days. The average price in North Dakota hasn't budged in the last week.

Analysts say prices in Illinois, Indiana, Ohio, Wisconsin and Michigan should fall just as quickly as they went up. When, however, remains less certain. Prices generally begin going down after Labor Day.

[Donger]

Originally Posted by KILLER_CLOWN

Hey Donger, you still doubting 4-5$ a gallon gas by the end of 2012?

Yes.

[jiveturkey]

Originally Posted by Dave

Donger already admitted he was trolling, but I'll put this here anyway...

http://mcalesternews.com/statenews/x...-price-average

While consumers fumed, industry analysts explained a pipeline rupture and equipment problems at three regional refineries were mostly responsible for the hike. While gas prices were rising in most states, the increases were nothing like these five states experienced.

I thought that pipelines never ruptured. And since they don't lets put one right in the middle of our drinking supply.

[Frazod]

Originally Posted by Dave

Donger already admitted he was trolling, but I'll put this here anyway...

He wasn't trolling - he was just being himself. When he started getting his shit pushed in he changed his tune.

[Donger]

Originally Posted by frazod

He wasn't trolling - he was just being himself. When he started getting his shit pushed in he changed his tune.

Are you channeling Frankie or something? I knew that you'd have an emotional response, so I provoked it. There really isn't any need to get all bent out of shape over it. I was just having fun.

Crude is up to $95.00 today, BTW.

[TEX]

Originally Posted by HemiEd

Shouldn't that word be "posted?"

I had to drive quite a ways to find 4.15 gas last Saturday, most of it was 4.39 around here.

Believe it or not, I found Gas this morning in Crosby Tx, right outside of Houston, for 3.28 regular unleaded.

The rest of the area is averaging about 3.39 and Houston in general is averaging about 3.42. NEVER thought I'd think those prices were good, but I have been "conditioned" to believe they are.

[Frazod]

Originally Posted by Donger

Are you channeling Frankie or something? I knew that you'd have an emotional response, so I provoked it. There really isn't any need to get all bent out of shape over it. I was just having fun.

Crude is up to $95.00 today, BTW.

You're a ****ing douche. I don't really know why you've gotten a free pass for so long, but it is what it is. For a douche, being douchy is fun. For the rest of us, though, it's just you being a douche. You're like the bitch in the Billy Joel song - she never gives in, she just changes her mind.

Seriously, **** you, you miserable prick.

[Donger]

Originally Posted by frazod

You're a ****ing douche. I don't really know why you've gotten a free pass for so long, but it is what it is. For a douche, being douchy is fun. For the rest of us, though, it's just you being a douche. You're like the bitch in the Billy Joel song - she never gives in, she just changes her mind.

Seriously, **** you, you miserable prick.

I'm not sure what you mean by getting a free pass, but okay. And, no offense, but you are the one who sounds miserable. I'm actually a pretty affable chap.

[Frazod]

Originally Posted by Donger

I'm not sure what you mean by getting a free pass, but okay. And, no offense, but you are the one who sounds miserable. I'm actually a pretty affable chap.

If jerking off over the price of oil is happiness, yeah, I guess you're just regular bundle of joy.