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Old 04-23-2007, 08:40 AM  
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Gasoline at $4 Coming to a Pump Near You, Unfazed by Rising Tab

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

Pretty alarmist, IMO, but possible.

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.
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Old 04-27-2007, 05:03 PM   #121
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Quote:
Originally Posted by munkey
How the f(*& do you know
It's public record. Right around 9%

Quote:
Originally Posted by munkey
...Do you work in the industry
I used to work in a related industry.

Quote:
Originally Posted by munkey
or just have to much time on your hands?
Probably.

Quote:
Originally Posted by munkey
Oh wait...how many posts do you have?
22,583.

Quote:
Originally Posted by munkey
Seriously...

The way you write one would think everyone is on the same playing field and it is what it is...

I hate to tell you but your dead wrong...

The fuel prices are going to tip the scale...EVERYTHING will be affected. Construction, food, shipping...It's not just about me car pooling with the neighbor or using my scooter.
Have I said that increasing gasoline prices won't have an influence on other items? What am I wrong about?
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Old 04-27-2007, 05:10 PM   #122
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Quote:
Originally Posted by munkey
How the f(*& do you know...Do you work in the industry or just have to much time on your hands? Oh wait...how many posts do you have?

Seriously...

The way you write one would think everyone is on the same playing field and it is what it is...

I hate to tell you but your dead wrong...

The price of fuel will tip the scale...EVERYTHING will be affected. Construction, food, shipping...It's not just about me car pooling with the neighbor or using my scooter.
Here: http://www.washingtonpost.com/wp-dyn...102702399.html

Most financial institutions, such as commercial banks, are routinely more profitable than Exxon Mobil was in its third quarter. For example, Exxon Mobil's gross margin of 9.8 cents of profit for every dollar of revenue pales in comparison to Citigroup Inc.'s 15.7 cents in 2004. By percentage of total revenue, banking is consistently the most profitable industry in America, followed closely by the drug industry.
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Old 04-27-2007, 05:10 PM   #123
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Maybe its the way you come across...

I'm a conservative but the trend at the pumps is seriously starting to question my belief in our governments policies...

I did not see where you mentioned prices won't have influence on other items...you just have to forgive me on that one.
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Old 04-27-2007, 05:13 PM   #124
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Quote:
Originally Posted by munkey
Maybe its the way you come across...

I'm a conservative but the trend at the pumps is seriously starting to question my belief in our governments policies...

I did not see where you mentioned prices won't have influence on other items...you just have to forgive me on that one.
I simply don't become emotional very easily, especially on this subject. That may strike some as, well, I don't know what.

I just try to answer questions that people have about the industry. That's all.
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Old 04-27-2007, 05:17 PM   #125
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Quote:
Originally Posted by Donger
Here: http://www.washingtonpost.com/wp-dyn...102702399.html

Most financial institutions, such as commercial banks, are routinely more profitable than Exxon Mobil was in its third quarter. For example, Exxon Mobil's gross margin of 9.8 cents of profit for every dollar of revenue pales in comparison to Citigroup Inc.'s 15.7 cents in 2004. By percentage of total revenue, banking is consistently the most profitable industry in America, followed closely by the drug industry.
So why is it the consumers fault the idiots that run Exxon weren't smart enought to get when they're profits sucked so bad for so long....

It's no different then me raising my fee's for servicing a loan when the company next door makes more building window frames.

Apples and Oranges...IMO
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Old 04-27-2007, 05:18 PM   #126
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So why is it the consumers fault the idiots that run Exxon weren't smart enought to get when they're profits sucked so bad for so long....

It's no different then me raising my fee's for servicing a loan when the company next door makes more building window frames.

Apples and Oranges...IMO
Sorry, but I don't know what you are asking.
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Old 04-27-2007, 05:25 PM   #127
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Sorry, but I don't know what you are asking.

You should run for president...

I don't know why you're confused....
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Old 04-27-2007, 05:26 PM   #128
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You should run for president...

I don't know why you're confused....
This sentence didn't make any sense to me: "So why is it the consumers fault the idiots that run Exxon weren't smart enought to get when they're profits sucked so bad for so long...."

Does it make sense to you?
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Old 05-02-2007, 11:13 AM   #129
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Gasoline prices could hit record this month: AAA

NEW YORK (Reuters) - U.S. retail gasoline prices could hit an all-time high by the end of this month due to ongoing problems at the nation's oil refineries, automobile and travel group AAA said on Wednesday.

Gasoline prices have surged 30 cents since early April to $2.97 a gallon on average, bringing them within a dime of the record struck after Hurricane Katrina shut down refineries along the Gulf Coast in 2005.

"The nationwide average price of self-serve regular will probably hit $3 per gallon in the next few days, and could possibly set a new all-time record high price before the end of the month," AAA said.

Gasoline stockpiles in the United States have dropped by 15 percent since early February amid an unusually high number of refinery outages, alongside robust demand and low imports.

AAA said it was "alarming" that gasoline prices were rising so high without the backdrop of a major geopolitical or natural event to disrupt supply, like a hurricane or a new military flare-up in the Middle East.

"Because oil prices today are at least $10 less expensive per barrel than when gasoline prices previously exceeded $3 per gallon, almost all of the price pressure on gasoline can now be attributed to America's continuing -- and increasing -- inability to supply enough refined gasoline to the marketplace," AAA said.

The U.S. government said earlier this week that gasoline prices could hit a record this summer.
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Old 05-02-2007, 11:18 AM   #130
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Quote:
Originally Posted by Donger
Gasoline prices could hit record this month: AAA

NEW YORK (Reuters) - U.S. retail gasoline prices could hit an all-time high by the end of this month due to ongoing problems at the nation's oil refineries, automobile and travel group AAA said on Wednesday.

Gasoline prices have surged 30 cents since early April to $2.97 a gallon on average, bringing them within a dime of the record struck after Hurricane Katrina shut down refineries along the Gulf Coast in 2005.

"The nationwide average price of self-serve regular will probably hit $3 per gallon in the next few days, and could possibly set a new all-time record high price before the end of the month," AAA said.

Gasoline stockpiles in the United States have dropped by 15 percent since early February amid an unusually high number of refinery outages, alongside robust demand and low imports.

AAA said it was "alarming" that gasoline prices were rising so high without the backdrop of a major geopolitical or natural event to disrupt supply, like a hurricane or a new military flare-up in the Middle East.

"Because oil prices today are at least $10 less expensive per barrel than when gasoline prices previously exceeded $3 per gallon, almost all of the price pressure on gasoline can now be attributed to America's continuing -- and increasing -- inability to supply enough refined gasoline to the marketplace," AAA said.

The U.S. government said earlier this week that gasoline prices could hit a record this summer.
So gas is less expensive per barrel today than when it was 3 bucks a gallon. But in the span of a year, our demand has risen so sharply that gas companies have no choice but to raise prices? I have no idea on how to refute that, but I'm not sure I buy that.
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Old 05-02-2007, 11:23 AM   #131
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I think they're dicking around at the refineries to drive up prices.

I'm getting really, really tired of the constant barage of excuses of reasons the prices keep rising for things that "might" happen.

"We're converting to heating oil"..."We're making #1 diesel for winter" "We're converting away from heating oil" "someone in Nicaragua farted on an oil field"....
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Old 05-02-2007, 11:27 AM   #132
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So gas is less expensive per barrel today than when it was 3 bucks a gallon. But in the span of a year, our demand has risen so sharply that gas companies have no choice but to raise prices? I have no idea on how to refute that, but I'm not sure I buy that.
No.

Crude oil is $10 less expensive per barrel than it was when gasoline was last at $3 per gallon. That means that gasoline shouldn't be near $3 per gallon now, right?

Wrong.

Refineries are operating at ~88% capacity right now. The last time gasoline was near $3/gallon, they were operating at near 100% In other words, the present high price of gasoline has more to do with refining capacity (or lack thereof) than it does with the price of crude.
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Old 05-02-2007, 11:30 AM   #133
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......Then Build some effing refineries.

I really wish the Govt would step in and build a couple of large refineries on retired military bases....and use the profit to reduce debt and tax burden on poorer Americans...or fix schools or roads....or Military equipment
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Old 05-02-2007, 11:32 AM   #134
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Quote:
Originally Posted by Donger
No.

Crude oil is $10 less expensive per barrel than it was when gasoline was last at $3 per gallon. That means that gasoline shouldn't be near $3 per gallon now, right?

Wrong.

Refineries are operating at ~88% capacity right now. The last time gasoline was near $3/gallon, they were operating at near 100% In other words, the present high price of gasoline has more to do with refining capacity (or lack thereof) than it does with the price of crude.
Refineries here, or refineries worldwide?

See, I'm not sure what all is the reason gas has risen so sharply. First, it was the whole Iraq ordeal. Then, it was the hurricanes. Then, it was China and Indonesia and their consumption rates. Then, it was the threat of Iran doing something stupid. Now, OUR refineries aren't being used at full capacity. I count two of those five reasons being domestic problems.

I call bullshit. Have they given a plausible reason as to why our refineries are operating at a reduced capacity?
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Old 05-02-2007, 11:32 AM   #135
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Originally Posted by Iowanian
......Then Build some effing refineries.

I really wish the Govt would step in and build a couple of large refineries on retired military bases....and use the profit to reduce debt and tax burden on poorer Americans...or fix schools or roads....or Military equipment
It would help. President Bush proposed doing just that. I don't know what happened to it, to be honest.
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I think the young people enjoy it when I "get down," verbally, don't you?
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