Gasoline over $4 coming to a pump near you because this thread is ass

[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

Yes.

LOL

[petegz28]

In May 2007 gasoline prices were higher than after hurricane Katrina wrecked a third of the nation's refining capacity. Gasoline prices are higher than ever before. If we are to believe that high prices are not a result of price fixing or price gouging, then we are actually seeing the result of an imbalance between low stockpiles and increasing summer demand for gasoline.

2007:
Fears new problems at US refineries will constrict gasoline supplies already at unusually low pre-summer levels (May 2007)
A refinery fire in Sweden
Nigerians running wild again this year
Trouble at many of the nation's refineries
US inventory stockpiles at lowest level since 1956
Extended planned refinery maintenance programs
Excuses given in the two previous years (2005-2006) mirror what we are hearing in 2007:
Concern a storm in the Caribbean will become a hurricane and hit petroleum installations in the Gulf of Mexico
Fresh worries Iran will miss a deadline to halt its nuclear program (8-18-06)
Oil fell $2 to below $75 a barrel today after Britain said it had thwarted a plot to blow up aircraft in trans-Atlantic flight. (8-10-06)
BP Plc said it's shutting the Prudhoe Bay oil field in Alaska (8-06-06)
Depletion at some of the world's largest fields including Mexico's Cantarell
Three Filipino oil and gas workers were abducted in southern Nigeria (8-04-06)
Fears that the Israeli-Lebanese conflict could spread to Middle East oil producers = $78.40 per barrel
Fear of Nigerian spies (7-31-06)
Explosions on Nigerian pipelines, Israel's military action, and tensions with Iran = $76 per barrel (7-13-06)
Tension over problems with North Korea cause record high prices (7-10-06)
Strong demand and worries about Iran; record high above $75 a barrel (7-05-06)
Momentum from strong demand and geopolitical worries
World oil prices advanced further as the market focused on tight supplies of US gasoline (6-22-06)
Congress has resisted accessing the billions of barrels' worth of oil and natural gas in our (U.S.) offshore continental shelf (added 6-17-06)
Mixed signals from Iran over a package of incentives offered by the West for it to give up uranium enrichment (added 6-16-06)
Militants kidnapped five Koreans at a natural gas plant operated by Royal Dutch Shell in Nigeria
Iran's supreme leader threatened to disrupt global supplies if the West punishes Tehran over its nuclear program
A refinery fire cut production at a Valero Energy Corp plant on June 1, 2006
An attack on a Nigerian oil rig which included kidnappings
Crude futures rose amid expectations of a spike in motor fuel demand during the summer driving season, and as forecasters warn of hurricane activity in the coming months. A barrel of light crude jumped $1.21 to $72.50 on the New York Mercantile Exchange on 30 May 2006.
President Bush's Blunders some say George Bush added $15 to a barrel of oil Add $15 to the price of each barrel of oil
Concern of new predictions of new hurricanes for 2006
A letter from Iran's president to President Bush failed to move the countries closer to an agreement
Rising resource nationalism in South America have added to oil-market worries
An expected decline in gasoline stocks (note that this excuse was reversed in 2 days as stocks increased)
Bullish buying by investors
A refinery outage in Italy
Supply disruptions in Africa
Tight petroleum supplies amid soaring demand could drive crude oil prices above $100 a barrel by this winter (2006-2007), energy experts warned yesterday.
Speculators and profit takers bid up the market
Bush stops filling oil reserves while experts say refining is the real issue
Changes from MTBE to Ethanol cause refining and delivery problems
Problems continue in Nigera
Concern about meeting demand for fuel as summer approaches (2006)
The Iranian government wants nuclear power, but purchased long range missiles while acting like loose cannons

-- Beginning of excuses for 2005 --
U.S. government reported in November an unexpected decline in oil supplies
Concern about meeting demand for fuel as winter approaches
Concern US refineries aren't recovering fast enough from the hurricane season
Tropical Storm Wilma - Oct 17 2005 - could move in to the Gulf of Mexico
Almost 19 percent of the U.S. total refining capacity is idle
French refiners might sit on the sidelines due to strikes
Fears of inadequate heating oil supplies this winter
Speculation about natural gas shortages
Debate about trade and budget deficits as US buys more fuel overseas
Are they stretching it with this one?
"Natural gas yesterday surged to a record on concern that a tropical storm system developing in the Caribbean Sea may develop into another hurricane that could cut production that has been crippled by two storms in the last month." - from September 28, 2005
And we continue...
Storms have exposed the soft underbelly of the U.S. energy system
U.S. Gulf of Mexico production remained completely shut because of Hurricane Rita
Four refineries remain shut because of damage caused by Katrina
Tropical Storm Rita will impede efforts to restore production in the Gulf of Mexico
Department of Energy said energy costs in the United States for the upcoming winter would be the highest in a decade
Gasoline futures on the New York Mercantile Exchange sent prices 25 percent higher in less than a week - Sep 1, 2005
US production recovered more slowly than expected after Katrina
Eight major refineries are shut down squeezing U.S. refining capacity
Hurricane Katrina appears to be gathering power, causing big problems
Hurricane Katrina damaged platforms and ports
A fire broke out at a Tesoro refinery in Martinez, California
Oil is effected by a superhot, panic-ridden California market
Iran parliament rejects president's choice of oil minister
Tropical Storm Katrina could threaten oil production in the Gulf of Mexico
A fire at a massive refining complex in Venezuela
In Nigeria villagers closed down a pumping facility
A 2 percent slump in US supplies signaled a thirsty market
In Ecuador protesters forced a halt to production
The oil market has not fully convinced itself that more than $60 is sustainable
US stockpile data expected to show a drop in gasoline inventories
Events in the oil-rich Middle East conspire to keep prices high
Nippon Oil Corp. suspended operations after a strong earthquake in Japan
Chevron Corp.'s refinery in El Segundo, California, shutdown for 25 days following a fire
The hot summer helped keep natural gas inventories at worrisomely low levels
ConocoPhillips' Wood River, Ill., refinery, was shut after a thunderstorm caused a power failure
Premcor Inc.'s refinery in Memphis, Tenn., was closed due to a power outage
If sanctioned by the U.S. and U.N., Iran would cut back on oil producing
The hot Chinese economy
Fear of a supply disruption
Rumours of terrorist threats to Saudi refineries
US embassy in Saudi Arabia closed for two days
Iran's decision to restart its nuclear program
Summer is the peak driving season in the US
Bombings in London
Diplomatic showdown over Iran's nuclear program
The recent death of King Fahd
Refinery outages in the United States
It is a product of trading strategies
Dicey conditions in oil producing nations
Weather related problems
Continued worldwide high demand
Strong economic growth in the US, which consumes a quarter of the world's fuel
Excessive fuel use by the US military, which use a third of US supplies
An explosion at the BP plant in Texas City, near Houston
Aging plants that are having difficulty maintaining output at high levels
Major oil reserves are becoming harder to find
Major oil reserves are more expensive to exploit
Strong demand from India
Lack of OPEC to increase oil production
Canada, which supplies oil to the US, recently signed a deal with China
Insurgents have not halted their attacks against the US military in Iraq
Insurgents have not halted their attacks against the new government in Baghdad
Anxiety over terrorism and the Iraq war
Some refineries have had to cut back production because they've been running so hard
Decreasing production in the North Sea
There are only about 1.5 million barrels of spare daily production that can be used in case of emergency
Rebel attacks on pipelines in India
A Sunoco refinery fire in Philadelphia
The threat of hurricanes
A provision in the energy bill signed by President Bush removes protections relative to MTBE
Without MTBE refiners have less flexibility in reformulating gasoline, which could drive prices up
The dollar is declining in relation to other benchmark currencies
No giant new oil fields have been found in twenty years
Critical items such as steel casing and tubing are now in short supply and expensive
Drilling and operating costs have soared
Hurricane Dennis, July 11, 2005
Hurricane Emily
Concerns that demand was straining the world's capacity to pump and refine crude oil
Nigerian rebels have warned oil companies to shut down production in the Niger delta
If Chinese demand were comparable to US demand China would consume more than what is currently being produced
Yukos bankruptcy where Yukos is a major supplier of upwards of 2% of the world's oil supply
Chavez recall vote in unstable Venezuela
Darfur's rebels and supposedly Khartoum backed militias, where the real prize is the oil wealth of the Sudan
Fear of lower US petroleum reserves
OPEC's lack of spare capacity means they can no longer control the market
Sabotaged pipelines in Iraq have added to the escalating price of oil
Fear of cold weather in the winter of 2005 - 2006
Fear that global oil reserves will be entirely depleted by 2038
Concerns over Iran’s decision to resume uranium-conversion activities

[Donger]

Originally Posted by petegz28

JFC, donger, are you going to use the summer gas excuse now?

Unless you think supply and demand aren't factors...

It's actually a combination of three things:

1) It's peak driving season, so demand is very high. 6% greater than last year, in fact.

2) Since it's summer, refiners are still dealing with the mandated summer blends.

3) To try to meet demand, refineries are operating at near 100%. When that happens, more things break.

So, I suppose it could be a big BP conspiracy to actually intentionally limit the product they produce during peak driving season... Or...

[Donger]

Jesus indeed, Pete.

[Donger]

U.S. oil futures on Friday sank below $40 a barrel for the first time since the Great Recession and were on track for an eighth straight weekly loss—the longest streak of weekly losses since 1986.

Prices sank under $40 intraday shortly after data from Baker Hughes BHI, -2.43% showed that the number of active U.S. oil drilling rigs rose 2 to 674 as of Aug. 21.

Weaker-than-expected Chinese manufacturing data and a sharp declines in the U.S. stock market also spurred worries about the outlook for energy demand.

After tapping a low of $39.86 a barrel, WTI crude for delivery in October CLV5, -2.95% remained down $1.39, or 3.4%, at $39.93 on the New York Mercantile Exchange. Based on the most-active contract, prices were set for their lowest settlement since February 2009 and are on track for a weekly loss of 5.7%, their eighth weekly decline in a row.

[Donger]

Crude plummeting today. Now well below $40 at $38.90, down 3.83% right now.

[ThaVirus]

If I don't see gas prices at or below $2 here in the next few weeks I'm paying Donger a visit

[Donger]

Originally Posted by ThaVirus

If I don't see gas prices at or below $2 here in the next few weeks I'm paying Donger a visit

For what purpose? I'm not very social.

[KC native]

Originally Posted by Donger

For what purpose? I'm not very social.

He would like to share an adult beverage with you in your garage.

[DaneMcCloud]

$3.15 yesterday at the Burbank Costco. I got caught in the gas line and was stuck for 22 minutes.

$4.29 at the Chevron nearest my home.

[Donger]

Originally Posted by DaneMcCloud

$3.15 yesterday at the Burbank Costco. I got caught in the gas line and was stuck for 22 minutes.

$4.29 at the Chevron nearest my home.

[Bowser]

Originally Posted by DaneMcCloud

$3.15 yesterday at the Burbank Costco. I got caught in the gas line and was stuck for 22 minutes.

$4.29 at the Chevron nearest my home.

LOL, Christ

[Bowser]

Originally Posted by Donger

Crude plummeting today. Now well below $40 at $38.90, down 3.83% right now.

Gas still hovering around 2.60/gal here in KC. There has been no substantive drop in prices even though crude is going down faster than a drunken homecoming queen.

Tell me more about how broke dick our refineries are, again.

[Donger]

Originally Posted by Bowser

Gas still hovering around 2.60/gal here in KC. There has been no substantive drop in prices even though crude is going down faster than a drunken homecoming queen.

Tell me more about how broke dick our refineries are, again.

See 168.

[BigMeatballDave]

Based on what happened 7 years ago, if crude keeps falling, and these refineries get their heads outta their asses, we should see gasoline fall to around $1.50.