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.

[Donger]

National average is $3.30, down $0.25 from a month ago.

[displacedinMN]

Originally Posted by lewdog

$4.67 in the Phoenix area. We always get screwed with the $1/gallon in Maricopa county gas tax they implemented years ago. Pretty crazy to think how expensive gas is in a city this large without much public transportation. People in Phoenix drive A LOT.

holy shit, I did not know it was that much. That is overboard.


saw 3.09 here

[scho63]

Originally Posted by lewdog

$4.67 in the Phoenix area. We always get screwed with the $1/gallon in Maricopa county gas tax they implemented years ago. Pretty crazy to think how expensive gas is in a city this large without much public transportation. People in Phoenix drive A LOT.

Amazing how much money the Federal, State and Local governments make on a gallon of gas.

[Misplaced_Chiefs_Fan]

We're finally back down to 2.99/gal here. And that's including the .75 state/county gas tax. *sigh*

[ChiliConCarnage]

Originally Posted by ChiliConCarnage

Paid 3.40s this morning.

filled up for $2.73 today. That's the lowest I've seen in a quite a while. I don't even know how long ago it would have been

[Donger]

Surging U.S. Oil Production Brings Down Prices

Edited to remove some of the other... stuff.

https://dnyuz.com/2023/12/01/surging...climate-fears/

American oil fields are gushing again.

Only three years after U.S. oil production collapsed during the pandemic, energy companies are cranking out a record 13.2 million barrels a day, more than Russia or Saudi Arabia. The flow of oil has grown by roughly 800,000 barrels a day since early 2022 and analysts expect the industry to add another 500,000 barrels a day next year.

The surge in output has helped push down gasoline prices, which have fallen by close to $2 a gallon since the summer of 2022 and are now back to levels that prevailed in 2021. It has also provided the Biden administration with substantial leverage in its dealings with oil-exporting foes like Russia, Venezuela and Iran while reducing its need to cajole more friendly countries like Saudi Arabia to temper prices.

The United States now exports roughly four million barrels a day, more than any member of the Organization of the Petroleum Exporting Countries except Saudi Arabia. On balance, the United States still imports more than it exports because domestic demand exceeds supply and many American refineries can more easily refine the heavier oil produced in Canada and Latin America than the lighter crude that oozes out of the shale fields of New Mexico, North Dakota and Texas.

Nearly every extra barrel of American crude produced is being exported, mostly to Europe and Asia, where supplies are tight. In addition, the natural gas that bubbles up with oil has also led to record exports of gas and helped to lower prices for that fuel and for electricity, much of which is produced at gas-fired power plants in the United States.
Most of the new U.S. oil production is coming from the Permian Basin, which straddles Texas and New Mexico. There are also some new projects and expansions in Alaska and offshore in the Gulf of Mexico.

“It’s the mother of all comeback stories,” said Robert McNally, who was a senior energy adviser under President George W. Bush. “The last couple of years have shown that you should never bet against the U.S. oil sector.”

The bonanza has helped American consumers. This week the average price for a gallon of regular gasoline was $3.25 a gallon, 25 cents below what it cost a year earlier and nearly $1.80 below the record price set in June 2022, according to AAA.

The American oil industry is now dominated by hydraulic fracturing of shale, a process that splits hard rock with pressurized water and chemicals. Shale wells are highly productive for only a couple of years, so a decline in drilling brings a quick, sharp decline in output. Conversely, a rapid return of drilling ignites a spurt of production.

Technological advances have enabled producers to drill faster with new rigs designed for the shale fields of Texas, New Mexico, Colorado and North Dakota. Robotics and software improvements have cut costs, while lateral wells have been lengthened to expose more rock for fracture.

[493rd]

Originally Posted by Donger

Surging U.S. Oil Production Brings Down Prices

Edited to remove some of the other... stuff.

https://dnyuz.com/2023/12/01/surging...climate-fears/

American oil fields are gushing again.

Only three years after U.S. oil production collapsed during the pandemic, energy companies are cranking out a record 13.2 million barrels a day, more than Russia or Saudi Arabia. The flow of oil has grown by roughly 800,000 barrels a day since early 2022 and analysts expect the industry to add another 500,000 barrels a day next year.

The surge in output has helped push down gasoline prices, which have fallen by close to $2 a gallon since the summer of 2022 and are now back to levels that prevailed in 2021. It has also provided the Biden administration with substantial leverage in its dealings with oil-exporting foes like Russia, Venezuela and Iran while reducing its need to cajole more friendly countries like Saudi Arabia to temper prices.

The United States now exports roughly four million barrels a day, more than any member of the Organization of the Petroleum Exporting Countries except Saudi Arabia. On balance, the United States still imports more than it exports because domestic demand exceeds supply and many American refineries can more easily refine the heavier oil produced in Canada and Latin America than the lighter crude that oozes out of the shale fields of New Mexico, North Dakota and Texas.

Nearly every extra barrel of American crude produced is being exported, mostly to Europe and Asia, where supplies are tight. In addition, the natural gas that bubbles up with oil has also led to record exports of gas and helped to lower prices for that fuel and for electricity, much of which is produced at gas-fired power plants in the United States.
Most of the new U.S. oil production is coming from the Permian Basin, which straddles Texas and New Mexico. There are also some new projects and expansions in Alaska and offshore in the Gulf of Mexico.

“It’s the mother of all comeback stories,” said Robert McNally, who was a senior energy adviser under President George W. Bush. “The last couple of years have shown that you should never bet against the U.S. oil sector.”

The bonanza has helped American consumers. This week the average price for a gallon of regular gasoline was $3.25 a gallon, 25 cents below what it cost a year earlier and nearly $1.80 below the record price set in June 2022, according to AAA.

The American oil industry is now dominated by hydraulic fracturing of shale, a process that splits hard rock with pressurized water and chemicals. Shale wells are highly productive for only a couple of years, so a decline in drilling brings a quick, sharp decline in output. Conversely, a rapid return of drilling ignites a spurt of production.

Technological advances have enabled producers to drill faster with new rigs designed for the shale fields of Texas, New Mexico, Colorado and North Dakota. Robotics and software improvements have cut costs, while lateral wells have been lengthened to expose more rock for fracture.

And why is this happening? Because they’re trying to speed up refilling the SPR that was previously drained by a certain idiot.

[493rd]

https://www.reuters.com/markets/comm...pt-2023-12-01/

[Donger]

Originally Posted by 493rd

And why is this happening? Because they’re trying to speed up refilling the SPR that was previously drained by a certain idiot.

It's happening because it's profitable.

Drawing down the SPR in order to try to drive down crude prices and thereby gasoline/diesel prices in response to consumer prices and other events is not a new thing. So please don't bring politics into this here.

[493rd]

Originally Posted by Donger

It's happening because it's profitable.

Drawing down the SPR in order to try to drive down crude prices and thereby gasoline/diesel prices in response to consumer prices and other events is not a new thing. So please don't bring politics into this here.

Just speaking facts bro. And selling oil from the SPR to China had nothing to do with driving down prices. You wanna debate a guy who worked on the floor of the Merc about commodities pricing and supply/demand?

[Donger]

Originally Posted by 493rd

Just speaking facts bro. And selling oil from the SPR to China had nothing to do with driving down prices. You wanna debate a guy who worked on the floor of the Merc about commodities pricing and supply/demand?

Once again, not here please. I assume you know how to find CPDC.

[Chief Pagan]

Originally Posted by 493rd

And why is this happening? Because they’re trying to speed up refilling the SPR

Originally Posted by 493rd

Just speaking facts bro. And selling oil from the SPR to China had nothing to do with driving down prices. You wanna debate a guy who worked on the floor of the Merc about commodities pricing and supply/demand?

Wait, wut?

So selling oil from the SPR to China drove prices down?

But now, the Feds desire to fill the SPR is causing a surge in production that is also driving prices down?

I guess the Feds should continually fill and drain the SPR?


Only three years after U.S. oil production collapsed during the pandemic, energy companies are cranking out a record 13.2 million barrels a day, more than Russia or Saudi Arabia. The flow of oil has grown by roughly 800,000 barrels a day since early 2022 and analysts expect the industry to add another 500,000 barrels a day next year.

The surge in output has helped push down gasoline prices

[kcfan75]

Just filled up for $2.62 at a BP on State Line road.

[493rd]

Premium here is $3.90

[KingPriest2]

Originally Posted by 493rd

And why is this happening? Because they’re trying to speed up refilling the SPR that was previously drained by a certain idiot.

Lol ok. If you say so