How's Your Gas Doing?

[tourunigo]

Nova Scotia: Our gas prices just dropped by about 9% this week with another reduction expected tomorrow night. :clap What's happening with prices in your part of the world? - Bob

[glurkus]

Over here in SE Wisconsin The price of a gallon of gas went from a high of 4.29 and is now a low of 3.79. Thats over a 10% drop. I hope it keeps dropping.

[tourunigo]

hmmm..... 10% is awful close to our 9%. International Corporate Socialism?:dunno
-Bob

[RJM2096]

Our local pump prices have dropped from a high of $4.20 to $3.59 as of yesterday. I would say that is cool, but given the still high price I find no solace of any price above $3.00 a gallon.

I can't help but think that the upcomming election has something to do with this.

We are still in the drive season, we still import crude, we still drive SUVs, trucks etc, we still have China buying fuel, we still have unrest and attacks in Africa, we still have hurricanes, we still have limited refining capacity, we still have oil spills, and we know that only 5 global oil companies control most of the petroleum markets in the free world.

For fear of sending this thread to the dog house I ask "So why is gas cheaper?"

http://i259.photobucket.com/albums/hh310/RJM2096/OilMarket.jpg

[rocketman]

Our local pump prices have dropped from a high of $4.20 to $3.59 as of yesterday. I would say that is cool, but given the still high price I find no solace of any price above $3.00 a gallon.

I can't help but think that the upcomming election has something to do with this.

We are still in the drive season, we still import crude, we still drive SUVs, trucks etc, we still have China buying fuel, we still have unrest and attacks in Africa, we still have hurricanes, we still have limited refining capacity, we still have oil spills, and we know that only 5 global oil companies control most of the petroleum markets in the free world.

For fear of sending this thread to the dog house I ask "So why is gas cheaper?"




two reasons I've heard/read is that demand (in the US) has dropped and the big one is the speculators in oil futures are bailing as the demand dropped and they don't want to get caught with large amounts tied up in falling profits (from speculation), barrel prices are dropping as a result and its passed on down the line. That seems to be it in a nut shell, how long the trend will last is still a wait and see issue as far as I'm concerned.

RM

[RJM2096]

two reasons I've heard/read is that demand (in the US) has dropped and the big one is the speculators in oil futures are bailing as the demand dropped and they don't want to get caught with large amounts tied up in falling profits (from speculation), barrel prices are dropping as a result and its passed on down the line. That seems to be it in a nut shell, how long the trend will last is still a wait and see issue as far as I'm concerned.

RM

Does anybody have any information on the percent in drop of demand for the US?

If we assume the price is dropping because of speculation and not all of the other reasons, then we can assume that the past histroical rise is also a result of speculation, and has little to do with the cost and avialability of crude.

Duing the last congressional election, gas prices also eased quite a bit. Then after the elections the SH## hit the fan.

[bubbagazoo]

Does anybody have any information on the percent in drop of demand for the US?

If we assume the price is dropping because of speculation and not all of the other reasons, then we can assume that the past histroical rise is also a result of speculation, and has little to do with the cost and avialability of crude.

Duing the last congressional election, gas prices also eased quite a bit. Then after the elections the SH## hit the fan.

The financial analyst who does a bit on local radio had this information. I didn't write down the total number of miles not driven in the past month but it works out to the equivalent of 900,000 barrels of oil not being consumed PER DAY. And that is only in the the US. When you factor in the reduction in demand in Canada and Europe, it is a very significant amount of oil not being used worldwide.

[xp8103]

RJM,
Availability has nothing to do with the cost. We are at our refining capacity. There are tankers anchored off shore waiting to off load but can't because we have a backup in refining capacity. There's not SHORTAGE of oil. There are no even-odd days, no gas lines, no rationing (I'm dating myself here). No stations closed because their tanks are empty. The wonks can TALK about the overall global demand, China, India etc but it this "demand" was putting such a strain on supply we'd see it in the front of the pipeline and it's simply not there. Is world demand rising? Yes. Is current output keeping up? All signs point to yes. So why was oil at $140? A weak US economy and low low interest rates that we've ALL (and by ALL I mean EVERYONE) been enjoying for the last few years is coming back to bite us. The Federal debt isn't helping matters a bit and you can blame BOTH PARTIES FOR THAT INCLUDING OUR PRESIDENT (something that disappoints me severely). But since oil futures are traded on the world market in US dollars, why would you want to keep those dollars that are becoming worth less and less when you could turn those dollars into oil futures which are worth more and more and that then becomes speculation. It happens in every commodities market.

[sjbmw]

RJM,
Availability has nothing to do with the cost. We are at our refining capacity. There are tankers anchored off shore waiting to off load but can't because we have a backup in refining capacity. There's not SHORTAGE of oil. There are no even-odd days, no gas lines, no rationing (I'm dating myself here). No stations closed because their tanks are empty. The wonks can TALK about the overall global demand, China, India etc but it this "demand" was putting such a strain on supply we'd see it in the front of the pipeline and it's simply not there. Is world demand rising? Yes. Is current output keeping up? All signs point to yes. So why was oil at $140? A weak US economy and low low interest rates that we've ALL (and by ALL I mean EVERYONE) been enjoying for the last few years is coming back to bite us. The Federal debt isn't helping matters a bit and you can blame BOTH PARTIES FOR THAT INCLUDING OUR PRESIDENT (something that disappoints me severely). But since oil futures are traded on the world market in US dollars, why would you want to keep those dollars that are becoming worth less and less when you could turn those dollars into oil futures which are worth more and more and that then becomes speculation. It happens in every commodities market.

bingo.

Oil is not rising in simple economic cost (i.e. supply vs. demand). The dollar is losing its value.

byw, 3.71 here in South Jersey..

[rocketman]

Does anybody have any information on the percent in drop of demand for the US?

If we assume the price is dropping because of speculation and not all of the other reasons, then we can assume that the past histroical rise is also a result of speculation, and has little to do with the cost and avialability of crude.

Duing the last congressional election, gas prices also eased quite a bit. Then after the elections the SH## hit the fan.

No the two don't always follow, the last time we had on-off days was for different reasons. This time its in part that the oil futures market is retuning less profits so people are bailing and the price of crude is down because demand is down, that to me shows that, in at least some ways, it still is a market-driven economy and we can effect it to a certain extent. As I've said before complex issues require multifaceted solutions, its not all black and white and you can't point to any one aspect and say, "there, That's the problem, fix that and everything else is golden!".

As for why there are no new refineries being built, one major reason that i keep seing talked about (by a number of sources) is that there is no supply for them to process, the existing ones have gotten much more efficient so it would seem to me that with the time it takes for the investment of building one to start returning a profit and pay off the up-front costs and the uncertainly of there being an increase in supply (we can only pump are a certain rate per well) who's going to chance it? Assuming there is in fact all these tankers waiting at ports to unload, (which I haven't head about, but that doesn't mean its untrue, just that has not been in any reports I've heard/read) still that doesn't mean there is this large over-supply just waiting for someplace to processes it. Just like any business, you have to have a certain inventory in reserve at your warehouse to operate, right? So why should it be any different for an oil refinery? I would imagine the cost of shutdown and start up if they run low on supply would be very costly.

RM

[133754]

There are many factors apparently causing the high price of crude with the devaluation of the dollar certainly being one.

During this latest boom down here in the Permian Basin (Midland, Texas)one of the problems with production is the large number of oil well workers that left the profession in the ninety's when oil dipped under $10 a barrel. Many oil drilling rigs were sold for scrap metal and it takes a long time to replace them and find crews to run them.

We are still not up on most of those rigs and if oil stays above $100 it will take a few years to reach the desired numbers.

As to solutions the answer is "why can't we just all get along".

Drill everywhere we can safely and ecologically. Build more refineries , more wind mills(this area leads the nation in wind power) more solar and do everything possible to find other sources of energy and develope politically correct power as it becomes available.

JT:clap :clap

[osbornk]

There is one thing I think that has impacted oil prices that nobody has mentioned. In preparation for the Olympics, China has taken millions of cars off the road and closed many factories that use oil. I think that the decrease in Chinese usage is having a temporary effect only.

[rocketman]

from bloomburg.. (I've seen this same data on several other reports so...)

Dollar Trades Near One-Month High as U.S. Companies Add Jobs

By Ye Xie and Candice Zachariahs

July 30 (Bloomberg) -- The dollar traded near a one-month high versus the euro and the yen after an ADP Employer Services report showed U.S. companies unexpectedly added jobs.

The greenback pared gains as a decline in gasoline inventories pushed crude oil prices higher. The Australian dollar dropped against all of the other major currencies as a report showed home-building approvals dropped in June.

``The ADP number is not bad, but I think the dollar's rally was a bit stretched,'' said John McCarthy, director of currency trading at ING Financial Markets LLC in New York. ``Then oil spoiled the party.''

The dollar reached $1.5522 per euro, the strongest level since June 24, before trading at $1.5579 per euro at 4:20 p.m. in New York, compared with $1.5588 yesterday. The U.S. currency was little changed at 108.06 yen, compared with 108.11. It touched 108.33, the highest level since June 25. The euro traded at 168.37 yen, compared with 168.53.

unfortunately it goes on to say..

"The Federal Reserve extended its emergency lending programs to Wall Street firms through January after policy makers judged that markets are still too weak to operate without a backstop from the central bank.

`Still Fragile'

``It suggests the market is still fragile and we're not out of the woods yet,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. ``That means the Fed won't raise rates any time soon. I'm not buying the dollar.''

the rest is here...

http://www.bloomberg.com/apps/news?pid=20601101&sid=aU1lp342W9Y8&refer=japan


as I said don't hold your breath, but any slowing of the decline is better news than not....
RM

oh, and gas prices have dropped in the Dc area as well, down around 25 cents, yet in WV, its still in the over $4 mark in many places. Not sure why, perhaps higher taxes or transportation costs to more outlying areas?

[tommcgee]

Gas prices haven't changed much in New England over the past six weeks. We're still around $4.00 plus or minus 5 or 10 cents.

[glurkus]

Nearly 10 Billion Fewer Miles Driven in May 2008 than May 2007 Seven-Month Decline in Travel Reflected in Highway Trust Fund

WASHINGTON - New Federal data showing further steep declines in the number of miles Americans are driving is additional proof that the country needs new means - other than the gas tax - to finance the nation's transportation infrastructure, U.S. Secretary of Transportation Mary E. Peters said today.

"By driving less and using more fuel-efficient vehicles, Americans are showing us that the highways of tomorrow cannot be supported solely by the federal gas tax," Secretary Peters said. "We must embrace more sustainable funding sources for highways and bridges through more sustainable and effective ways such as congestion pricing and private activity bonds."

Secretary Peters said that Americans drove 9.6 billion fewer vehicle-miles traveled (VMT) in May 2008 than in May 2007, according to the Federal Highway Administration data. This is the largest drop in VMT for any May, which typically reflects increased traffic due to Memorial Day vacations and the beginning of summer, and is the third-largest monthly drop in the 66 years such data have been recorded. Three of the largest single-month declines - each topping 9 billion miles - have occurred since December.


VMT on all public roads for May 2008 fell 3.7 percent as compared with May 2007 travel, the Secretary added, marking a decline of 29.8 billion miles traveled in the first five months of 2008 than the same period a year earlier. This continues a seven-month trend that amounts to 40.5 billion fewer miles traveled between November 2007 and May 2008 than the same period a year before, she said.

As Americans drive less and rely increasingly on mass transit, carpooling or other options, the federal Highway Trust Fund receives less revenue from gasoline and diesel sales - 18.4 cents per gallon and
24.4 cents per gallon, respectively.

"Less driving means less money for the Highway Trust Fund," said Acting Federal Highway Administrator Jim Ray. "The status quo cannot and will not work in the 21st century."

To review the FHWA's "Traffic Volume Trends" reports for May 2008, visit http://www.fhwa.dot.gov/ohim/tvtw/tvtpage.htm.

[tonkandy]

$4.00 today for non-oxy in the land of ethanol. It's was $3.67 for regular.

[nortonrt]

Interesting reading, all of these suppositions about why the price of crude, gasoline, and diesel is up, or down, and why it's linked to the dollar, or not. Apart from the political assumptions, which can be valued by parsing the verb assume, most seem perfectly logical, and more or less directly contradictory. In discussions such as these, it's best to keep in mind why economics is known as "The Dismal Science." But it's fun to talk about.

[RJM2096]

Nearly 10 Billion Fewer Miles Driven in May 2008 than May 2007 Seven-Month Decline in Travel Reflected in Highway Trust Fund

"By driving less and using more fuel-efficient vehicles, Americans are showing us that the highways of tomorrow cannot be supported solely by the federal gas tax," Secretary Peters said. "We must embrace more sustainable funding sources for highways and bridges through more sustainable and effective ways such as congestion pricing and private activity bonds."

To review the FHWA's "Traffic Volume Trends" reports for May 2008, visit http://www.fhwa.dot.gov/ohim/tvtw/tvtpage.htm.


This is their opening to turn most interstates into tollways through the use of toll account cards, electronic monitoring, and cameras for violators. If we are driving less then there is less need for new highways and repairs. These are the same people talking about highway tax giveaways for the election. If they need more cents per gallon taxes then so be it, but they hardly use what they got wisely.

http://i259.photobucket.com/albums/hh310/RJM2096/TollBooths.jpg

[xp8103]

JT, you're right. The solution HAS to be a combination of EVERYTHING. No single source of power will replace dino. It HAS to be a combination of everything. We have built this nation and it now runs on oil/coal. Everything. There is no way, in 6 months, in a year or 10 years or 20 years that we can simply flip a switch and say "Ok! We're done with oil. NEXT!" It just won't happen. France gets 80% of it's electricity from Nukes. Where does ours come from? Coal. Maine is a PERFECT example of the energy-hypocrisy of the environmental wacko mentality that has been essentially governing our national energy non-policy for the last 40 years. Maine used to have a nuclear power plant that supplied not only the state but the northeast grid with electricity.
Maine has been the California of the east when it comes to environmental policy. But it let Maine Yankee fall into such disrepair that it had to be shuttered. So instead of clean energy, we now get our electricity from all the coal plants in the midwest which then belch hydrocarbons and soot into the atmosphere which Maine then sues because of acid rain and air quality.
Wind farms? No. All the flatlanders don't want their mountain views ruined. Oh, then there's the birds (there was nothing so funny as to watch one environmental wacko group going after another!)
Hydroelectric? Absolutely not. Stops fish migration.
Hey! Let's put in an LNG terminal on a small piece of Maine's 5000 mile coast line? NO! NIMBY (in at least 4 different communities - Another funny. Company tried to put an LNG terminal on the eastern most port in Maine. Community said NO! So they moved it across the bay to Canada where they said Oui! How shortsighted are we?)
So my friends, what does that leave? Solar? We're up on the 45th parallel. They don't work on a large scale very well here. What's next?
Ah HA!! Outdoor wood boilers! Afterall, Maine is one of the most heavily forested states in the nation. Guess what? Your neighbor complained and the Legislature passed a law last year to heavily regulate them, allowing a moritorium on the sale, installation and use until the DEP could develop rules and regulations governing them. Also, can't buy one manufactured before October 2007 unless it's certified to meet the new (undefined) regs.
But we're told to buy hybrids. Barry O says "Inflate your tires! Tune up your engines!" And then there's PLUG IN hybrids. Drive it home and plug it in. Charges overnight! No emissions! Oh. Wait. Where's that electricity coming from? See Paragraph "B" above.
SO JUST WHAT IN THE LLEH DO WE DO??????? SOMEONE??? ANYONE???? TELL ME WHAT THE F--- ARE WE SUPPOSED TO DO FOR POWER? The solution HAS to include ALL technologies INCLUDING both conservation AND drilling for our OWN oil off shore and in ANWR. Shale in the upper midwest that geologists and oil companies discovered could be extracted on a profitable basis once oil went to $50 a barrel. Guess what? Where are we now? We can't just flip a switch and be off oil. The argument that "new oil drilling wont impact us for another 5-10 years" was the same argument that was used 5-10 years ago to not drill! Guess what folks?? It's 5-10 years later now! Am I the only one who sees this? I'm not that smart, I can't be.
And don't give me the "Big Oil" B.S. These companies are in business to make money and ANYONE with a retirement plan makes money off them. And if you look at who is investing the MOST money in R&D, making drilling and refining more efficient and safer, looking for new oil and other resources, spending money on alternatives, it's the oil companies. Yes, along with others but there are VERY few other organizations with the capital to make investments on the scale necessary. Lastly and finally, Exxon and Shell and BP don't SET the price of oil. It is set on the open world commodities market that allows ANYONE to trade in oil. YOU could buy oil futures if you wanted to. The problem is, there is less regulation on trading in oil futures than there is in cattle futures. THAT is where the Government can make a difference.
At the rate technology is advancing, how we power our lives 30-50 years from now will look VERY different from today. Heck, in just the 10 or so years since the EV-1 (which was a successful failure) we have gone from the Honda Insight to full-on hybrid technology in vehicles that can carry more than two people and a couple golf bags. Materials and technologies will continue to improve. But we need to get from here to there and oil is going to continue to provide that pathway. If we want to get off FOREIGN oil, let's drill for our own!
Government isn't the solution. Government should be the catalyst, not the hindrance. It should make it EASIER not harder.

[RJM2096]

Today the street price when from $3.59 to $3.97.

Exxon/Mobil reported record profits while the rest of the economy is in the toilet. My portfolio is not doing much despite having oil company stocks in its mix.

There is no doubt that we all are proud of our society and our beliefs of the power of the free market, but political corruption and monopolistic activities hamper the ability of a market to be really free. Look at the Senator from Alaska and you see an example of an oil industry related company doing special favors for a politician. Despite the retoric they are cozy.

The oil industry is pretty much a closed industry with each geopgraphical area being served by one or two refineries. With the 12 global oil companies having merged into 5 and the campaign contributions to politicans by the oil industry we are not going to get out of this mess. Common sense should rule: Ask yourself if they were really buying crude at the $140.00 a barrel wouldn't they be unable to reach record profits. The key is that they own the oil through lucrative leasing arrangements and special tax breaks. Most of their oil comes from the US, Canada, and Mexico.

http://i259.photobucket.com/albums/hh310/RJM2096/SpendingResearch.jpg

[DarrylRi]

Common sense should rule: Ask yourself if they were really buying crude at the $140.00 a barrel wouldn't they be unable to reach record profits.

Well, that's a pretty basic misread of how any commodity works.

Producers and the middlemen all get a percentage of the cost of the oil as profit, as it flows to the end users. So big oil makes A LOT more money -- as shown in today's profit report from ExxonMobil of $11.68 BILLION for this past quarter (that's profits, not revenues!) -- when oil is $140/bbl than when it's $10/BBL, for moving the same number of barrels of oil.

So, high oil prices are a good deal for big oil. They are also a good deal for our friends the Saudis, the Iranians and the Venezuelans, as they, too, are getting a percentage of the price. (Political discussion about supporting our enemies elided.)

The only oil producing country around that is not pumping everything it can is Saudi Arabia. But even they have a limited headroom on how much more they can pump. Oil production is pretty flat, but the demand is up, in part because of our friends, the Chinese.

With a tight market, the speculators have been having a field day. They buy up oil futures and hold them, hoping to sell them at a good profit. This makes it appear that there's no oil available for delivery in 3 months, and this apparent shortage affects the cost on the spot market -- oil that's being bought and sold for delivery this week.

Probably the speculation will cool down a bit, but oil is not going back to $10/BBL anytime soon. The underlying fundamentals of this commodity are that it is going to be in tight supply, and therefore, more expensive than in the past.

[rocketman]

RJM

Not sure where you got your figures but everything I find says street price is still dropping and so is per barrel prices, down to $123 - $122 depending on market.
As for BIG OIL profits, no arguments there, if fact Exxon/mobile reported record earnings yet again!

Does kinda piss you off, don't it?

RM