“Video from the sea floor has once again exposed as ludicrous the federal estimates of how much oil is poisoning the Gulf of Mexico. That video shows that the billowing cloud of filth from BP’s broken pipe appears undiminished even as about 15,000 barrels of oil a day are being captured by a new cap, clearly indicating that the flow is several multiples of that amount.”
Oil is under $40 a barrel at the moment. There’s no reason to think gasoline won’t soon be under a buck a gallon, in some places at least. You can get regular for $1.27 a gallon in Cheyenne, Wyoming.
Is this good news or bad news?
[Update: I don't recommend driving to Cheyenne to buy gas. It just seems to have the lowest price in the country at the moment.]
Check out the oil price graph at Calculated Risk.
“Prior to each national election in the U.S. the price of oil plummets for a several month cycle prior to November voting, and then immediately climbs back up to record-setting highs by about March 1 of the new year.”
Wheels Blog quoting expert who has studied the phenomenon.
Regular gasoline spotted around town Tuesday for $2.999.
Wholesale — that’s wholesale — gasoline hit $4.85 today, up from $3 Tuesday because the refineries in southeast Texas are closed and aren’t making any gasoline for now.
That’s wholesale — four-eighty-five a gallon.
But the price of crude oil is down to near $100 you say. How can that be?
Because the southeast Texas refineries are closed. They aren’t buying any crude oil because they aren’t using what they have because they aren’t making any gasoline.
According to AAA, the cost of a gallon of unleaded regular gasoline nationwide averages 10.8% less than the record high price in mid-July.
The price today is still 30% higher than it was a year ago.
Average for unleaded regular September 11, 2008: $3.671.
The price of a barrel of crude oil is down 31% since July.
HOWEVER, this from AP:
The wholesale price of gasoline ranged from $4 to nearly $5 a gallon at the U.S. Gulf Coast on Thursday, said Tom Kloza, publisher and chief oil analyst of the Oil Price Information Service in Wall, N.J. That was up significantly from about $3 to $3.30 a gallon on Wednesday, Kloza said.
“We’re looking at the highest wholesale prices ever for a huge swath of the country,” he said. “People understand that regardless what happens with Ike, it’s going to shut down the biggest refining cluster for a period of five, six, seven days.”
The wholesale price of gasoline is what refineries charge retailers. Retailers then mark up those prices for the customer so they can make a profit — so if these wholesale prices hold, it could mean that pump prices for U.S. drivers easily break through the July 17 record of $4.114 a gallon.
How come the price of a barrel of oil is down 20% since its peak, but the price of gasoline is only down 10% from its record high five weeks ago?
School starts this week in Albuquerque — Wednesday is the first full day. NewMexiKen never started school before Labor Day and none of my kids did either. What’s with this August-to-May school year anyway?
I bought regular gasoline yesterday for $3.58 (I’m rounding off the tenth of a cent from now on). I was thinking I shouldn’t fill up (that is, I should buy short), because the price will continue to drop at least until election day.
What percentage of time during the Olympic coverage on NBC is actually spent watching athletes do athlete stuff? 10 percent? 15 percent?
There are rumors that McCain will pledge just one term to offset the age issue. I know an even better way — no terms. The Wall Street Journal’s MarketWatch tells us Why McCain would be a mediocre president. “A careful look at McCain’s biography shows that he isn’t prepared for the job. His resume is much thinner than most people think.” Amazingly, McCain is even more of a dilettante than W.
Remember my rant about Comcast and the comment from a representative of Comcast? Well, it seems the outreach is real:
From a sparse desk dominated by two computer screens in the new Comcast Center here, Mr. Eliason uses readily available online tools to monitor public comments on blogs, message boards and social networks for any mention of Comcast, the nation’s largest cable company. When he sees a complaint like Mr. Dilbeck’s, he contacts the source to try to defuse the problem.
“When you’re having a two-way conversation, you really get to clear the air,” Mr. Eliason said.
The New York Times has more — Complaining Bloggers Have a Cable Company’s Ear.
The iPhone is great except for battery life, which is OK at best.
James Kuntsler, author of The Long Emergency (written when oil was $50 a barrel), is not what you’d call an optimist.
Here’s Kuntsler in the Schnectady Gazette:
A lot of people (Realtors, builders, bankers) are waiting for the “bottom” of the housing crash, with the idea that we’ll re-enter an up-cycle. I see it differently. There won’t be a resumption of “growth” as we’ve known it, certainly not in suburban residential and commercial real estate. The suburban project is over. We’re done with that. (I know people find this unbelievable.) The existing stuff will represent a huge liability for us for decades to come as it loses value and utility and falls apart.
And here he is in the Dallas Morning News:
I think the Sun Belt generally is in for tough times. We’re going to rediscover why the territory between Charleston and the Pecos was an agricultural backwater before 1945, with few cities of any size. You can’t overestimate the importance of cheap air conditioning – and the prospect for that is looking pretty grim in years ahead.
Among the reasons some are arguing for more offshore drilling and drilling on wilderness lands, is it’s a bargain. This first reported here two years ago today:
While the oil companies are recording record profits and oil-producing nations are awash in cash, the income from the oil and gas you own (if you are an American citizen) is up just 8% from 2001-2005. (About one-third of all the oil and gas produced in the U.S. comes from federal land.)
That’s eight percent at the same time the price of oil is up 90% and the price of natural gas up 30%.
Presumably production from federal lands is down 20% and that explains the small increase in income.
Sure.
According to a report at MSN Money, at $140 a barrel, two of our best friends, Iran and Saudi Arabia — just those two — could sell their oil reserves (403 billion barrels) for enough dollars to buy the entire United States of America.
Every three months the Federal Reserve estimates the value of our collective tangible assets, financial assets and liabilities to arrive at our net worth. It’s the whole enchilada — all our cars, our houses, our durable “stuff,” bank deposits, stocks, bonds and mutual funds. Everything. Then it subtracts all our mortgages, consumer credit and other debt to arrive at our net worth.
At the end of March, for instance, our collective net worth as a nation was $56 trillion, the second straight quarter it had dropped. Divide $56 trillion by the recent $140-a-barrel price of oil and you get 400 billion barrels of oil as the value of America . . .
“PNM won’t be ready to project what this winter’s bills will be until August, but they will be ‘significantly higher’.”
The Albuquerque Journal quoting PNM spokesperson Susan Sponar. PNM is New Mexico’s largest gas and electric provider. Your mileage may differ, but I’m thinking heating bills this coming winter are going to be scarier than Dick Cheney’s to-do list.
Thanks to jfleck at inkstain for the pointer.
Oh, and here’s another painful line, as if we didn’t know. This from CNN Money.
“Record gas and higher food prices drove inflation to the biggest annual jump since 1991 and fanned fears about growing pressures on consumers.”
When it comes to the cost of gasoline, who should we believe? Here are some nominees and their viewpoints:
1. The oil companies: It’s supply and demand at its most basic, just like your professor outlined in your freshman economics course.
2. The petro-toadies in Congress: All we have to do is open up the Arctic National Wildlife Refuge and the waters off Florida and California.
3. The Department of Energy: OPEC has to pump more, and we’ve got to allow more refineries by rolling back environmental restrictions.
4. King Abdullah: OPEC pumps plenty of crude but “despicable” oil-futures speculators in the West are driving up the prices due to their “selfishness.”
5. Senator John McCain: Exxon Mobil has done such a good job of demonstrating the magic of the marketplace that it deserves another $1.2 billion in tax breaks.
6. Senator Barack Obama: Impose a windfall-profits tax to remind American oil executives that price gouging can backfire politically.
7. About 90 percent of the print and TV reporters in America: See No. 1. It really is that ol’ devil supply and demand.
8. The White House: Never mind. Nobody’s home.
Howell Raines in an article critical of news media coverage of energy issues.
Or are you more fortunate? Here are the national averages from AAA for Sunday.
NewMexiKen paid $3.84 for regular the other day. I guess I’m below average.
It’s an all-too-common belief that if only we had authorized more domestic development of oil, our gasoline prices would be lower.
Even though we are the proverbial 8,000 pound gorilla, consuming about one-quarter of the world’s energy, oil prices are not all about us. The increasing consumption of countries in Asia, South America, Russia, and the Middle East have more than made up for the slight declines in petroleum consumption we have experienced this year. Global consumption is expected to increase another 1 mbpd this year, even as consumption declines in the U.S.
The fact is that oil is a globally traded commodity. Since the U.S. imports two-thirds of the oil it consumes, the price of domestic oil will always maintain parity with global prices. Therefore, no matter how much we drill up the remaining resources, it will not significantly change the price of fuel.
With the global supply and demand balance as tight as it is for oil, natural gas, and coal, it is highly unlikely that a slight increase in U.S. production could make any noticeable difference in our gasoline prices.
From a lengthy piece about “peak oil” at The Oil Drum by Chris Nelder, author of Profit from the Peak: The End of Oil and the Greatest Investment Event of the Century.
Another interesting point: Many oil fields are depleting; that is, their production is decreasing. Any new oil fields must make up this decrease before there is a net gain. Currently net growth of production is 1% a year. Demand is up 1.5% a year. Do the math.
“I just don’t drive as much,” said Herman Heaton, a 72-year-old retired lumber mill worker, leaning against a Chevy Silverado pickup that now costs him $80 to fill up. “We don’t go to Mobile as much as we used to for shopping.” Heaton said he now spends about $600 a month on gas, about 10 percent of his income and about double what he spent last year.
The above from an MSNBC story.
A retired lumber mill worker in Alabama has an income of $72,000 a year?
He’s buying, roughly, 150 gallons of gas a month? Even figuring just 10 miles a gallon, what’s a retired 72-year-old doing driving 18,000 miles a year?
He says he “just don’t drive as much,” but he also is said to be spending double on gas when gas has gone up just 33%.
“I’ve been an oil man all my life, but this is one emergency we can’t drill our way out of.”
So, to recap, a program designed to lower fuel prices so that rich people can continue to drive at discount prices wherever they damned well please in huge, mobile living rooms is raising the price of food so high that poor people can no longer afford to eat. The effect of that program is demonstrated in a report, but the report is not published because the powers-that-be would rather let poor people continue to starve than embarrass the leading proponent of the program.
And here we are: we’d rather starve poor people than give up our big cars. Remind me again about what a good country the United States is.
There’s more.
“A record 1.6 million barrels a day in U.S. refined petroleum products were exported during the first four months of this year, up 33 percent from 1.2 million barrels a day over the same period in 2007. Shipments this February topped 1.8 million barrels a day for the first time during any month, according to final numbers from the Energy Department.” (Forbes)
Put another way, we are exporting more than twice as much oil now as we could expect the Arctic National Wildlife Refuge to produce when it came online in 15-20 years.
Exporting.
More than twice as much.
As you may have heard, oil prices have reached a new high above $140. I can already hear the outcry against speculators and their out-of-control games to enrich themselves at our expense.
Never mind that speculators have been caught shortselling oil (ie betting on a fall in prices) more than a few times in recent months. Never mind that spot oil prices, which require actual physical deliveries of oil at the end of each month, have behaved the same way as paper futures. Never mind that oil storage seems to not be increasing.
Nope, it is just too convenient, too irresistible and, let’s say it, too comfortable an excuse that speculators are to blame. It’s not our fault, we have our scapegoat. Our price increases are temporary, we’ll soon be back to “normal” lower prices, as soon as (take your pick) speculators have been punished/oil companies are taxed for their profiteering/”fundamentals” are left to set prices.
This is just denial
There are A LOT of good reasons why oil prices are going up. Let me show you just a few.
The Oil Drum runs down the reasons they believe $140 oil is real.
Whether they are correct on every point or not, this is a particularly good primer for informing your opinion.
The price of crude oil was up 4% today.
That is crude. Rude too. And socially unacceptable.
Mr. Terrazas, a 48-year-old maintenance worker, is among a flow of American “gas tourists” who, Mexican service stations near the border with El Paso estimate, account for a 50 percent surge in gasoline sales here over the last several months. (Similar increases are reported along the border all the way to Tijuana.) Even the Mexico Tourism Board is promoting the journey.
$2.66 a gallon in Juarez. NewMexiKen paid $3.75 a gallon at Costco in Albuquerque Tuesday. Nationwide the average price for a gallon of regular is $4.07.
NewMexiKen read somewhere this week that there were less than 10,000 privately-owned cars in Beijing when I was there 16 years ago.
Today there are more than 3 million privately-owned cars in Beijing.
Remember this?
Ten days later, same Chevron station in Orange County, California:
Bet customers wish they were getting their 18.4¢ tax rebate.
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