Category: Energy & Gasoline Prices

Six Things to Think About

1. According to a report in Automotive News, Ford and General Motors discussed a merger in July.

2. The price of gasoline has gone down 50 cents in a month. How much lower can it go before the election? (Thanks to mjh’s blog for focusing my thought on this one.)

3. Venezuelan president Hugo Chávez‘s favorite books include “Les Misérables” by Victor Hugo and “Don Quixote” by Cervantes. Also “Dude, Where’s My Country?” by Michael Moore.

4. Charles P. Pierce thinks the president is on the edge:

This all came back to me because, quite frankly, I think the president of the United States is getting ready to slug somebody. And, based on several recent on-camera performances, all of them readily available to anyone who wants to watch, you wouldn’t have to say anything about his momma, his wife, his kids, his dogs, or the fundamental legitimacy of his pedigree to get him to throw down on your ass like the genuine Earnie (The Acorn) Shavers. It appears that all that would be necessary is for you push a question about his policies beyond the limits of whatever talking-points he has on the subject.

… There are presidents who can rise above it, and presidents who can’t, but none of them ever looked like they were ready to toss hands because people questioned their right to torture. It’s become truly startling how close we seem to be coming to the “Because I said so, that’s why” moment.

5. John Yoo understands American history a little differently than I learned it.

But the founders intended that wrongheaded or obsolete legislation and judicial decisions would be checked by presidential action, just as executive overreaching is to be checked by the courts and Congress.

6. Path to 9/11 writer Cyrus Nowrasteh is even more delusional.

I felt duty-bound from the outset to focus on a single goal–to represent our recent pre-9/11 history as the evidence revealed it to be. The American people deserve to know that history: They have paid for it in blood.

… Fact-checkers and lawyers scrutinized every detail, every line, every scene. There were hundreds of pages of annotations. We were informed by multiple advisers and interviews with people involved in the events–and books, including in a most important way the 9/11 Commission Report.

More than you want to know about gasoline

NewMexiKen bought gasoline last week for $3.019 (mid-grade) then saw premium at Costco and Sam’s a little while later for $2.749. Wow, I thought, 27¢ a gallon, how can that be?

Then I read why in the October Consumer Reports.

When oil prices are relatively low or falling and supplies are adequate, independent gas stations tend to have the lowest prices because they’re free to shop around…. Super-size independents or hyper marketers, such as Costco, can afford to market gas for little profit; convenience-store gas independents make more profits selling coffee and cigarettes [and beer] than gasoline….

When oil prices are relatively high or rising and supplies are tight, brand-name gas stations will tend to have a pricing edge. That’s because the brand-name companies make sure their own stations get scarce supplies first, at contract prices that insulate them somewhat from hikes…. Scarcity pushes up spot market prices and independents’ costs.

The article also points out that gasoline is a generic product. “The only thing that distinguishes brands is the fraction of a percent of proprietary additives dropped into tanker trucks before delivery to retail gas stations.”

NewMexiKen also read recently that it is unwise to buy gasoline while a tanker truck is filling the station’s tanks. Apparently the delivery will stir up impurities in the underground tanks and send them along to your vehicle.

Gas prices

At $3 a gallon it costs NewMexiKen about 15¢ a mile just for gas, so I don’t drive 12 miles to save $1.50 on fuel. Even so, it doesn’t hurt to know in advance. MSN Autos has a good tool for finding gasoline prices near you.

After 30 years or so of watching gasoline stations turn into grocery stores (OK, convenience stores), it’s interesting to watch the reverse trend as grocery stores start adding gasoline pumps. It began with the big stores — Costco and Sam’s — but now is extending to Safeway, Smith’s and, I’m sure, other supermarket chains. And, generally, these stores have competitive prices and discounts if you buy groceries.

Pay at the pump

“[The big five oil] companies earned $34.6 billion in the second quarter, 36 percent more than the same period last year. Through the first half of the year, the five companies earned $62.8 billion, putting them 20 percent ahead of their record-setting pace last year.” (New York Times)

That’s ExxonMobil, BP, ConocoPhillips, Royal Dutch Shell and Chevron.

Makes no sense to me

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.

Doesn’t it take longer than a day for oil to become gas?

Environmental Economics asks a question many of us have had:

Doesn’t it take longer than a day for oil to become gas?

Oil jumped to $78 per barrel yesterday. My wife paid $3.30 for gas this morning. I’m pretty sure it takes more than 48 hours for Middle East oil to become Columbus, OH gas. So what’s going on? In short, expectations matter. Prices are expected to go up in the future, so prices jump today. Is this greedy suppliers taking advantage? No just rationality at work.

And a commenter elaborates:

A gasoline retailer may have spent $2.50 for a gallon of gasoline sitting in his underground tank, but this is a (literal) sunk cost.

Why would he sell a gallon today for $3 if he expects the replacement cost to be $3.50 next week? Just holding the gallon will leave him $0.50 better off at the moment next week when his supplier finishes topping off his underground tank.

By the way, the price we hear in the news reports isn’t for Middle East oil. It’s for light, sweet crude delivered at Cushing, Oklahoma.

Moving on up

GasPriceWatch reports today that the highest gasoline price in the U.S. is $3.79 a gallon for regular in Barstow, California. The lowest is $2.59 in Evanston, Wyoming. And the average, nationwide, is $2.96.

Other sources report the average for a gallon of regular is $3.00, just below last September’s Katrina aftermath and the all-time 1981 level (adjusted for inflation).

Why is it?

Why is it that we tip in restaurants, taxis, airports, hotels, and so on, and yet no one has thought to establish a service station with attendants to fill your tank for a small salary plus tips?

When it takes $40 or $50 or more to fill a tank, how many of us might be perfectly happy to tip (say 10 percent) to have someone do the nasty work, and possibly clean our windshield and headlights. I certainly would. Most women I know would.

Travelin’ men

NewMexiKen has been in 25 states and the District of Columbia since last August.

4,600 car miles on this recent trip. (Dad gets another 950 for the roundtrip from Tucson to Albuquerque.)

Gasoline readily available everywhere — we paid anywhere from $2.54 to $3.00 a gallon for regular. Cheapest gas was in Arkansas; most expensive is in New Mexico.

Dad’s 2002 Pontiac Grand Prix averaged 28.4 miles per gallon for the entire trip (not counting his drive to Tucson today).

As Gas Prices Go Up, Mass Hysteria Rises to Meet Them

This is the kind of journalistic nonsense that just drives NewMexiKen crazy. From the opening paragraphs of a lengthy story in Saturday’s New York Times, As Gas Prices Go Up, Impact Trickles Down:

Ms. Tapia’s red 2004 Dodge Neon was supposed to be a ticket to freedom when her brother passed it down to her in January. She had planned to drive to Manhattan each weekend to visit her boyfriend at New York University, and also dreamed of going out to restaurants and making day trips with friends.

But the car has been nothing but a money-guzzler, she said, leaving her so short of cash that the car often sits in the parking lot outside her apartment.

“When I first got the car it was all fun and games, but I found out it’s pretty expensive to fill the tank,” Ms. Tapia said. “I don’t even want to put gas in my car right now.”

Unexpectedly high gas prices are also putting a crimp in the summer plans.

J. R. Cowan, a history major at Quinnipiac University in Hamden, Conn., said he decided against a cross-country summer trip because “gas would cost double what I budgeted for when I started dreaming about California last year.”

When Amanda Early, a junior at Seton Hall University in South Orange, N.J., accepted a four-day-a-week summer job in public relations near the campus, she did not realize it would amount to a sentence of spending an entire summer in New Jersey. Ms. Early had planned to drive home to Connecticut every weekend, but she said gas prices would force her to remain in New Jersey in the house she shares with four other girls.

Gasoline prices have gone up one-third since a year ago — 31 percent to be exact.

A trip from Waltham to New York City and back, (about 420 miles) in a Dodge Neon (25 city, 30 highway) would take, let’s say, 16 gallons. Sixteen gallons a year ago cost about $36 ($2.24 X 16). Today it might cost $52 ($3.25 X 16). That’s a difference of $16, so the car sits, but Ms. Tapia has money to eat in restaurants.

Gas for a cross country trip costs one-third more than last year, Mr. Cowan, not double. Even a history major should be able to do that much math.

South Orange, New Jersey, to Hartford in the middle of Connecticut is 266 miles round-trip. Going home for the weekend will now cost Ms. Early $13 more than it did a year ago (at 20 miles per gallon).

Yes, gasoline has gone up. Yes, one-third is a substantial increase. Yes, $13 or $16 is a hardship for some. Yes, and most importantly, we all should consider whether there aren’t more enivronmentally efficient modes of travel we can take.

But it’s not as big a deal as the current journalistic and political hysteria would make it out to be. The tone of the paragraphs excerpted above just does not seem justified. It approaches the level of silliness seen in the live, local, late-breaking coverage of local TV news — from outside office buildings closed hours before. I still expect better from The New York Times.

That depends on what your definition of gouging is

Oil company first-quarter profits are up substantially over last year’s records. The oil companies say it’s because the price of oil is up.

But the oil companies control both the extraction and production. To a very large extent they set the price.

Yes, multiple complex issues are in play here. But let’s not let the oil companies get away with acting like they are innocent victims of windfall oil price increases beyond their control.

Too little, too late

While stopping short of actually tapping the reserves, Bush ordered a temporary halt to any further deposits — a move that will slightly increase supply available to consumers.

Dow Jones reports that the move would free up about 70,000 barrels a day otherwise destined for the reserve in the coming weeks.

By my calculations, that’s about one third of one percent of the total U.S. consumption of about 20 million barrels a day — anyone want to call that a drop in the bucket?

Dan Froomkin

NewMexiKen is so excited at the President’s move that I’m going out for a drive.

The President went out for a ride too. Via Froomkin:

Julie Mason of the Houston Chronicle notes in her pool report: “President Bush rode a 14-vehicle motorcade there and back to the Marriott Wardman to talk to the Renewable Fuels Association about energy conservation and other topics. En route, the motorcade passed the Exxon station next to the Watergate, where gas prices were $3.29, $3.39 and $3.49 a gallon. Just saying.”

Oh, and the President ordered a temporary suspension of environmental rules for gasoline. How temporary one wonders?

Random thoughts

The price of gasoline is going up so fast around here they’re going to have to post some guy fulltime on the price signs. You know, give him a headset so he can keep up with the rise. Well over $3 most places for mid-grade or premium (and our regular is just 86 octane).

The cottonwood trees have unleashed their annual crop of cotton. It’s like snow falling at times, especially near the Rio Grande (the banks are lined with cottonwoods). At a winery/restaurant near Old Town last evening with the doors open to the patio, the barroom floor was covered. Ah Choo!

The Rio Grande Cottonwood reproduces by seeding, unlike many other flood-plain trees which regenerate by sprouting. It flowers in the spring, before it leafs out. It releases its seeds, each carried by downy white tuft, or “parachute,” in anticipation of traditional spring floods and winds, the principal mechanisms for dispersion. A mature Rio Grande Cottonwood can produce as many as 25 million seeds in a season, covering wide areas with a blanket of “cotton.” (Rio Grande Cottonwood – DesertUSA)

NewMexiKen hasn’t watched TV in nearly two weeks — at least 11-12 days. None. Nada. Don’t miss it.

T-shirt in winery: “Men are like grapes. You crush them, keep them in the dark and wait until they mature. Then they might be worth having with dinner.”

At a semi-pro soccer match last evening (Albuquerque Asylum vs. San Diego Fusion), a 9 or 10-year-old girl insisted on reading (a major novel, no less), rather than watching the game. As the night progressed the mother and father increased the pressure on the daughter to watch the game. It started out with “Honey, do you see what’s happening? It’s a corner kick.” Progressed to “You should watch the game.” Ended up with “Put the book down and watch the game.” NewMexiKen is happy to report she kept on reading. I mean, come on parents, yes it would be nice if she took in the game and shared the moment with her family, but what’s the point of demanding it? Leave her alone.

Albuquerque won 2-1. It was a warm, beautiful snow-filled night (see cottonwood item above).

Sums it up pretty well

“A leak in the Alaskan Pipeline last week spilled 265,000 gallons of crude oil into the Arctic tundra. British Petroleum, the company that runs the oil operation, said that the spill was too small to be detected by their maintenance equipment. But just large enough to rise the price of gas fifteen cents a gallon this week.”

Jay Leno

Ouch!

Gasoline has become cheaper — NewMexiKen paid just $2.099 for regular Friday in Virginia. (So why is it 40-50 cents more a gallon in New Mexico?)

However, and it’s a big however, my October natural gas bill has arrived. I used 2.6 percent less gas than a year ago, but the cost was 50 percent more.

With gasoline cheaper and natural gas up, when it gets really cold I may have to sit in the heated car in the garage.