Posted on 04/16/2008 9:25:12 AM PDT by Dane
Gas, oil futures hit new records on report of lower supplies
By JOHN WILEN – 54 minutes ago
NEW YORK (AP) — Gasoline and oil futures prices rocketed to new records Wednesday, propelled by concerns about how much gas will be available during the peak summer months. Crude futures approached $115 for the first time.
Gas futures prices set records after the Energy Department's Energy Information Administration reported that supplies of the fuel fell by 5.5 million barrels last week, much more than analysts surveyed by Dow Jones Newswires had expected.
The report raised concerns that there won't be enough gasoline to meet demand this summer. May gasoline futures rose 3.58 cents to $2.9168 a gallon on the New York Mercantile Exchange after earlier rising to a trading record of $2.933.
Meanwhile, oil futures rose to a new trading high of $114.95 after the report said crude inventories fell by 2.3 million barrels last week, compared to the gain analysts expected.
Light, sweet crude for May delivery was up 60 cents at $114.39 a barrel on the Nymex by late morning.
The EIA also reported that inventories of distillates, which included heating oil and diesel, unexpectedly rose last week by about 100,000 barrels. Analysts had expected a sharp decline. That news sent May heating oil futures 0.48 cent lower to $2.2691 a gallon on the Nymex.
At the pump, meanwhile, the national average price of a gallon of regular unleaded gas rose 1.3 cents Wednesday to a record $3.399 a gallon, according to a survey of stations by AAA and the Oil Price Information Service. That's 53 cents higher than a year ago, and is expected to keep climbing along with futures prices and as the summer driving season draws near.
The average national price of a gallon of diesel, meanwhile, rose a cent to a record $4.129 a gallon, the survey showed.
When are you going to quit starting discussions with insults?
Supplies are irrelevant in the narrow range they occupy. The decline in Russian oil production might be of interest, but supplies is not.
But there isn’t an energy problem. It is wholly manufactured by government beaurocracy via rules, regulations, and drilling limitations.
Yeah, that's the ticket.
We already have, but might not agree with you as to the exact nature of our energy problem.
Awwww, poor wittle baby, he has been insulted, welll you know what I am insulted every time I put fuel in my tank and the majority of the money goes to arab shieks and crazy commies like hugo chavez, who hate you and me.
But of course you come on these threads claiming how alternative energy and energy independence is not feasible(i.e kissing the ring of the arab shieks and hugo chavez).
Well you go ahead and kiss OPEC's rings, but don't get insulted when someone calls you out on that.
it doesnt help the dollar hit another record low. this is pushing oil prices just as much as anything.
I was wondering why a local independent gas retailer had increased his prices 11 cents this morning for a gallon of unleaded -— by happenstance, I saved almost two dollars on gas just by buying yesterday instead of today.
RBOB gasoline has risen about 15 cents in the past week. This would show up directly at the pump.
This will stop when some speculators on future prices lose their shirts.
They won’t lose their shirts, because Friday morning (Thursday evening?) the gas pumps will increase their prices to reflect today’s bidding...a no lose situation for speculators.
It’s an endless cycle. They speculate, and the companies set prices based on the speculation.
This protection of speculation via instant price increases signals that the market is open to manipulation, and that it is, therefore, no longer operating freely.
And guess what, saudi arabia, Venuzuela, and Nigeria are in the top 5 of our suppliers, and probably provide more oil combined than Canada does, but you already knew that, since you also probably love kissing the ring of OPEC.
Get the environut regulations out of here and let us go after our own natural resources. Let us build new refineries. Let us build nuclear power plants so petroleum can be diverted from domestic power supply.
Then we can talk about ‘Rush elitism’.
Also, when will there be as much effort to subsidize ethanol from corn as there is developing biodiesel from algae?
By the way, even with that being true the free market will take care of the problem (and I NEVER listen to Rush...so I guess I don't qualify for your "elitist" comment). If people can't afford gas prices, they will change their behavior to adjust. I know I have. I've taken to parking my thirsty pickup and take the bus or drive my wife's eco car or my motorcycle. This is the new reality, and people better wake up to the fact that it ain't going to get better so they need to quit complaining and take action to help themselves.
Another way we'll change our behavior as a nation is (hopefully) to insist that those in Congress who are purposefully constraining domestic oil production should get out of the way or lose their job.
So what do you recommend should be done about this problem outside of more oil and more conservation?
"Hello there Dane. My name is Ad Hominem."
Add to those the under-regulation of the commodities markets, specifically as it applies to speculation, and you are pretty close to reasons gas/oil prices are so high.
Also, don’t forget the multilayered taxes!
Although we are made aware of the publically traded price of petroleum products the public doesn’t seem to realize that major oil companies seldom pay the published price. Lets take russian diesel for instance...Platts’ pricing is currently around $1025.00 per metric ton, however you can get a spot buy of diesel (millions of metric tons) for $550.00 to $600.00/MT FOB Rotterdam. A 12-36 month contract for Diesel can be had at even a lower rate. Gasoline on the other hand can be had with a 4 to 6 cent /gal discount off of published prices.
So what do you recommend should be done about this problem outside of more oil and more conservation?
Well my motto is cheap energy equals freedom, and IMO, there has to be a Manhattan type of project that would endorse all domestic energy sources, be they coal, nuclear, wind, solar, hydrogen, cellulose(non-food) ethanol(etc.etc.).
Any candidate who took on such a stance would be a winner, IMO, and as for conservation, we don't need to go back to the Carter era of wearing cardigan sweaters, the winner will take on our petroleum addicted economy, and BTW, there is nothing wrong with oil, the fact though is we(the US )is being held under the thumb of govt's that laothe and even hate us.
This is a national security issue, and should be treated as such.
This “insanity” is due primarily to weak currency, not oil supply. When (if) you see gold fall, you will see this reverse.
Actually Dane when are you going to start discussions with facts.
You know your buddies in Mexico were our #3 source of imports for the period 2/08 while our friends in Canada were our #1 source of imported oil for the same time period. Seems to me the majority of our money is going to Canadians and Mexicans.
This is a purposful, blatant decision to manipulate prices and consumers are going to take it up the a$$ because of it. We WILL see $4.00 gal by May 1st, and 4.50 by June. Speculators continue to pump more money into the futures market making the law of supply and demand irrrevelent.
Commodities have been hijacked by the huge hedge funds, pension funds, and soveirgn welath funds. They will continue to bid prices up until the whole economic shooting match collapses. The you just might see another world depression.
Mike
Just buy stock in Big Oil like the FReepers who love this did.
Drill, drill, drill, and drill some more. Drill Alaska; drill North Dakota; drill offshore and drill some more. Refine shale oil, tar, and drill some more. Let China and India have the Mideast and OPEC. Meanwhile, we can keep looking for other ways to fuel our economy and save the world from an ice age. Build Nuke plants; make hydrogen; grow hemp, and make bio diesel. Defy gravity, if we can, but drill, and drill some more.
And you also do know that rounding out the top 5 is saudi arabia, Venuzuela, and Nigeria.
Are you happy that you are dependent on an islamofascit state, a state run by a crazy che guevera commie, and an African nation where islamofascists are making inroads?
Happy with that while you diss energy independence for the US.
When are you going to admit that oil is not a free market. If it were, the price would come (way) down.
As a matter of fact the oil market represents the complete opposite of a free market, therein lies the problem.
And THAT is the problem I have with the current market. You nailed it.
You assume he's looking for a discussion...I don't.
Memo to Congress: “due to lower supplies...”
Consumption is down over last year and prices are up.
So there goes your theory.
Rush is the problem???? Hello?
I don’t hear him calling for us to NOT get the oil we have in abundance in the Gulf, ANWAR, PA, ND, NY, OH, MT, WY, CO and probably half a dozen other states. I don’t hear Rush demanding that we increase the bogus ethanol subsidy. And I don’t hear him giving support to OPEC.
What is it that you expect Rush or anybody else to do? I have my own answers but I’d like to hear yours.
If this is the fault of speculators, why were they not able to do this in the 1980’s and 1990’s? Why now?
If this is the fault of speculators, why were they not able to do this in the 1980’s and 1990’s? Why now?
They won’t lose their shirts, because Friday morning (Thursday evening?) the gas pumps will increase their prices to reflect today’s bidding...a no lose situation for speculators.
It’s an endless cycle. They speculate, and the companies set prices based on the speculation.
This protection of speculation via instant price increases signals that the market is open to manipulation, and that it is, therefore, no longer operating freely.
And Rush will say with a staright face stating that his friends in the oil industry tell him that all is well.
This has turned into one big racket and the American consumer is getting screwed.
It isn't Dane, unless you include ANWR, nukes and all out coal. Wishful thinking and touchy feely thoughts are what is now causing the Al Gore/Hollyweird Elite WORLDWIDE FOOD RIOTS.
On a lighter note...let us drill where it is and we can come a lot closer to independence.
That said, there is no reason to throw the baby out with the bathwater as elite conservatives do, when it comes to such sources as hydrogen, wind, solar, and cellulose(non-food) ethanol, etc.etc.
You are not paying attention very well. US has the resources to be energy independent. I have said that many times. I have promoted over and over greater US energy independence and production of our resource.
But ideas like hydrogen only make our energy consumption worse not better. It consumes more energy than it contains to make a transportation fuel.
Recognizing bad ideas in not the same as being against all ideas. I greatly want to see more energy independence in the US. I just don't want to see legislation that only makes it worse and cost us even more money.
And I want to see intelligent discussion on the topic and the exchange of ideas. Why do you post on Free Republic?
Well a couple of weeks back you were dissing nuclear energy saying that the US has only an 85 year supply of uranium.
Did it ever occur to you, if even your point was true, that great strides could be made in more efficient energy production, in those 85 years.
JMO, your point was to diss nuclear energy and go on the cynical yet profitable track for you, of saying we are stuck with petroleum like it or not and will be kissing the rings at OPEC for the forseeable future.
I reject that, given what American ingenuity has produced in the past, but I can see your point, IMO, you are akin to the buggy whip manufacturers, who did not want to see the horse give way to the automobile, and you do anything in your power to make sure the internal combustion engine does not go the way of the buggy whip.
I read this last week. It is not the only report on the subject:
http://blogs.mysanantonio.com/weblogs/traffic/archives/2008/04/gas_prices_rise.html
I’ll proudly wear that pancake when I’m sure of what I’ve been reading.
April 11, 2008
Gas prices rise as consumption goes down
Gasoline prices continued to rise this week, hitting the latest record today, even as U.S. motorists increasingly burn less petrol.
(Tony Dejak / Associated Press)
A worker feeds the hungry gas pumps earlier today in Beachwood, Ohio. The nation’s gas prices are at a record and rising even though motorists have been and are expected to continue buying less fuel.
Regular grade averages $3.36 a gallon nationwide, up almost 8 cents over eight days and 56 cents from a year ago, according to AAA.
Texas prices are at an all-time high of $3.29, while San Antonio’s averaging $3.22, down 0.2 cent from Wednesday’s record.
“Because crude oil continues to sell above $100 per barrel, motorists can expect prices to remain high as well,” AAA Texas spokeswoman Rose Rougeau said.
AAA Fuel Gauge
Prices won’t just stay high, they’ll shoot into the stratosphere, blowing by the inflation-adjusted record of $1.42 set in March 1981, which is $3.41 in today’s dollars.
The U.S. Energy Information Administration this week upped its estimate on how high gas prices will get this year, saying they could average $3.60 a gallon in May and June, more than a dime higher than last month’s prediction.
Short-Term Energy Outlook
Historical and projected prices
Nevertheless, while global demand for oil grows, U.S. drivers will likely continue burning less gasoline.
Consumption decreased slightly in the second half of 2007, accelerated to 0.4 percent in the last quarter and then to 0.6 percent in the first three months of this year, the Energy Information Administration said. The weak gas sales are expected to go on.
“The drop in gasoline consumption, the first since the recession of 2000, should come as no surprise with the slowing economy and soaring gasoline prices,” agency officials said.
This Week In Petroleum
Motor Gasoline Consumption
Americans aren’t just buying more fuel efficient cars. Last year, for the first time in 27 years, they drove less.
Look at prices 8 years ago and consumption 8 years ago and see if consumption has doubled in 8 years the same way that prices have nearly tripled.
I don’t buy it.
The market is not free. It is being distorted in some way.
They can say what they want. I don’t buy it.
Petroleum is a global, fungible commodity.
Global Consumption of Petroleum is up, not down. And it is projected to continue to climb. The reduction is recent reports are on how much it is increasing, not a reduction in total demand.
World Petroleum Demand, 2003-2007
http://www.eia.doe.gov/emeu/ipsr/t24.xls
OPEC, Monthly Oil Market Report
April 2008
http://www.opec.org/home/Monthly%20Oil%20Market%20Reports/2008/pdf/MR042008.pdf
Table 3: World oil demand, page 20
INTERNATIONAL ENERGY AGENCY - OIL MARKET REPORT http://omrpublic.iea.org/omrarchive/11mar08dem.pdf
That is not the way supply/demand curves work. Especially if they are short-term inelastic.
Take a simplified example. You make a life-saving drug for a disease. You can make 100 pills a month and normally 99 people per month contract the disease. It cost you $100 dollars a pill to make them and you sell them for $150 each. Decent profit, pays for your research.
After a few year, the spread of the disease picks up, but you have not enlarged your production yet. Now 120 people a month contract the disease. Do you think the market price for a pill that treats a fatal disease will only go up 20% and those at the end of the line will just wait?
Or are they going to bid up the price at a much faster rate than demand is increasing?
Very simplified model of a monopoly, regardless of the suppliers intentions, prices will skyrocket to the maximum the 100th person can afford.
It's a distorted market.
Ultimately, the issue with oil is that it has no competitor fuel.
But, a monopoly is not a free market, and that is my point.
See #48
It's a distorted market.
More like a manipulated market.
JMO, we are in another period like the late 19th and early 20th century, where the oligopolies had control and Teddy Roosevelt(TR) broke them up.
TR is a hero to McCain, so maybe the manipulators are trying to get their profits while the getting is good.
I know time for me to take my tin foil hat off.
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