Prices Fuel a Rebellion

Washington Post. ^

[traumer]

Drivers Tired of Paying More for Premium Gasoline Switch to Regular

For some people, it's hitting the big five-oh that really hurts -- that is, dropping $50 on a tank of gas. For others, it's just that relentless upward creep in prices that gets their attention.

Whatever the trigger, drivers pulling up to the pump in vehicles that ostensibly require high-grade gas are wondering if they really need the more expensive fuel or whether it's okay just to fill it up with regular. As gas prices soar, car owners increasingly are going for the cheaper stuff -- no matter how fancy their wheels. And station owners and oil companies are seeing the impact: Sales of premium and mid-grade gasoline are tumbling.

It's an age-old response, industry experts say, for drivers to switch from pricey, higher-octane formulations of gas to cheaper alternatives whenever gasoline prices rise substantially. Now, with prices stuck stubbornly high, oil experts wonder whether high-grade gas will go the way of the Studebaker.

"I foresee no serious decline in prices anytime soon, so the question is, will consumers' buying habits change permanently if the higher prices stay as they are," said Daniel F. Gilligan, president of the Petroleum Marketers Association, which represents independent filling stations. "Will it be more difficult to attract consumers back to the higher-octane fuels? I don't know."

[Normal4me]

You have a point. If gas crept up a few cents every week, people wouldn't notice as much. It's the ten and fifteen cent swings that get me.

[A CA Guy]

Regarding oil, the reason they are restricted is because there are so few companies that is nearly a monopoly.

The margin needs to be reduced then.

[dljordan]

"Why is Diesel so high? It used to be 1/2 the price of Gasoline? Does anybody know?"

Because they can?

[B Knotts]

Just got back from the gas station -- noticed that diesel fuel was at 3.09 a gallon.

Ouch. $3/gallon is my trigger price to switch over to biodiesel at $3.10. I just need to get a hose kit.

[B Knotts]

Now, with prices stuck stubbornly high

This sounds like attempted conditioning. There really isn't a good reason for the current oil prices. Inventories have been generally higher than the historic norm, but the prices have kept getting bid up. The one exception is that recently, there has been a slightly lower inventory of unleaded gasoline. On the other hand, distillate inventories are way up, but diesel fuel prices are nevertheless insanely high. Go figure.

[motzman]

Well, we could always mandate $1.50 or so gas prices - Then wait in line on odd days to buy some.

[Capt_Hank]

I would also like to know, why is diesel so high. I fueled my boat on Thursday afternoon, $598.00 for 230 gallons of diesel fuel. I hold 504 gallons. Needless to say, just cruising, is out of the picture now.

[motzman]

1) Supply instability (at least the perception thereof)

2) India and China skyrocketing usage

3) Too many oil-producing thug-ocracies

[Paladin2]

I'd guess that it could partly be due to Diesel having ~9% more energy/gallon than gas.

Another factor could be that refineries are going to have to invest to be able to meet the 2006 US requirement for lower sulfur levels in Diesel and they need to get everybody used to Diesel prices higher than gas.

Plus it's likely my fault as we just replaced two gasoline vehicles with Diesels. Demand for gas fell and demand for Diesel rose.

[A CA Guy]

It's nearly a monopoly and needs to be looked at regularly and closely.

This isn't an industry you can let go like pizza joints because there has been collusion in the past to not compete with prices.

[SmithL]

Fire sends diesel price to record high

By Dale Kasler and Dan Nguyen -- Bee Staff Writers
Published 2:15 am PDT Friday, August 5, 2005
Story appeared on Page A1 of The Bee

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In the latest fuel price spike to hit California, diesel rose to record levels Thursday in the wake of an El Segundo refinery fire.

The statewide average price for diesel jumped 5 cents to a record $2.81 a gallon, according to AAA. Record highs were also reported in 24 of the 25 metropolitan areas surveyed each day by AAA. The exception was Redding, where Wednesday's $2.79 price is the record.

In Sacramento, diesel was selling for $2.78 a gallon, up 6 cents from the day before. The costliest diesel on average in California was $2.90 in San Luis Obispo.

Diesel, which fuels trucks, farm equipment and other machinery, accounts for about 28 percent of California's market, according to the California Energy Commission. High diesel prices could filter throughout the broader economy as costs get passed on to consumers.

"What's bad about it is the people who pay for it are the people at the grocery store," said trucker Paul Gilli, who was refueling en route to Oregon at the Sacramento 49er Travel Plaza at the West El Camino Avenue exit of Interstate 80.

"These prices are as high as I've ever seen them," he said. "I pulled in and I couldn't believe it."

The problem stems from high oil prices, plus a July 20 fire that curtailed diesel production at the Chevron Corp. refinery in El Segundo. Chevron, in a prepared statement, said repairs will take a week and a half.

Although the El Segundo plant supplies Southern California, higher prices have spread across the state. That's because wholesale traders began diverting supplies from Northern California to take advantage of the high prices down south, said David Hackett, an industry consultant at Stillwater Associates in Irvine.

Rob Schlichting, spokesman for the California Energy Commission, said the higher prices have spread to Arizona and Nevada, which depend heavily on fuel produced in California. Prices hit a record $2.74 in Reno on Thursday, according to AAA.

Statewide diesel production fell 12.5 percent last week from the week before and was 6.9 percent below year-ago levels, according to the commission.

"It's a really tight market right now, particularly for diesel," Schlichting said.

The U.S. average diesel price was $2.43 a gallon on Thursday.

Link to Sacramento Bee

[B Knotts]

Those sound accurate, but hasn't Chinese demand fallen off recently?

[B Knotts]

It's hitting us in Oregon, too. Prices are around $2.70/gal. My last tank was $2.67.

Still, even at that price, I don't regret having a diesel car that gets 27 mpg, while weighing in at 3600 lbs. The equivalent gasoline-engine car would get something around 18-20, and diesel fuel is still only around 10% more expensive.

Plus, diesels last longer, and can run on biodiesel, or, with a conversion kit, even waste vegetable oil.

[MarkL]

This is odd behavior. You only need the octane that the manufacturer recommends for the vehicle. Buying a higher grade will not help performance, but buying a lower one than recommended will. Price should have nothing to do with the buyer's decision.

I believe that there are some cars that do require high octane gasoline, but thankfuly I don't have any. Even my bike (a Ducati 900SS) only needs about 87 octane fuel.

However, I once had a car that needed 94 octane, and that was AFTER installing water injection! Then again, it was a high performance 400CI Pontiac with a 650CFM double pumper, high lift and long duration cam, headers, and a compression ratio of 13:1!

Mark

[motzman]

but hasn't Chinese demand fallen off recently?

Don't know, but that would be surprising. Once the engine revs, it rarely slows...

But then again, they are commies, so who knows?

"Nobody uses gas for one month, by order of the government"

Chicom citizen: "Yes, master"

[B Knotts]

In some parts of the country, ULSD is already available. I've been running my car on it for a couple months. It has additives to address the lubricity issue.

[mysterio]

If the oil companies continue to show sky rocketing profits, I think they will be investigated by Congress.

el oh el@ that statement. But maybe during the next election cycle there will be a lip service investigation.

[MarkL]

The cheapest grade of fuel works just as well as the spendy stuff. There are only a few auto's out there that require higher grades, and to all of the people that own them it isn't that big of a deal to pay a little more. A drop in the bucket.

This isn't exactly 100% correct. There are a number of cars that really need the extra detergents that are available in some brands of gasoline (I'm not talking about octane levels). This has been a problem throughout the oil industry. Over the years, the amount of detergents in the blend has been dropping. I believe these are known as "Top Tier" gasoline suppliers. The reason that this becomes important is because of problems with the EGR system design in some engines, you can wind up with some very serious "sludging" problems. Early and mid 90's Toyota Camrys are a really great example of this. There are LOTS of examples of Camrys needing their engines replaced with less than 70,000 miles due to oil starvation.

Mark

[Mulder]

It's going to get worse as Peak Oil impacts.

[SmithL]

According to a report I heard on Friday, California legislated itself a "special blend" for Diesel. And the market was already tight before they lost the use of that refinery. Idiot politicians think they can regulate anything, but they have no control whatsoever over the laws of supply and demand.