$3 Gas On Horizon This Summer?

CBS ^ | March 28, 2006

[presidio9]

If you've bought gasoline in the last few days knows, you know that prices at the pump are on the rise again.

Trilby Lundberg, publisher of the Lundberg Survey of 7,000 gas stations, told CBS Radio News the average price of all grades combined is up nearly 15 cents over the last two weeks, to $2.52. That's 40 cents higher than last year at this time.

Tom Kloza, an oil analyst for the Oil Price information Service told The Early Show co-anchor Rene Syler Tuesday, "This is pretty much typical for this time of year. It seems a little worse because we're starting from higher numbers.

"But, generally, wholesale prices go up by about 55 percent from, let's say, mid-February to late May — and, as bad as this may seem, we haven't gone up that much right now. I'm afraid this may be the last time you see $2.50, or less than that, for about five months."

Are we looking at $3 a gallon gasoline this summer?

"I don't think we are, unless there's a calamity," Kloza says. But, he warns, "there's a pretty good chance for some calamities this year. This is going to be the summer of hurricane fears, the summer of hurricane worries.

"Oil prices are established by traders, they're established by speculators, and they're established by people who react to fear. And there's no question that this spring and summer is going to be a summer of fear about the tropics. So, I think, without any hurricane impacts or anything geopolitically in Iran, Nigeria or Venezuela, we're looking at $2.50 to $2.75 on average for the next five months.

"If we get an event, that brings $3 and all the other numbers into play. An event would, of course, be a tropical system making landfall near (oil-producing) hardware," or a problem in any of the major oil-producing nations.

"A lot of the gasoline price and a lot of the crude oil price is established by the investment community," Kloza explains. "The investment community is worried about a geopolitical hot spot. It's also worried about refineries breaking down, because we really have no margin of error.

"That investment community is not likely to be selling, particularly since the real peak driving season in the days where we use 9.5, 9.6 million barrels a day is well ahead of us. It's going to be a tough period to go through."

What can we do to help reduce the impact on our pocketbooks?

"Everyone should realize there's really no downside to conservation," Kloza said. "You might not necessarily need to cancel your summer vacations. You probably should take them.

"Measured in personal disposable income, gasoline is still pretty much a bargain, but pay attention.

"I think if you can cut back a little bit, that's a prudent measure, whether we're talking about gasoline or we're talking about appetite for other things. There is a lot of excessive consumption out there. It holds true in gasoline and holds true in a lot of other elements."

[poobear]

"its because of credit cards. most people absorb these higher gas costs, because they buy gas on credit, and it just gets rolled into their debt load."

That well may be, but prices have been high long enough to hit very hard on those folks who practice this without being able to afford it. I've had to raise prices on our company services more than three times to try and compensate. My credit card bills keep coming in and I pay them off (for the most part).

Just an observation here in a county of Florida that's mostly middle class. I've seen no slow down in purchasing or buying of smaller cars. ???

Again, I am no economist.

[balch3]

"I think if you can cut back a little bit, that's a prudent measure, whether we're talking about gasoline or we're talking about appetite for other things. There is a lot of excessive consumption out there. It holds true in gasoline and holds true in a lot of other elements."

-------
MSM trying to talk down the economy again. VP Cheney said conservation was ineffective. I think he knows a little bit more about it than these talking heads.

[dakine]

2 cars, 30k miles a year each? Then $750 better not be a week's pay...

[balch3]

"any bets on when the first refinery fires will start? that's always good for another 10 cents a gallon."



Yeah, but they're just "good capitalists".

---

Lots of bashing of free enterprise on this thread. Sometimes I wonder how may conservatives there really are on FR.

[riri]

true. If they are playing the credit game-somehow they are still qualifyting for 700k homes all around me. And the restaurants are full Sunday through Saturday.

[xcct838]

The refineries did convert to gasoline earlier this year because of the warm weather. But don't try to use logic on the oil market. I have the crude oil futures contract on my screen. I watch it every day. Today it is up almost $2 because "traders want to get in before the new ETF comes out, possibly next week (according to WSJ)". The ETF is a fund that will allow Joe MutualFund to buy crude oil shares--like stocks. They (the speculators) think there will be a price spike when the ETF comes out. Maybe, but I don't trade oil--too risky. And actually, the traders will probably let the public buy into the ETF and then drop it (taking their money).

The whole oil price run-up has been a crock from the start. Global demand forecasts have been falling for the last year and inventories of oil and gasoline are at 5-7 year highs. So the price is down, right?

The bastard oil speculators (hedge funds) are to blame and nobody wants to address the problem.

[ThinkDifferent]

Lots of bashing of free enterprise on this thread.

Gasoline has the amazing ability to turn otherwise reasonable people into raving Marxists.

[Beagle8U]

We need to outlaw day-traders.

Buy anything you want, any day you want, but sell orders take 7 days.

That would calm down prices and markets, day-traders could go get a real job.

[mission9]

I really don't know why we keep bothering for government to solve our problems. Getting government in usually takes the solution out. Its like getting mad at a pig for wallowing in the mud. It will just frustrate you and annoy the pig. We should focus on limiting the power of government.

[petercooper]

Nobody's got a gun to your head forcing you to buy gas. Go get a bike

[USFRIENDINVICTORIA]

$3.00/gallon gas -- is that a promise? (Current prices = $US3.45/U.S. gallon in BC)

[RightWhale]

Oil is up today -- $66 a barrel. Remember when it was $2 a barrel?

[poobear]

"And the restaurants are full Sunday through Saturday."

Yep. Got a young couple in our neighborhood that moved from the Baltimore, MD area. Both work, two kids, large mortgage. They were b@tching about the property taxes on their home this year after they went over $5,000.00. I'm wondering how they managed in MD. Ridiculous. BTW, they eat out at least three times a week. Always complaining that their employers should pay for more. What do DC & MD schools teach anyway?

Oh, never mind.....

[RetiredArmy]

$3.00 by summer!!! Hell, it is $2.80 or in that area around here now. It has risen over 40 cents in the past two-three weeks. It will be $4.00 by summer at that rate.

[VA_Gentleman]

I'm still waitng for Steve Forbes' prediction of the $35 per barrel cost for oil.

"I'll make a bold prediction: I think in 12 months, you're going to see oil down to $35, $40 a barrel," Forbes said. "In the meantime, it's a huge drain, more a psychological drain (on the economy), but it's not forever. This thing is not going to last."
- Steve Forbes - August 2005.

[backhoe]

Allow me to drop out of Lurk and Link Mode for a rare bit of commentary- we need to get serious about our dependency on foreign sources of energy, and use our own resources.

Our consumer-based economy is driven by readily-available, reliable energy-- choke that, and we'll be back to using one rotary dial phone in the dining room and driving one car per family-- probably a Hudson Hornet...

We need to

1) end the nonsensical ban on offshore drilling off California and Florida

2) build a lot of next-generation nuclear power plants, not just for electricity, but for any process requiring heat, power, or steam

3) end Jimmy Carter's idiot ban on recycling nuclear waste, and reprocess the stuff rather than fighting over where to bury it

4) use the 300-500 years worth of coal we have on our own land, using the new clean-coal technology

5) and finally, there's nothing wrong with conservation- but you can't conserve your way out of a shortage- we need to get serious about this before we get strangled by a bunch of petty thieves and dictators who don't like us much.

My tongue-in-cheek collection of energy-related links:

Sticker Shock-$3 a gallon gas? Click the picture:

And note well-- the first reply to this post ( when gas was less than $1.50 a gallon ) was derisive... who's laughing now?

[mysterio]

$3? Wouldn't surprise me. And then we can be entertained by the stockbrokers here telling us how competitive and free the market is, no colluding, etc.

[dakine]

Proof? Waiting....

~10% profit is not outrageous...

[rockabyebaby]

It's $2.53 right NOW at the gas station I use, I'm guessing in another week or two it'll be up to $3, by summer, hell, it'll be $5.

[gogeo]

I told you people like to bitch. lol...

Oh yeah. The refineries are shutting down for turnaround, and the shortage this year may be ethanol, not petroleum. Ethanol producers may not be able to produce enough of that federally mandated liquid.

There is one new refinery being built in the Southwest, Arizona I believe. Other refineries are adding capacity rather than new facilities.

Building a refinery doesn't just involve building the plant; it requires a lot of support structure, supply and pipelines. Most times it's cheaper to add on than build greenfield.

I'll be commuting on my Silverwing this summer, I think. D@mn!!!