Posted on 04/06/2008 11:05:38 AM PDT by kellynla
NEW YORK — Retail gas prices surged to another milestone, rising above $3.30 a gallon Friday, and appear poised to rise further in coming weeks as supplies tighten.
Oil prices, meanwhile, supported the gas price rally by jumping more than $2 a barrel after a dismal employment report sent the dollar lower.
At the pump, gas prices rose 1.4 cents overnight to a national average of $3.303 a gallon, according to AAA and the Oil Price Information Service. That's the latest in a series of records, and about 60 cents higher than a year ago.
In Ventura County, the average price of regular unleaded hit a record $3.68 a gallon Friday, according to the Automobile Club of Southern California.
During the past week, prices in the county have been climbing by a few cents per day.
A few weeks ago, Jack Kyser, chief economist of the Los Angeles County Economic Development Corp., said he expected prices to fall as oil speculators backed off.
Now, he's not so sure.
"We could very likely see $4," he said. "It's going to be painful."
As investors are fleeing to commodities such as oil, gold, wheat and corn, people are starting to look at Washington, D.C., to curb speculation, Kyser said.
"You have speculators globally now," Kyser said.
"This is going to be a tough time for anybody who has to use an oil-based product. We've already seen chaos in the aviation industry, with Aloha and ATA going out of business."
While oil's surge above $100 over the past month has boosted gas prices so far this year, analysts now expect gas prices to continue rising regardless of what direction crude takes. The Energy Department expects prices to peak near $3.50 a gallon later in the spring, but many analysts predict that the spike could approach $4.
That's because gasoline supplies are falling, in part because producers are cutting back on output of the fuel because of the high cost of crude — the more expensive crude is, the more refiners have to pay and the lower their profits are.
They're also in the process of switching from producing winter grades of gasoline to the less polluting but more expensive grade of fuel required in the summer.
"That cuts back on some of the supply and helps to pump up the price," said Mike Pina, spokesman for AAA.
The margin between the price that refiners pay for crude and receive for selling the products they make from it is about $11 to $12 a barrel right now, according to the Oil Price Information Service.
However, that margin has occasionally slipped into negative territory in recent weeks and is well below margins of $37 a barrel that refiners earned last spring.
In futures trading, meanwhile, oil futures rose Friday after the Labor Department said employers cut payrolls by 80,000 jobs last month, much more than analysts had expected.
The unemployment rate rose to 5.1 percent.
That news sent the dollar lower and pushed light, sweet crude for May delivery up $2.40 to settle at $106.23 a barrel on the New York Mercantile Exchange.
Gasoline futures for May delivery rose 3.24 cents to settle at $2.7567 a gallon.
Gasoline futures were also boosted Friday by a fire that shut down part of a refinery in Torrance.
Even though everything is as it was, column inches have to be filled.
Refineries don’t make more money by refining less oil. If they cut production, it is not in search of more profit. Most refineries operate at above capacity almost all year. They do have maintenance periods, along with the changing of blends.
Ya don’t need a locking gas cap. Most vehicles made in the past decade or so, have coiled springs in the filler hole. You can’t get a hose down it.
They’ll just take your vehicle or wallet at gun point. If prices continue to climb, you can bet it’s going to get very ugly.
Please do not forget the 50+ blends of gasoline and ethanol mandates.
One station in L.A. was charging about $4.15 the other day, and his bays were full of people filling their cars.
Generally the prices in the area have been in the $3.55 to $3.75 range, with some going even higher from what I hear.
India and China are now major consumers of the world's oil supplies. That has increased demand, which has decreased supply and caused the prices to soar.
These two countries have become major consumers in large part because of American companies exporting their manufacturing to them. Not only has this increased the industry in these countries, which is a drain on oil supply, but it has increased the wealth and living standards of their citizens. These citizens are driving more and using other machines the consume oil.
This is part of the ‘hidden cost’ of the greedy side of corporations seeking a higher profit. Would they have been so eager to offshore had our government not put them under such punitive regulation and taxation? Probably not.
But if our government were to rescind that regulation and decrease the tax burden, does anyone really think the corporations that are already offshoring would suddenly close up their offshore shops and bring the jobs and manufacturing back to America? Of course not. They would see it as another spike to their earnings.
all the pros say wait, this is simply a matter of supply/demand - favorable adjustments will occur.
However, is this a valid argument realizing that much of the market is under the strict control of governments, not the consumer or suppliers. And these governments often are dedicated to the demise of the US and other free nations by what ever means possible.
If we can’t get out of their clutches, where do we go??
would that be because they expect the Fed to cut rates anticipating weakening of economy, thus causing further weakness in the dollar?
From all accounts their is no shortage of crude oil globally. What makes you think that any oil produced domestically would not also be sold at the current futures contract of $106 a barrel???? We already produce 40% of our oil consumption domestically already and it doesn't ease prices. Unless you plan on making it illegal for domestic oil to be sold for more than $40 a barrel and outlaw exports, I don't think it would matter if we produced 80% of our oil consumption. Not with free markets.
All this talk of domestic drilling is slight of hand to misdirect our attention at what is truly causing the price of energy to skyrocket, the systematic dismantling of the value of our $$$$dollar, and rabid speculation on the commodities exchanges.
They’re also in the process of switching from producing winter grades of gasoline to the less polluting but more expensive grade of fuel required in the summer.
aarrggghhhh!!!!
come on, Cicero, there haven't been any NEW refineries built but the existing refineries have continually been expanded over the years but we DO need to expand even more.
“California, which always bitches the loudest, is the worst offender.”
My what a wide brush you have! LOL
I'm a native Californian, and I haven't complained...I just did my part and started working out of my home in 1979 and never looked back...
Do you suppose full storage facilities could be part of the reason production is cut back?
I visit two small refineries in Los Angeles about a month ago that were both shut down due to horrible crack spreads. I posted this a couple of weeks ago and was questioned by skeptics who claimed to “not hear of refineries cutting production”. The recent refinery run rates as reported by the EIA (~82%) should remove this skepticism.
IMHO, it would be 'nice' if our 'leadership' even knew about the costs at the pumps.
Not to worry - just crawl under the car, punch a hole in the tank with a sharpened screwdriver and drain the gas into a container. That was the standard bypass of the locked gas cap in the '70s. It will no doubt show up again, if it hasn't already.
Would you format those for printing, and post at a download site for us?
Thanks.
I believe this was only a couple of weeks back.
The effects from the meeting will most likely be taking place soon. There's lots of air in the oil/gold bubble which will be popping before too long....
Keep threatning your child they will be punished for bad behavior is meaningless without action. The child soon realizes they can ignore the threat. We see the same thing with our lousy congress folks call oil barons on the carpet. All we get are insults to our intelligence.
“as well as the cost of transportation of consumer goods, to include produce and other foods, and finally the base cost of business and services.”
I’ll never understand why diesel costs are more than gasoline costs. There is less refining required, and our nation’s transport services rely upon it to carry produce and goods across the country. It’s a huge expense on business to have fuel costs rise so.
Yeah, yeah....heating oil. I still don’t think a product that costs less to make and is so vital to our country’s economic well-being should be so expensive.
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