Video: Get ready for big hike in gasoline prices

Hot Air ^ | February 15, 2012 | Ed Morrissey

[cuban leaf]

When the deer wiped out our beautiful 300m right after we cancelled comprehensive insurance, it got delegated to my work car. Figured we’d just drive it into the ground on my commute (awesome drive in that car, btw). But it only gets 25 mpg on the trip while my scion gets 30+, so if the price goes up much, we’ll have to re-evaluate the cost.

[LibLieSlayer]

Premium 3.99.9 in Gulfport, MS today.

[Myrddin]

My son drives all over Idaho doing broker price opinions and inspecting properties. The rising gas prices are going to hit him as there is no component of his compensation that is indexed to transportation costs. He makes a fixed fee for writing the broker price opinion without any consideration to the cost of gathering the supporting data.

I ride a motorcycle to work except when it rains. Better gas mileage, lower insurance and better maneuverability through heavy San Diego traffic. My F150 is present for rainy days (all this week) and for making the long distance trips home to Idaho. The bike goes with me on a trailer that is stored in the garage at the place where I rent a room.

I currently have my 2009 Kawasaki Versys in San Diego. 42 MPG city/53 MPG freeway. The F150 is getting about 15 MPG right now.

[thackney]

Places like Texas and North Dakota, producing on private, not federal lands, are helping to pull up the total.

Same technology advances in steerable, horizontal drilling combined with hydraulic fracturing are increase oil the same way the natural gas is growing.

Now it should be even better if the feds and states like California and Alaska would get behind the ideas of growing production and jobs, instead of strangling it with regulations and overly taxed.

[nascarnation]

Gasoline usage is dropping like a rock. This certainly undermines the MSM claims of "recovery". And the mild winter across most of the US certainly hasn't cut back driving.

[dirtboy]

But demand is not 'soaring' and US gasoline demand has dropped sharply. Oil is fungible, but demand is more elastic than it used to be.

I smell the same rat I smelled in 2008. And I'm sorry, but the price whiplash that year was far more pronounced than the demand shifts around it.

[Myrddin]

Oil prices dropped in 2008 when oil leases were opened up. Competitors dropped prices in anticipation of new suppliers. That disappeared after Obama was inaugurated. The pressure to lower prices in anticipation of competing suppliers was eliminated immediately.

[thackney]

Do you consider this trend of prices as "soaring"?

[dirtboy]

I disagree. There was a speculative bubble in 2008. It popped. Policy was part of that, but not all of it. Speculators took large positions, far larger than we were led to believe at the time.

And I smell the same BS that was spread about in 2008 to justify the price hikes.

[MrB]

0bama’s already out there claiming that the increase in gas prices is proof of his economic recovery.

[dirtboy]

Not at this point.

I am discussing the storyline, that gas prices could rise dramatically over the next few months. And I smell a rat, the same rat I smelled in 2008. I am not sure how gas prices could trend up at this point given the stunning drop in demand shown in post 25, unless we are getting set up for speculative manipulation like we saw in 2008.

[DownInFlames]

The economy will be in the tank by May.

[thackney]

If Iran goes totally stupid, we will see an extended spike.

For now there is a shorter, smaller run up as refineries and storage terminals may decide to top off the tanks as an insurance.

But you can not look at the price/demand of US gasoline alone without considering the global oil market.

It would be the same as considering the price/demand of US jewelry while ignoring the global price of gold.

[dirtboy]

The US is the 700 pound gorilla for gasoline demand, even today.

It may be down from an 800 pound gorilla, but the size of the drop in US demand is considerable.

And I heard the same stuff all through 2008 about how Asian demand and uncertainty were driving the oil price spike, when it turns out speculators held massive positions that we were not told about until after the fact. There are good reasons why those who do not produce oil or consume it for manufacture should be subject to position limits.

[thackney]

The US is the 700 pound gorilla for gasoline demand, even today.

US gasoline is now less than 9% of the total petroleum market.

No doubt it is significant, but a 15% change in demand is a bit more than a 1% change on the global market. We just don't have the impact we used to have. Our demand has decreased a bit while the rest of world has grown.

[thackney]

This chart may show it better:

Same source as the other chart, click that chart for the source of both.

[DrDavid]

Could the oil markets be manipulated to push the prices up now, and drop next fall? This could be the setup for an October surprise.

The Palin/McCain ticket collapsed in the polls when the price of gasoline dropped the summer of 2008.

[Cowman]

He and his buddies are happy gasoline will hit $5+ per gallon so we will be forced to buy his POS cars like the Volt.

Now that Fiat owns Chrysler They should bring back the Topolino. It would get better gas millage than the Volt and would be less likely to catch fire.

[servantboy777]

12/06/2008 = 1.41 per gal.
1/03/2009 = 1.24 per gal.

Houston

[dirtboy]

Nice graph. Now, how does that provide any support for the underlying claims in the Today Show story about how gas prices could spike this summer? It clearly isn't the price of oil that will be driving that spike, if that graph is any indication. It shows WTI going up maybe ten bucks.

Whenever I hear any media talking head blabbering about strongly-growing Asian demand driving a price spike, I smell the same rat as in 2008. There was no massive spike in Asian demand back then, that was a red herring put in by the Goldman Sachs and Morgan Stanley talking head commentators. There was a massive spike in speculative positions that didn't come out until later.