Posted on 08/25/2015 9:42:36 AM PDT by bestintxas
A little more than a year ago, oil prices were above $100 a barrel. The national average for gasoline was in the $3.50 range. In late spring, oil was $60-ish and the national average for gas was around $2.70. The price of a barrel of oil has plunged to $40 and below—yet, prices at the pump are just slightly less than they were when oil was almost double what it is today.
Oil and gasoline prices usually travel up or down in sync. But a few weeks ago the trend lines crossed and oil continued the sharp decline while gasoline has stayed steady—even increasing.
Oil’s down, gasoline isn’t. Consumers are wondering: “What’s up?”
Even Congress is grilling refiners over the disparity.
While, like most markets, the answer is complicated, there are some simple responses that even Congress should be able to understand. The short explanation is “refineries”—but there’s more to that and some other components, too.
Within the U.S. exists approximately 20 percent of the world’s refining capacity. Fuel News explains that “on a perfect day,” these domestic facilities could process more than 18 million barrels of crude oil. But due, in large part, to an anti-fossil fuel attitude, it is virtually impossible to get a new refinery permitted in America. Most refineries today are old—the newest major one was completed in 1977. Most are at least 40 years old and some are more than 100. Despite signs of aging, refining capacity has continued to grow. Instead of producing at 70 percent capacity, as they were as little as a decade ago, most now run at 90 percent. They’ve become Rube Goldberg contraptions that have been modified, added on to, and upgraded. The system is strained.
(Excerpt) Read more at spectator.org ...
Boutique blends are probably more of an issue in the summer months, too. You see it here in New Jersey and Pennsylvania. Fuel taxes are much higher in PA, and this is reflected in a price difference of 30-40 cents per gallon in the winter months. But NJ has special blend requirements for the summer months, so at this time of year there usually isn’t a huge difference in gasoline prices between the two states.
I just got back from DR. Appt.
Drove past stations that had Regular Unleaded from $2.18 - $2.26 on the west side of the lake.
Get back on east side going home and Sam’s was $2.32, others are $2.46 or so.
The gas at the pump was bought under the July contract. If they start dropping the price. They lose money. If the September oil goes up. They are borrowing money to make the contract.
We are below $2 a gallon here in the midlands of SC.
Liberal states also add their own refining demands which explain why their gas prices are higher. Also, don’t forget how much you are paying in gasoline taxes for that gallon at the pump. The taxes don’t go away just because the price of the commodity goes down.
Using the data available at the St. Louis Fed website it works out to about a 20-day lag between a barrel dropping and a gallon dropping at the pump.
Conversely, it’s a 20 microsecond delay between the increase in price of a barrel and a 10-20 cent rise at the pump.
Go figure.
“How is propane? I just got a a quote of $1.99 / gal.”
this guy has a better handle on this.
We do not have refinery shortage. We refine more petroleum product than we use and export the surplus.
We do have a mess of different requirements of blends making it expensive to bring in fuel from on area to another to temporarily supply a short term loss.
When was the last refinery built in the United States?
http://www.eia.gov/tools/faqs/faq.cfm?id=29&t=6
There were 140 operable petroleum refineries in the United States as of January 1, 2015.
Two new refineries began operating in early 2015:
The 19,000-barrel-per-calendar day (b/cd) Dakota Prairie facility in Dickinson, North Dakota.
The 42,000 b/cd Kinder Morgan condensate processing facility on the Houston, Texas, ship channel, with plans to double that capacity by the end of 2015.
The newest refinery with significant downstream unit capacity began operating in 1977 in Garyville, Louisiana. That facility came online in 1977 with an initial atmospheric distillation unit capacity of 200,000 b/cd, and as of January 1, 2015 had capacity of 522,000 b/cd.
Capacity has also been added to existing refineries through upgrades or new construction. The most recent examples are:
In 2012, Motiva upgraded its refinery in Port Arthur, Texas, making it the largest refinery in the United States with a capacity of 603,000 b/cd as of January 1, 2015.
In 2009, Marathon upgraded its Garyville, Louisiana refinery. As of January 1, 2015, the capacity (b/cd) is more than double its original 1977 capacity.
But watch what happens to gas prices if the oil price goes up by one cent.
Propane is a byproduct of natural gas production. It’s one of the wet gases that’s stripped out.
So... we’re not unlike Iran which has tons of oil but has to import gasoline (I know we’re not there yet)?
Sounds like environmentalist whackos & hostile muzzie oil producers have a lot in common - cripple our domestic production.
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The closure of the largest of Whiting’s three units caused an immediate jump in gasoline prices in the Midwest. Stockpiles were drawn down to fill demand during summer’s peak driving season. Gasoline has been moved—via pipeline, truck, and train—from other parts of the country to balance out supply. So, while the biggest price increase was in states like Minnesota, Michigan, and Illinois, prices raised nationwide beginning on August 11.
Meanwhile, because the Whiting plant wasn’t sucking up crude oil, its supplies grew and drove crude prices down further—hitting a six-year low. The Financial Times reports: “An outage at Whiting’s main crude distillation unit could add almost 1m [million] barrels to Cushing [the Oklahoma oil trading and storage center] every four days as long as it is out.”
Making matters worse, another Midwest refinery, Marathon’s Robinson, Illinois 212,000 barrels per day facility is down for repairs that are expected to take two months.
Others smaller outages include Philadelphia Energy Solutions and the Coffeyville Resources’ refinery in Kansas. BloombergBusiness states: “As many as seven other Midwest refineries could shut units for extended time this fall.” Though, other reports indicate that some of the planned maintenance may be put off due to profit margins that are at a seven-year high.
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Some areas of South Caroline are down to $1.86/gal.
I still do not understand why, when all those oil companies spent multiple billions to build oil sand processing facilities in Fort McMoney (Fort McMurray), they did not build a massive refinery. Canada should not be shipping heavy oil to the US or overseas. Why not keep the ‘value added’ jobs here, shipping finished product outside the country?
IF a refinery had been built along with the bitumen processing facilities, Alberta (and Canada) would not be facing as severe a recession as we now face. We currently produce approximate 4 million BOEPD yet only have capacity to refine 2 million BOEPD. Over the next 25 years, production is expected to rise to 7 million BOEPD.
Of course the ‘greenies’ and ‘liberals’ aka ‘progressives’ aka ‘commies’ choose to destroy our economy, so tie up ANY refineries in tons of ‘red tape’, making the building of such facilities prohibitively expensive.
“We do have a mess of different requirements of blends making it expensive to bring in fuel from on area to another to temporarily supply a short term loss.”
Wouldn’t a grassroots refinery be much more efficient in handling this versus what we have now in aging, reworked refineries?
We are below $2 a gallon here in the midlands of SC.
The problem is the drive from the western Rockies to SC for the fillup.
As a guy working in a facility supplying propane, I tell ya it’s too damn cheap!!!
But we are staying busy. Lots of Petrochem expansions are underconstruction and suppliers have to get ready before they are on line, if they want the big contracts to supply when they start.
Residential prices vary a lot from locations. My normal source is EIA.gov but they don’t track propane price until the heating season. Stocks are quite high at this time.
This will get update tomorrow afternoon:
http://www.eia.gov/petroleum/weekly/propane.cfm
The spot market prices for propane have been quite low this year.
http://www.eia.gov/naturalgas/weekly/#tabs-prices-4
When we lost our medium sized refineries here in the midwest, we became hostage to the big one BP has in Whiting Indiana.
When their (frequent) problems crop up, we’re hurtin.
Gas is below $2 in OKC, and oil is only one of many input expenses for gasoline retailers, and the price drop was recent... there is a lag time.
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