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Get ready for $4 gasoline

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Get ready for $4 gasoline

Postby chadlincoln » Mon May 07, 2007 12:37 pm

Greedy punks

http://money.cnn.com/2007/05/07/news/ec ... tm?cnn=yes

NEW YORK (CNNMoney.com) -- With gas prices near record highs, experts say $4-a-gallon gasoline is just around the corner.

"I think it's going to happen," said Phil Flynn, a senior market analyst at Alaron Trading in Chicago. "Unless things change dramatically, I think we're going to see $4 a gallon."

Already, prices in California average $3.48 a gallon, according to the motorist organization AAA. And one service station in San Francisco was charging $3.95, according to GasBuddy.com, a handy site that lists the cheapest and most expensive gas stations by city and state across the country.

Refinery problems and strong demand are the two main reasons sited for the runup. Prices hit a record high of $3.07 a gallon, according to the Lundberg survey released Sunday.
The bad boys of oil

Refinery output in the U.S. has been below normal for several months now, after fires and other accidents combined with longer than normal maintenance shutdowns, hurting production.

Peter Beutel, an oil analyst at consulting firm Cameron Hanover, noted in a recent report that refineries have not operated above 95 percent capacity since Hurricanes Rita and Katrina in 2005. Before 2005, the refineries, clustered around the Gulf coast and badly damaged in the storms, routinely operated at over 95 percent capacity.

Flynn said gasoline stocks have fallen for the past twelve weeks straight and are now at their lowest level for this time of year since 1956.

This all comes just as the nation gears up for the summer driving season, spurred by vacationing families and students out of school.

Meanwhile, demand has shown no sign of easing. That's despite a nationwide average price of $3.07 a gallon for unleaded regular, a record, according to Trilby Lundberg, publisher of the Lundberg Survey of thousands of stations nationwide.

During the winter months gasoline demand grew at about 2.5 percent, according to the Energy Information Agency. Average demand growth is about 1.5 percent.

"More and more communities are going to see gasoline that approaches or exceeds $4 a gallon," John Kilduff, an energy analyst at Man Financial in New York, said recently. "Where we're currently at with prices, that's a given."
Behind high gas prices: The refinery crunch

But not everyone is so convinced.

Wholesale gasoline prices have fallen 20 cents over the last week and prices for gasoline futures on the New York Mercantile Exchange have lost about the same amount over two weeks, according to Tom Kloza, chief oil analyst at the Oil Price Information Service, which gathers statistics for AAA.

Kloza said gasoline prices as measured by AAA have not yet hit a record, clocking in at $3.04 a gallon Monday, two cents shy of the 2005 record.

"I'm not sure we're going to get there," said Kloza. "I wouldn't be surprised to see our numbers stay the same, or maybe even tick lower."

When inflation is factored in, Lundberg's record of $3.07 still trails the all-time high in March 1981. At the time, gasoline cost $1.35 a gallon - and in today's dollars, that's $3.13 a gallon, said Lundberg.

Also, Americans earn a lot more now than they did in the early 1980s, so by some measures what people spend now on gas is only half of what is used to be.

In 1980, the average American had to work 105 minutes to buy enough gas to drive the average car 100 miles, David Wyss, chief economist at Standard & Poor's, said in a study last year. By 2006, the average American needed to work only 52 minutes, thanks in part to better fuel efficiency but mostly due to higher wages.

It's also worth noting that while $4 gasoline would be a record for American motorists, in Europe it's common. The average price for a gallon of gas in the Netherlands is over $7, and it's over $6 in many European countries.
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Postby knapplc » Mon May 07, 2007 12:44 pm

I like how the article spends so much time telling us how we should be appreciative our gas is so cheap, forgetting that there's really no good reason for it to be this expensive.

With profits at record-setting levels, and prices rising on as-yet-unfounded fears that there may be shortages, coupled with the fact that Big Oil hasn't built any new refineries in decades in the States to take care of these fluctuations, I'm not inclined to be happy to pay in excess of $4 for a product that should cost around $1.90.

No matter how yummy you tell me it is, this still tastes like crap to me. :-t
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Postby Stejay » Mon May 07, 2007 12:51 pm

Oh my god, why so expenisive. Unfair :-o
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Postby AcidRock23 » Mon May 07, 2007 12:52 pm

knapplc wrote:I like how the article spends so much time telling us how we should be appreciative our gas is so cheap, forgetting that there's really no good reason for it to be this expensive.




peak oil production?
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Postby knapplc » Mon May 07, 2007 1:03 pm

AcidRock23 wrote:
knapplc wrote:I like how the article spends so much time telling us how we should be appreciative our gas is so cheap, forgetting that there's really no good reason for it to be this expensive.




peak oil production?


I'm not denying that this is true (I don't have the answer to the questions posed on that site), but I do know that Big Oil has not taken the steps they could have to increase production - namely, building more refineries.

When one company alone makes $13 billion in profit in one quarter of 2006, and still won't build refineries, there's a problem.
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Postby Snakes Gould » Mon May 07, 2007 1:07 pm

maybe we should all just buy stocks in oil companies and the money we make from there, we can use for our gas money :-B
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Postby chadlincoln » Mon May 07, 2007 1:08 pm

AcidRock23 wrote:
knapplc wrote:I like how the article spends so much time telling us how we should be appreciative our gas is so cheap, forgetting that there's really no good reason for it to be this expensive.




peak oil production?
Great read. ;-D

We need to develop alternative fuels.
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Postby knapplc » Mon May 07, 2007 1:21 pm

Snakes Gould wrote:maybe we should all just buy stocks in oil companies and the money we make from there, we can use for our gas money :-B


There you go. ;-D



The reality is that we need oil. We make far too many products out of it other than fuel for it to ever go away. But the reality is that as an automobile fuel source we need to figure out a way to drastically reduce our dependence on this stuff. Cars that get 100+ MPG need to be developed.

Oil will not last forever. Until we figure out a way to make our plastics and a bazillion other things out of something else as plentiful as oil (and bio-oil is not necessarily the answer, since there simply isn't enough land on the planet to support both food for humans and energy), we need to use as little oil as possible starting NOW, and harbor those reserves for the future.

Think what would happen if we didn't have plastic. :-o
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Postby AcidRock23 » Mon May 07, 2007 1:38 pm

knapplc wrote:Think what would happen if we didn't have plastic. :-o


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Postby Field » Mon May 07, 2007 1:42 pm

I'm more worried about how $4 gas will lead to even greater levels of inflation. You won't see the Fed lowering interest rates anytime soon if that happens.
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