$4 a gallon for gas

duckideva wrote:
shihonage wrote:

Ok guys its time to start shelling out the cash for nuke-powered cars.

oooooh, we could bring back the Egyptian mode of traveling on litters! "Ptahhotep, peel me some grapes and bring me the pole boys, I feel the need for an outing..."

Hey, I think I just solved the oil crisis and the immigration crisis. Yay, Me! DuckiDeva for President. This time, why not elect the Real Quack?

Will you have my babies?

Just got to work, gas station next door has regular at CDN $1.35 / liter.

We really have to start producing our own oil in serious quantities...

I actually took the BMW to work today; Bus, Metro, Walk. I'm hoarding my fuel for the revolution!

Just got this on the internal e-mail. The current price spike in petrol is mostly due to damage to refineries and pipelines, not inadequate supply of oil:

Impact on oil products raises economic fears

By Christopher Swann and Andrew Balls in Washington
Published: August 31 2005 20:43 | Last updated: August 31 2005 20:43

For all the physical devastation wrought by hurricanes, their economic impact has tended to be marginal. Lost retail spending and tourism revenues are quickly offset by extra construction as affected communities start the work of rebuilding. Research by the Commerce Department estimated that the impact of last year's four hurricanes on gross domestic product growth was zero - despite a combined insured loss of more than $20bn (€16.2bn, £11bn).

The wider US economy should see only a "modest" impact from Hurricane Katrina, although the hardest-hit regions would suffer, a White House official said. "Clearly it's going to affect the Gulf coast economy quite a bit. You've had a lot of property damage," Ben Bernanke, chairman of the Council of Economic Advisers, told the CNBC network.

But some fear that Katrina could prove to be the most economically disruptive hurricane of recent history - eclipsing even Andrew in 1992. This is not because of the immediate bill, although this is forecast to be an imposing $25bn in insured losses. Instead it is the impact on oil products that is worrying economists.

The hurricane has had a significant impact on America's ability to pump oil and also to refine it. The initial impact has been to push oil prices about $3 higher to within a whisker of $70. The effect on US refining infrastructure looks set to push the price of petrol at the pump higher and increase the cost of jet fuel, diesel and home heating oil. This will further erode the spending power of US consumers.

"The economic impact will depend critically on the damage to the US energy infrastructure and how high prices go," says Nariman Behravesh, chief economist at Global Insight.

The best-case scenario, he says, is that the oil price rises only to between $70 and $75 a barrel, with petrol prices moving above $3 a gallon. If that is the case, Global Economics is estimating the hurricane will end up shaving between 0.5 and 1 percentage points off economic growth in the third and fourth quarters.

Last year's storms took $23.3bn off corporate profits in uninsured losses to business property as well as the net insurance settlements and a $3.7bn fall in the uninsured rental income of individuals.

Petrol prices expected to stay high

By Kevin Morrison in London
Published: August 31 2005 20:43 | Last updated: August 31 2005 20:43

The closure of nine refineries along the Gulf of Mexico accounting for 12 per cent of US refining capacity has generated concern in the world's largest oil consuming nations that petrol supplies will remain tight for the rest of the year.

US wholesale petrol prices have shot up almost 50 per cent this week as refineries suffered a dramatic reduction in their ability to process oil into finished products such as petrol and diesel.

Adding to consumer fears on Wednesday was a US Department of Energy report that showed petrol inventories near to five-year lows.

The US government tried to soothe fears of an energy crisis by announcing that it would tap into its special petroleum reserve to supply refiners short of oil. The move did little to halt the soaring petrol price, although it did check the advance in crude oil prices.

"The supply of oil is not the problem; it is a refinery problem and the ability to make petroleum products and, in particular, gasoline," said Adam Sieminski, energy strategist at Deutsche Bank.

US wholesale petrol prices jumped to a record $2.90 a gallon, up about 42 cents on the day. The petrol price is equivalent to $121.80 a barrel, or more than $50 above US benchmark crude prices, which were trading just below $70 a barrel in New York.

The shortages in US supplies affects global prices as US petrol demand accounts for about an eighth of global oil demand. The rise in wholesale petrol prices has pushed retail prices to more than $3 at the pump. The refinery shutdowns have also pushed other petroleum products higher, such as diesel, heating oil and jet fuel.

Natural gas and power prices have also moved up sharply. George Hopley, natural gas analyst at Barclays Capital, said the rise in gas prices should see utilities switch to cheaper, but higher polluting, coal.

US natural gas futures hit a record $12.30 per million British thermal units yesterday. The rise in gas prices this week pushed up power prices along the US east coast by as much as 40 per cent.

The prices of soft commodities were also pushed up, as the devastated region is an important warehouse and trading centre for grains, metals and coffee.

Coffee prices have risen more than 7 per cent this week to 98 cents on fears that beans held in storage in New Orleans, which accounts for more than a quarter of US coffee bean inventories, might be permanently damaged. The New York Board of Trade, where US coffee futures are traded, declared a force majeure on Tuesday giving sellers exemption from contractual obligations.

New Orleans holds about 44 per cent of the zinc held in warehouses registered with the London Metal Exchange. Stephen Briggs, metals economist at Société Générale in London, said there were no reports of damage. Zinc has moved $20 higher to $1,371 a tonne this week.

Judy Ganes, an independent soft commodities analyst, said the potential loss of production in Mississippi and Alabama might amount to only about 1 per cent of the expected US cotton crop this year of 21m bales.

The $3-$4 spike is probably temporary, and should abate over the next few months as the infrastructure is brought back online. Whether prices will drop back to below $2 a gallon isn't something I would hold my breath for however.

#1. I would never argue for price caps, artificial price fixing, etc. of gasoline. That I am in complete agreement with you JMJ. But I would not argue for us to use the last reserve of oil we have left in the country (ANWR). We might need that in the future.

#2. Quite frankly I do not mind the rise in prices. I drive ~55 miles a day all highway in a Honda Accord. I use about 12 gallons a week on average. If my gas bill goes from ~$25 a week to ~$50 a week I will survive. But will the US economy survive the giant sucking sound of comsumer's disposable income going to fuel instead of restaurants, retail, etc.? That is just $100 a month from me, add that up for all consumers in the US. And I am a single male with no costs besides rent and insurance what about working families?

#3. If the prices do stay high in the US for a long period, the US citizen will have to make serious lifestyle decisions in regards to fuel use. No more gas guzzling SUV's, no more endless sprawl, no more driving 60 miles a day. Wait those sound like environmentally sound decisions! Maybe this was the enviromentalist "nutjob's" plan after all?

Bottom line: We have dug our own grave, now we have to sleep in it.

Nimcosi wrote:

I realize we are a capitalisitc society, but why are the Oil companies not considered a public utility?

You put the answer before the question. Is this Jeopardy? I'll take "Free Market Economies" for $100, Alex.

Suffice it to say that JohnnyMoJo is making the most sense to me of anyone on this thread, although I agree with Rezzy that the President has the authority to freeze gas prices temporarily (at least, I'm inferring that Rezzy believes this). I don't have any problem with the temporary closing of the various capital markets (New York Stock Exchange, etc.) in the midst of a national crisis (9/11) either.

EDIT: as of 5:50pm Central, gas at the station near me is $2.959 for regular unleaded, $3.159 for supreme.

one can only imagine the markup on Prius's and other hybrids going on at Auto Dealerships around the country...

Lester_King wrote:

The rumor here in Charleston is that we received our last shipment of gas today... from what I hear there isn't another tanker scheduled to come in... Sounds like hooey to me, though

Apparently several gas stations here in State College shut down this afternoon because they ran out of gas and none is coming soon. At the moment we're assuming that means no shipments to those particular stations, rather than the area at large.

TheGameguru wrote:

one can only imagine the markup on Prius's and other hybrids going on at Auto Dealerships around the country...

I can't speak for the rest of the world, but prices here haven't gone up in the 6 weeks or so I've been researching hybrids. But then, I'm looking at hybrid SUVs, which probably have a much smaller target demographic.

Hopped Up On Koolaid wrote:

Apparently several gas stations here in State College shut down this afternoon because they ran out of gas and none is coming soon. At the moment we're assuming that means no shipments to those particular stations, rather than the area at large.

Gasoline isn't like orange juice that is fresh squeezed every morning. it would take at least ten days after refineries stopped working to see a drop off in available petroleum and that would mean all the refineries were down. same thing for pipelines. the pipelines don't split off and terminate at your local shell station. any shortages or running out happening this week is from people panic buying up the local supply, not an indicator of production or supply into the region you live in.

BobbyLaw wrote:

any shortages or running out happening this week is from people panic buying up the local supply, not an indicator of production or supply into the region you live in

Yeah I don't know the logistics of getting gas from a refinery to the station next door, other than that it gets trucked in from somewhere. I'm guessing things went something like

gas station has a delivery scheduled for Sunday
everyone wigs out and takes a run on gas
gas station runs out early, tries to get the shipment moved up to friday and can't

It could be that the station didn't run out but just isn't selling because they want to keep a reserve. Whatever the reason, some stations are in fact no longer selling gas here, so potentially it could happen somewhere else.

I saw a couple of people calling for price caps which would be the worst thing that could be done. If you cap the price of gas, then demand will exceed supply and there will be lines and rationing. If you want gas prices to fall then they need to continue to rise so people have more incentives to buy more fuel efficient cars, ect.

Price controls never work and should be avoided. I know that the poor and working class will be hurt the most but they're always hurt the most.

I paid $2.34 about 2 weeks ago, and that was not a bad price at the time. I paid $2.79 for Regular yesterday; same station has it at $3.49 today. Just data points for the central Maryland area.

Ulairi wrote:

I saw a couple of people calling for price caps which would be the worst thing that could be done. If you cap the price of gas, then demand will exceed supply and there will be lines and rationing. If you want gas prices to fall then they need to continue to rise so people have more incentives to buy more fuel efficient cars, ect.

Price controls never work and should be avoided. I know that the poor and working class will be hurt the most but they're always hurt the most.

while this is economically sound and correct in theory.. I do worry about the whole house of cards effect... mass panic amongst the poor and working class could have an escalating domino effect that could spark some serious problems in our country..

Dunno...perhaps we're simply delaying the inevitable...

Wednesday: $2.99
Thursday: $3.17
Friday: $3.35

So, given that the price of gas is allegedly due to oil supply limitations, I have a question:

Why hasn't the price of all plastic-based products started rising? Roughly 40% of the US's oil consumption is for auto fuel. The other 60% is used for everything else oil goes into.

Tires. Phones. Garbage bags. Rubbermaid / Tupperware. Medical supplies. Kitchen utensils (spatulas!). Litter boxes / garbage cans. Tape. Styrofoam. Packing peanuts. Lunch baggies. Saran Wrap. Pvc pipe. Epoxy glue. Paint and paint thinners. Shower Curtains.

And on and on and on. So much of our stuff is made with either plastic (made from oil) or directly from oil products. So why aren't prices on those products rising given that the oil supply and delivery capacity is allegedly the source of rising gas prices?

I don't mind paying a little more for gasoline. The more gas costs, the more people will eventually start using more efficient, environmentally-friendly vehicles. Not only that, but the more something costs, the less likely one is to waste it. I'll find ways to make my driving more efficient.

I do mind paying more on the basis of outright greed, especially for something that's practically a utility expense these days.

Why hasn't the price of all plastic-based products started rising? Roughly 40% of the US's oil consumption is for auto fuel. The other 60% is used for everything else oil goes into.

oil used for gas is different than oil used for heating homes, as an example. Also, I think the SEC should look into price gouging and collusion, just for the cunsumers mindset. Does anyone know if the gas companies use LIFO or FIFO?

Does anyone know if the gas companies use LIFO or FIFO?

One would almost assume they use FIFO to maximize profit in the short term for quarterly returns for thier investors. But I obviously don't know for sure,a nd there are problems with my logic (overlooking things etc)

Dr.Ghastly wrote:
Does anyone know if the gas companies use LIFO or FIFO?

One would almost assume they use FIFO to maximize profit in the short term for quarterly returns for thier investors. But I obviously don't know for sure,a nd there are problems with my logic (overlooking things etc)

I believe Dr. G is right, but I've never worked on the accounting side of things.

Farscry wrote:

So, given that the price of gas is allegedly due to oil supply limitations, I have a question:

Why hasn't the price of all plastic-based products started rising? Roughly 40% of the US's oil consumption is for auto fuel. The other 60% is used for everything else oil goes into.

Plastic (and the finished goods) can be stockpiled much more easily than petrol, and you'll often find stuff being warehoused for months anyway. The current supply limitation is mostly due to breakdown of processing plant and pipelines. By the time existing stockpiles of plastic and finished goods will have dwindled, those should be back up. This is not true for fuel, commercial storage tanks usually only hold a week's worth of supply or so (depending on usage).

I paid $2.03/gallon in one of the Carolinas on the second day of my road trip. I wished then and I wish now I'd brought a couple of gas cans or something.

My local Shell station is at $3.499/gallon here in suburban Massachusetts. Glad I live twenty minutes' walking distance from work.

Dr.Ghastly wrote:
Does anyone know if the gas companies use LIFO or FIFO?

One would almost assume they use FIFO to maximize profit in the short term for quarterly returns for thier investors. But I obviously don't know for sure,a nd there are problems with my logic (overlooking things etc)

Well, if they use LIFO it would explain why gas prices have risen so much so quickly.

For all the people keeping track: Here in Iowa I just filled my car with 93 octane Premium at $3.05 a gallon.

The gas-station at the corner where I live has regular for $3.15, people crossing the river from Omaha have told me that $3.60 is not uncommon on some of the major roads. Clear-cut case of opportunism: A station I passed on my way to work had a listed price of $3.65 this morning. On my way home the price was listed at $3.20. I guess they realized that people would just drive down the street 3 blocks and get the cheaper gas!

Hmm... Current Work Mileage Compensation: $0.30/mile
Current Average Miles/Gallon: 23.6 mpg
Rough Estimate of compensated miles per gallon: 80%
My work pays me approx. $5.66 per gallon of gas.
I should be okay for awhile!

Now if I can just remember to turn in my mileage sheets! I'm already 2 months behind!

Hmm... Current Work Mileage Compensation: $0.30/mile

National Federal Standard is suppose to be a minimum of $0.49/mile. You need to tell your company that they raised it last year. Then go through all of your past invoices/pay stub and redo the milage so they can give you the difference.

Edwin wrote:

National Federal Standard is suppose to be a minimum of $0.49/mile. You need to tell your company that they raised it last year. Then go through all of your past invoices/pay stub and redo the milage so they can give you the difference.

The government chopped $11 million off the top of our budget last year. There was a committee, and they decided instead of firing people and consolidating already heavy work-loads that we would wait to raise the mileage compensation. The state is talking about reversing that cut, now we are talking about raising the compensation. *shrug* As an agency we service 7 counties and 13 school districts. Mileage is a MAJOR expense for us!

Huh? They don't have a choice. They have to use the minimum set by the IRS, otherwise any employee could complain.

http://www.irs.gov/newsroom/article/...

2005 Standard Mileage Rates Set

IR-2004-139, Nov. 17, 2004

WASHINGTON "” The Internal Revenue Service today released the optional standard mileage rates to use for 2005 in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes.
Beginning Jan. 1, 2005, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

* 40.5 cents a mile for all business miles driven, up from 37.5 cents a mile in 2004;
* 15 cents a mile when computing deductible medical or moving expenses, up from 14 cents a mile in 2004; and
* 14 cents a mile when giving services to a charitable organization.

The 3-cent increase in the business mileage rate was the largest one-year rise ever. The primary reasons were higher prices for vehicles and fuel during the year ending in September. The charitable standard mileage rate is set by law.

The standard mileage rates for business, medical and moving purposes are based on an annual study of the fixed and variable costs of operating an automobile. An independent contractor, Runzheimer International, conducted the study for the IRS.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS), after claiming a Section 179 deduction for that vehicle, for any vehicle used for hire, or for more than four vehicles used simultaneously. Revenue Procedure 2004-64 contains additional information on these standard mileage rates.

Also looks like you were being shorted out in 2004. Might want to redo all those milage sheets.

Edwin wrote:

Huh? They don't have a choice. They have to use the minimum set by the IRS, otherwise any employee could complain.

http://www.irs.gov/newsroom/article/...

2005 Standard Mileage Rates Set

IR-2004-139, Nov. 17, 2004

WASHINGTON "” The Internal Revenue Service today released the optional standard mileage rates to use for 2005 in computing the deductible costs of operating an automobile for business, charitable, medical or moving expense purposes.
Beginning Jan. 1, 2005, the standard mileage rates for the use of a car (including vans, pickups or panel trucks) will be:

This is for claiming mileage as a deduction, not being compensated by the employer! I don't believe that that agency HAS to compensate us, they could simply allow us to deduct them from the end-of-year tax returns.

Doh! My bad then.

Re: why haven't the costs of other goods inflated immediately like gasoline has, and this whole pump price thing in general:

Individual gas stations have direct control over their pump prices, and can change their prices at the drop of a hat. In college I heard of an experiment where a guy arbitrarily changed his station's prices. Shortly thereafter (same day), the other station on the same corner changed its prices to match. The first guy then changed his price again, and it again was shortly matched by his competitor. The third time he changed it, the guy at the other station asked him what the hell he was doing.

By the way, that's all legal until they get together to plan it. "Conscious parallelism" is legal, but "collusion" is not.

And you thought it was over.

http://releases.usnewswire.com/GetRe...

Dream wrote:

And you thought it was over.

http://releases.usnewswire.com/GetRe...

Ugly. But somehow not surprising. Those three have a reputation for being the baddest boys in an industry which isn't known for its ethical behaviour.

Are they going to get slapped? Probably not. They own the White House.

Edit: Thinking about it, from a climate change perspective, this may not be a bad thing. If you can't get people to reduce consumption, reducing supply is always an option. Who'd have thought it? The three biggest "We don't believe in Climate Change" oil majors playing into the hands of anvironmentalists. I appreciate the irony.