Category Archives: gas prices


Here we go again.

According to the news media, gas prices are at record highs — for February! — and this somehow is cause for panic because even though gas prices have been higherin August 2008! — it means that they’re gonna be higher in May 2012 … just because!

I mean, good grief. If the news media is pressing the panic button, it must be because they’re tired of talking about vaginas and birth control pills. The funniest thing is watching Newt Gingrich remind everyone what the price of gas was when he was Speaker of the House, which was back in the last century. He then tells us what the price of gas was on Obama’s inauguration day, completely skipping over the roller coaster Bush years, including the record highs of 2008. Yeah, I know Republicans wish the Bush years never happened, join the club! But sorry dude, you can’t.

Nothing angers me more than the malfeasance that is our news media’s coverage of the gas price issue. Most of the time they’ll just shove a microphone in the face of some poor schlub trying to make it into work in the morning and record people complaining about something we’ve always complained about, since forever. Good grief, I remember people complaining about $1 a gallon gasoline, and I’m not that old.

It’s as if the news media has decided to not even bother and explain the issue. It’s just too hard, the poor dears know we idiot Americans can’t possibly comprehend gas prices rising due to things like Iran, China, Greece and increased demand from a stronger economy. So much easier to spread panic, I guess. Why don’t folks like Charlie Rose and Brian Williams actually inform the public? Instead, I watched Charlie Rose this morning let Newt blather on about stuff that has no effect on gas prices whatsoever without doing his fucking job and actually conducting an interview. You know, back in my day an interview involved two people, one asking questions and one answering them. This morning, Rose just basically turned on Newt’s mic, then went to the bathroom with his newspaper and cup of coffee.

As I wrote back in December, America is actually exporting more refined oil product than it’s importing these days. For the first time since 1949. How this makes President Obama anti-domestic energy, I have no idea.

These are the facts but you sure don’t hear the TV newsbots mentioning that. Gas prices are high right now because of global geopolitical conditions that U.S. consumers have very little control over and a strengthening economy which has increased demand. There is nothing magical about this being the month of February, nor is there any guarantee that these conditions will exist in May or June. There is no voodoo surrounding the time of year when gas prices have risen. I remember one Memorial Day weekend when they actually went down.

Here’s a nice little chart showing gas prices in the U.S.:

Every time the roller coaster edges up, the news media pushes the panic button. Frankly, I’m sick of it. It’s lazy, irresponsible, and does not inform the public. Instead, it fosters ignorance and partisanship, because it allows Republican talking points to take hold.

Instead of inciting panic, the news media should be spreading accurate information about why gas prices behave the way they do. That way an informed public could come together and actually agree on some kind of national energy policy enabling the country to weather these inevitable ups and downs over which we have little control.

Here’s an idea from Time’s Bryan Walsh:

In fact, it’s not the price of gas the President should focus on — it’s the effect high gas prices can have on the economy. A more energy-efficient economy — from gas mileage on up — is naturally more resilient to high energy prices. That’s one area the President can help shape — and it’s an area President Obama has found quiet success. The White House has pushed through measures that will mandate significant increases in the Corporate Average Fuel Economy rules, which means in the future, American drivers will be better protected against the next big hike in gas prices. And that’s not something one hears often from the Republican presidential field.

We’ll never agree on that more energy-efficient economy, though, because all the new media does is spread the false information that increased drilling somehow leads to lower gas prices at home. It isn’t now, it hasn’t in the past, nor will it in the future.


Filed under energy production, gas prices, Media

Drill Here, Drill Now, Pay MORE?

Remember Newt Gingrich’s “Drill Here, Drill Now, Pay Less” campaign? Based on the false assumption that if we drill for oil in America, that oil will stay in America? And drive gas prices Americans pay down? Because, you know … supply and demand and all that simplistic Econ 101 crap from the 1920s that people believe still holds true in a global economy?

Yeah, well, it ain’t happening:

Oil boomlet sweeps U.S. as exports and production rise

Looking at your heating bills or gas prices, you may find it surprising that the United States is enjoying a mini oil boom. It’s producing more crude oil and, for the first time in decades, has become a net exporter of petroleum products such as jet fuel, heating oil and gasoline.

The U.S. exported more oil-based fuels than it imported in the first nine months of this year, making it likely that 2011 will be the first time since 1949 that the nation is a net exporter of such goods, primarily diesel.

That’s not all. The U.S. has reversed another decades-long trend. It began producing more crude oil in 2008 than the year before and accelerated that upswing 3% in the first nine months of this year compared with the same period in 2010. That production has helped reduce U.S. imports of crude oil by about 10% since 2006.

Funny because I thought Socialist Obama was a puppet of Greenpeace and the Sierra Club! Oh, and the tree huggers and Dirty Fucking Hippies have blocked all the new refineries! And bargle bargle blargh! And Al Gore is fat!

Hmm. So we’re producing more crude oil domestically, reducing our imports, headed toward energy independence … yet we’re still paying over $3.50 a gallon for gasoline! What happened to the “pay less” part of Newt’s slogan?

What gives? Two things:

American consumers benefit little from the U.S. oil boomlet, because their fuel prices depend heavily on a global oil market that remains tight and has probably already peaked in production, says Jeremy Rifkin, author of The Third Industrial Revolution: How Lateral Power is Transforming Energy, the Economy and the World.

Ah yes that global market thing. Oil is not like oranges or laundry detergent. And then there’s the fact that this “boomlet” comes from new sources of oil (like tar sands and shale and ultra-deep offshore wells) that had been prohibitively expensive to tap before. The price of oil has to reach a certain high price before tapping these sources makes economic sense.

You see, high gas prices are built into the system. So no matter how much we drill and refine here in the U.S., we won’t be seeing cheap gasoline. And as for the rest of it — the poisoned well water and earthquakes from fracking, the crazy, wild weather from increased atmospheric carbon dioxide — we all pay those costs so the oil companies can enjoy higher profits. Privatize the gains, socialize the losses: it’s the way we do things these days.

Of course, those of us who drive electric cars don’t pay too much attention to gas prices.


Filed under climate change, energy production, gas prices

Food Or Fuel?

Last week My Conservative Friend™ was railing on about how they use sugar cane for fuel in South America and by God why isn’t America running its cars on American corn? I had to explain to him that actually we are, we do, and we have: and some of us don’t think it’s a good thing to turn our food into fuel. Not when people are going hungry, not when food prices are going up, not when Wall Street speculation on corn prices causes price spikes, and most of all not when corn fuels are so energy-intensive to produce that they don’t really solve our energy problems or the climate change problem.

He was completely unaware of the whole ethanol thing, how we now mix ethanol with gasoline. I couldn’t remember how much, but I did remember that it was a couple years ago that Congress mandated higher ethanol content in gasoline, and I remembered some people raising a big stink about it because ethanol can tear up some engines, especially things like lawnmowers. And I remember gas pumps have a big sticker on them indicating the percent of ethanol content in all gasoline. So how someone like My Conservative Friend™ can fill up his big gas-guzzling SUV with gas every week but not be aware that it’s mixed with ethanol is a little mind-boggling to me.

Over at Grist I saw this article which says 40% of all U.S. corn produced goes into our gas tanks. That’s a lot of corn, and I have to say, even I didn’t realize it was that high.

One of the things that frustrates me about our world today is that people are being increasingly asked to engage in the public discourse, yet they are not given the information they need to do so with any level of accuracy. It’s like the Powers That Be want people to be uninformed, but they also want people to be engaged. I guess it’s easier to manipulate an uninformed populace, and giving people politics instead of news and opinion instead of information is the modern-day “bread and circuses” which makes us feel like we are involved in our democracy without actually having control over anything.

I mean, seriously. How can we have a discussion about national energy policy when people don’t even know that American gasoline is mixed with corn ethanol? How can our opinions be valid when we aren’t even informed about what our government is currently doing?

Anyway, Grist calls corn ethanol “the boondoggle that won’t die,” and it’s hard to disagree:

What’s frustrating isn’t that the government is investing in alternative liquid fuels. It’s that, national security be damned, we’re barking up the wrong energy tree: All the data point to ethanol being a climate dead end. And it’s a dead end that’s eating our food. Yet the government finds ways to keep the money flowing towards ethanol. It’s truly the boondoggle that just won’t die.

There is an education gap that makes debating public policy issues so difficult. All the Republicans have to do is come up with some amygdala-triggering slogan: “Nuke The Ragheads!”, “Drill Here, Drill Now!” and “America Fuck Yeah!” None of these things educate people about the world as it is, policies that are currently in place, or the issues that these policies raise. But they do provide an emotional release.

The Left operates on the assumption that people already know what policies are in place, what issues they present, and let’s talk about what we need to do. And we get nowhere.


Filed under energy future, energy production, Energy Solutions, environment, gas prices

Oil Speculators & Gas Prices: Is Feature, Not Bug?

I’ve already written plenty about the dishonesty of “Drill Here, Drill Now, Pay Less” (for a rundown, check here.) That’s a nice little bumper-sticker slogan that caters to the low-information crowd who still believe in simplistic supply and demand models — something we all know does not apply so easily to oil and gasoline. Frankly, I don’t see that message getting much traction outside Fox News; American consumers are a little more sophisticated than that.

One thing I haven’t talked about too much though is the influence of Wall Street speculators on our gas prices. In that regard I found a recent interview with Ed Wallace on NPR’s “Here & Now” quite interesting. The interview built on his column of April 19, but then went into what interviewer Robin Young dubbed “provocative” territory. If you get a chance, give it a listen, it’s only around 15 minutes long.

I found his theory fascinating. He says that banks and investment houses need to make up for the money they lost in the mortgage meltdown, so they’re gambling it on oil futures instead of loaning it to small businesses and consumers. This is sending the price of oil soaring.

In the radio piece (around the 11:00 mark) he specifically blamed the Federal Reserve’s policy of loaning money to the nation’s banks at virtually zero interest. The idea was, banks would send that cheap money back out into the economy in the form of small business loans, consumer loans, and the like. But as anyone knows, banks are not giving loans these days. They’re being downright stingy in that department, actually. Wallace says it’s because they’re trying to get a bigger return on their investment by speculating in commodity futures like oil. The banks are making tons of money but they aren’t sharing the wealth with the rest of us; in fact, they’re costing us, because this speculative activity has sent gas and food prices soaring.

And while President Obama is calling for an investigation into such practices, Wallace thinks it’s all so much Kabuki theater. Indeed, the “provocative” thing is, he thinks this situation is a feature, not a bug. I’ve transcribed part of the interview Robin Young conducted here:

RY: But why can’t it be exposed?

EW: Because I think they have to keep it this way. And this … now let me speculate on my own story. The housing crisis is not over yet. They say that somewhere between 13% and 15% of all homes in America are now sitting vacant. Not all of them have been sold. The Wall Street Journal — what was it, last September? — did a story, said at our current sales rate for used homes in America, it’s going to take 9 years to clear off the backlog of these homes off the bank’s books and actually get them sold. That means they haven’t taken the losses, Robin. So how do you get the banks into a position where they make so much money they can slowly work out of this mess?

RY: You give them oil!

EW: You give them so much money at virtually no interest they can make money in commodities, food, oil, whatever. And these huge profits you’re piling up are actually gonna go to probably handle the losses that are still coming our way and will come our way for years to come.

RY: So it sounds like you’re saying that the government needs to keep this inflated oil market there because that’s how banks, investment houses, whoever these speculators are, can sort of offset their losses in homes.

EW: I think that’s as logical a theory, and I’m not saying that’s absolute, but why else would the government let it happen when the government’s the one that knows exactly why it’s happening, they’ve studied it. And yet they do nothing?

Why indeed!

It’s certainly a complicated issue, and while a few of Wallace’s ideas seem shaky — who is to say the sales rate of homes will stay at its current rate, for example? — I do think he’s onto something here.

Unfortunately, Americans can be intellectually lazy. Rather than exercise the gray matter on such intricacies as the global commodities markets and real estate inventory, they’ll jump on board the more simplistic “demand is up so gas prices are up” tale Grand Old Petroleum is selling. And any attempt to pressure the Fed to change its policy and prevent such gambling by banks in the Wall Street casino will be viewed as unpatriotic, Socialism, Fascism, tinkering with the free hand of the market, class warfare, punishing the rich, etc. etc. etc. I mean, we’ve seen this movie before, haven’t we? Instead we’ll get more oil leases off the coast of Viriginia and in the Gulf of Mexico, which won’t do a damn thing because the oil companies are already sitting on more untapped, unused leases than they know what to do with. And gas prices will go up, and on and on. Lather, rinse, repeat.

C’est la guerre!

[UPDATE]: I just realized I contradicted myself when I said the “drill here drill now” slogan wasn’t getting much traction outside of Fox News audiences, and then concluded that Americans are intellectually lazy. I guess what I meant is that while I believe most Americans understand the price of gas and the price of oil are complicated issues affected by more than just how many oil platforms are in the Gulf of Mexico, they aren’t necessarily researching this stuff on their own to find out all the many ways prices are manipulated. It’s too easy to grab onto whatever message the media is peddling today and buying into certain assumptions, such as “demand is high!” Um, well, no, actually, it’s not. The media also likes to conveniently blame China and forget about the role of refineries which have cut capacity, something Wallace goes into in his April 19 column.

So, as always … ’tis complicated.


That was fast. Gosh I hate it when I’m right. I said we’d get more oil leases off the coast of Viriginia and in the Gulf of Mexico and that’s exactly what our clueless House of Representatives has authorized.

I’m not worried about this. As I’ve said before, the oil companies have more leases than they know what to do with. The problem is not oil leases. They already know where all the oil is, the problem is pulling it out of the ground (or, in this case, the seabed.) There will be windfarms off the coast of Virginia long before there are oil platforms.

But if Congress wants to do something to lower gas prices, they’re barking up the wrong tree. And perhaps, as Wallace suggests, that’s all part of the Kabuki theater. They want to give the appearance of taking action, all the while knowing that what they’re doing won’t affect anything at all. Because they want this oil speculation to continue.

I dunno, it’s a theory … but a damn good one.


Filed under banks, gas prices, Wall Street

>Gas Prices: Historical Perspective

>(Note: I’ve updated this post to use a better chart going back 6 years and also showing the price of crude oil).

Some folks on the intertubes are wondering why people aren’t blaming President Obama for rising gas prices the way they did President Bush. I’m not entirely sure that’s true, but perhaps the reason there isn’t more outrage about rising gas prices is because, well, we’ve been here before:

Note gas prices have actually been more stable during Obama’s term, and have yet to reach some of the peak prices that they did under Bush (and note the chart only goes back to 2005). Now, I’m not giving Obama the credit for this — the sucky economy and drop in manufacturing has done more to reduce demand than anything else, hence the more stable gas prices (note gas prices took a nosedive along with the economic crash at the end of Bush’s term). But there it is.

Gas prices are a lot like that metaphor about the frog in the boiling pan of water: throw a frog in boiling water and he’ll jump out; slowly warm the water to boiling with him in it, and you’re eating boiled frog legs for dinner. I remember being so outraged when gas exceeded $2 a gallon for the first time! Now it’s like, “Meh. Been there, done that.”

There’s a lot of misunderstanding about what affects gas prices, oil prices, etc. People tend to think of gasoline in terms of simple “supply-and-demand” economics but this is only partially true … in addition to which, Newt Gingrich-types pushing “drill here, drill now, pay less” talking points tend to conveniently overlook a key component of the supply cycle, which is the refineries. Oil companies have been getting out of the refining business for years because the profit margins have shrunk.

Every time gas prices tick upwards Sitemeter tells me people are furiously Googling “why are gas prices going up?” For that answer, read my previous posts here (2009), here (May 2009 again) and here (2010). They all pretty much say the same thing: gasoline is not just a supply and demand business. The price of oil and gasoline is affected by a lot of things — world events, the value of the dollar, refinery capacity, and yes, demand such as summer travel.

So here’s an actual conversation that was had recently between a liberal and a conservative about gas prices. The liberal mentioned that refineries are cutting capacity to maintain high prices. The conservative said that the U.S. government should build its own refineries if the private ones refused to refine enough to keep prices low.

Chew on that one for a second. Apparently nationalizing certain industries is fine with conservatives as long as it keeps gas prices low. I mean, I just wanted to bust out laughing when I heard that one. Actually, I did.

Anyway, I’ve long been of the belief that we need gas prices to be as high as they are in, say, Europe. Why the hell not? Using less oil and gasoline is in our national interest. It keeps us out of hostile regions of the world, is better for our health and environment, can spur domestic job growth as we manufacture the infrastructure necessary to transition to the new energy economy.

Want to piss off a Yemeni terrorist? Conserve energy. Ride the bus. Support solar and wind energy. Get off the oil tit.

And don’t tell me we can’t, I’m sick of hearing this shit. America was able to completely transition its industrial and manufacturing base away from civilian goods to armaments and war materiel to take on World War II. We can do this.

1 Comment

Filed under energy future, gas prices

>Why Are Gas Prices Dropping?

>Yet more evidence that Newt Gingrich’s “Drill Here, Drill Now, Pay Less” campaign is bullshit: we’re two months into a six-month ban on deepwater oil drilling and gas prices are tumbling:

CAMARILLO, Calif. — The average price of regular gasoline in the United States has dropped more than 11 cents over a three-week period to $2.72.

Not possible! We were told that unless we drill for oil offshore, we’d be paying $4 and $5 a gallon! Instead, gas prices have been dropping since the oil spill started:

WASHINGTON (MarketWatch) — U.S. consumer prices decreased in May for the second straight month as gasoline prices fell, the Labor Department reported Thursday.

And no, I’m not suggesting that the oil spill is responsible for lower gas prices. That’s just stupid.

So why are gas prices dropping like a rock, despite a ban on offshore deep water drilling? Here’s an idea:

Analysts say a sluggish start to the summer vacation season has increased gas inventories, and serious economic problems in Spain, Portugal and Greece have helped lower prices as the dollar rose in value against other currencies.

The price drops, which began May 7 when the financial crisis in Europe worsened, have reversed a trend in early 2010 that had seen gasoline prices rising considerably higher than the previous year.

Hmm. So apparently the price of gasoline is more affected by world events and the global financial market than how many rigs are drilling off the coast of Mississippi.

Interestingly, the story goes on to say that hurricanes in the Gulf of Mexico could disrupt drilling operations and cause prices to go back up. That is an excellent reminder to us all that there is, in fact, offshore oil drilling going on in the Gulf of Mexico right now, as I type this. Republicans and even a few Democrats keep telling us that unless the deepwater moratorium is lifted, it will be an economic disaster for states already crippled by the oil spill, like Louisiana. Which ignores the fact that the oil industry is still chugging along down there.

So talk about platforms, specialized equipment and even the workforce leaving the Gulf of Mexico strikes me as unnecessary fearmongering. There’s still drilling going on, just not in water deeper than 500 feet. In fact, only 33 deep water rigs have stopped operations: so little that we haven’t even felt it at the pump. Gas prices are actually going down.

So quit yer whining. If there’s some deep-well engineering firm that’s going to have to leave the Gulf of Mexico because they are out of work for six months, see ya. Go pollute the waters off of Norway or Brazil (if you can). Take your trashy, polluting, risky, unsafe industry somewhere else. I’m not going to have a sad. I’d rather have some shrimp to throw on the barbecue and you guys screwed that up for us for good.


Filed under gas prices, Gulf oil spill, oil industry

>Sending An Energy Message

>I’m trying really hard to get upset about the Obama Administration’s announcement that it would open up coastal areas to oil exploration. Obviously I think it’s a terrible idea, for all of the usual reasons. But I just don’t think this plan is serious. Maybe I’m in denial.

Most media folks seem to have bought the “we need to drill here drill now pay less” line the Administration is selling. From the New York Times:

The proposal is intended to reduce dependence on oil imports, generate revenue from the sale of offshore leases and help win political support for comprehensive energy and climate legislation.

Let me be the first to call bullshit on that line of thinking. No, that’s not what the proposal is intended to do because it so clearly won’t do any of that. For one thing, oil companies are sitting on more offshore oil leases than they know what to do with. So don’t expect to see any oil platforms off the coast of Virginia any time soon; indeed, there will be windmills off the coast of Rhode Island long before Virginians need to worry about ExxonMobil drilling off their beaches. Aw heck, Virginians will see coastal wind farms long before they see oil platforms.

No one ever mentions this but that oil is too expensive to even think about pulling out of the ground until oil surpasses $100/barrel. That is, in fact, why it’s still there. For another, gas has been so cheap that the oil companies have been and continue to cut back on refinery production. I first wrote about the cut in refinery production to maximize profits last year; now, these cuts look to be permanent:

Energy companies are suffering huge losses from refining because of slumping gasoline use – a product of the economic downturn and changing consumer habits and preferences. Energy experts say refining cutbacks have already begun and will accelerate as corporations strive for profits.

Major refiners have been circumspect about their plans, saying they are considering options that could include closing refineries, selling parts of their operations, laying off workers or slashing spending.

“Refineries will have to be closed,” said Fadel Gheit, senior energy analyst with Oppenheimer & Co. “Unless this excess capacity is permanently shuttered, a recovery in refining margins is unsustainable.”

Apparently the nation’s appetite for gasoline and diesel have peaked. Cutting refinery capacity pretty much ensures that trend will continue, because it’s keeping prices high.

Meanwhile, gasoline is one of those commodities where what you pay at the pump is affected by more than just traditional supply-and-demand mechanisms. Speculation is rampant in the oil markets, unrest in the Middle East affects prices (though most of our oil imports come from Canada)–even hurricanes in the Gulf have caused gas prices to soar.

Opening up more offshore oil leases doesn’t change any of that, and everyone knows it. I happen to think it’s just more Kabuki Theater. While my in-box floods with alarming pleas for action (and donations) from MoveOn, Repower America, Firedog Lake, etc. about this oil drilling thing, I just can’t believe anyone thinks this is serious.

Most media outlets have suggested that the President’s drilling plan is also an effort to woo Republicans on cap-and-trade. Let me again call bullshit: Republicans have made clear they plan to sit on their hands until the midterm elections, and I don’t think Obama or his advisors are so dumb as to think opening the coast to oil platforms will change partisan politics in Washington.

No, I think this whole thing was planned to send a message to our “friends” in the Middle East, Venezuela, at OPEC, etc. I think we’re putting the world on notice that America won’t be pushed around from an energy perspective. It’s an energy declaration of independence, if you will.

Consider: while everyone was busy haranguing about the new healthcare law (heads up, folks! It’s not a bill anymore!) and its aftermath, the National Highway Traffic Safety Administration and EPA have quietly implemented new vehicle fuel and admissions standards.

Such a thing has been long, long overdue. The new standards, summarized here, take into account new technology, like electric vehicles:

The most intriguing part of the whole thing? Fuel efficiency isn’t king–it’s all about greenhouse gas reductions. This is probably the EPA’s attempt at preparing for a future where most vehicles aren’t just juiced up by gasoline. Carmakers shouldn’t necessarily get off scot-free if their EVs are ultimately powered by coal-fired electricity plants, after all.

That’s certainly ingenious, and casts a far wider net than previous government fuel efficiency standards ever did. Coupled with the offshore oil announcement, the message this sends is that a) we are serious about conservation, and b) we can, will and are finding our own oil supplies, which we will tap if needed.

Of course, all of this comes as oil prices are rising, but note:

So far, though, consumption of gasoline, diesel fuel, heating oil and jet fuel remains sluggish and markets are well supplied. The biggest sign of strength is from manufacturers using growing amounts of crude to restart the nation’s factories.

How cool would it be if our nation’s factories were able to reboot using energy-saving technologies and conservation mechanisms, enabling us to recover the billions of dollars we throw away each year on energy waste? Our manufacturing sector needs to get on board — and it is.

One of the hopiest-changeiest things I’ve seen in the past few years is the surge in renewable energy development. The economy is transitioning away from fossil fuels, not because the government is making us do it or because we’re facing an apocalyptic Mad-Max-style future without “the juice” or because people drank Al Gore’s Kool-Aid but because it makes economic sense. It’s where the money is. Eight years of Bush-Cheney and their oil minions couldn’t stop this train because the reality is that it is too expensive not to move away from the dead energy source that fueled our previous economic growth.

The future is green, not black. Everyone knows it, certainly our corporate overlords know it, and Newt Gingrich and Koch Industries stamping their widdew feet won’t change it. This is positive news, excellent news, because it means we aren’t doomed after all, and it means things like opening the Atlantic coast to offshore oil exploration when nobody seems to want or need the oil leases is just so much political theater.


Filed under energy conservation, energy production, gas prices

>So Much For The Free Hand Of The Market

>All of you people hitting the Google to find out “why are gas prices going up again,” I have a very simple answer:


I’ve said this, oh, like a hundred thousand times before, but those old rules about supply and demand simply do not apply to oil and gasoline. So Newt Gingrich’s “Drill Here, Drill Now, Pay Less” campaign of last summer (remember that?) was and is a lie.

I know, I’m sounding like a broken record. I just think you can’t say it often enough, especially when Republicans are trying to pull the ol’ switcheroo where their good buddies Big Oil are concerned.

Remember back in 2003 when fears of a supply disruption caused by the invasion of Iraq prompted gas prices to “skyrocket” all the way up to $1.60/gallon? Good times, good times.

Now, however, gas prices are jumping not because there’s too little supply, but too much:

Pitfield said refineries are charging retail gas stations more for wholesale gasoline because “the refineries aren’t making money. They’re not making money right now. We’re awash in supply, in fuel. But they’re not producing it to the degree that they would normally be, as at previous demand. And demand for fuel is probably off 20 percent to 25 percent across the board, worldwide, if not more. And I don’t see a great reason for that to be coming back up anytime soon.”

That is, except for a relatively small increase in demand, this year, between Memorial Day and Labor Day, he said.

Let the record reflect that gas prices have continued to rise in advance of Memorial Day Weekend this year.

Under “normal” laws of supply and demand, when demand is lower, prices should be lower.

“Prices should be lower,” Pitfield said. “Prices will continue to go higher.”

In short, refineries have decided to refine less to keep gasoline prices high so they can make more money. Well, fuck you very much. Basically, gasoline consumers can’t win for losing; when demand goes up, so do prices. And when demand goes down, prices go up anyway.

Hmmm, seems like the system is rigged.

Now that President Obama has raised automobile fuel efficiency standards, one wonders what impact this will have on gas consumers. Funny you should ask:

11Alive: “If we’ll be using less gasoline because we’ll all be driving higher-mileage cars, are the refineries going to kick up the prices because we’re using less?”

Pitfield: “Oh, absolutely. I mean, that’s basic economics.”

The new basic economics of supply and demand.

It’s always good news for the oil companies.

Speaking of, last year ExxonMobil sold 2,220 gas stations, saying they weren’t profitable, even with gas at $4 a gallon. A friend of mine who works for Mapco calls gasoline a “loss leader” — they make their money off of beer and cigarettes.


It’s amazing that we’re all paying through the nose yet nobody is making any money.

Comments Off on >So Much For The Free Hand Of The Market

Filed under gas prices, oil industry

>Why Are Gas Prices Going Up AGAIN, V.2

>Once again, oil prices are falling, yet gas prices are going up.

What gives?

One more time with feeling, people: drilling here, drilling now has not in the past and will not now affect what you pay at the pump.

I have written about this a lot, most recently back in February, when refiners cut back on production in response to decreased demand, which lowered gas prices so much the refiners felt it in their own pockets.

Back then USA Today reported:

Beset by weak consumer demand and losses on gasoline sales, oil refiners have scaled back production since late December. The average utilization rate at U.S. refineries was 81.5% as of Feb. 6, the lowest in 17 years, not including hurricane-related slowdowns, according to the Energy Information Administration. As recently as early December, refineries were running at 87.4% of capacity.

Here, via the AAA Fuel Gauge Report, is what gas and crude oil prices were doing in December:

Note when gas prices hit rock bottom: yep, that would be December.

I don’t know what the profit margin is on a refinery, but clearly the refiners have become accustomed to a certain level of dough rolling in. Thus they responded by cutting back on refining the crude, at a time when crude oil was relatively cheap (compared to recent history, at least).

None of this has anything to do with drilling for oil off the coast of the United States or in an Alaskan wildlife refuge. The oil companies already have more domestic leases than they know what to do with, because with oil priced below $60 per barrel, it’s not profitable to pull that stuff out of the ground. There’s a reason this stuff hasn’t been tapped before, and it has nothing to do with tree-hugging environmentalists.

Rising gas prices do, however, provide the perfect opportunity for people in Washington to score political points and try to sway low-information voters who think gasoline is a commodity like corn or pork bellies. And yes, I do mean the usual suspects:

Republicans believe that rising gas prices are their trump card against a Democratic-sponsored climate change bill.

The GOP is struggling to regain footing after two successive electoral blowouts, but party leaders are relishing an opportunity to debate what they call a “national energy tax.”

The Democrats’ plan of moving a cap-and-trade bill this summer plays into GOP hands because as the cost of gasoline spikes, so does the public’s awareness of energy prices, Republican leadership aides say.

Rep. Adam Putnam (R-Fla.), the former House GOP conference chairman, said that the cost of gas is not likely to hit last summer’s national high of $4 a gallon, but he noted that oil prices have been creeping up recently.

Putnam said most Americans want to increase oil production, not restrict consumption, adding, “At some point, gas prices become a very potent political weapon again.”

I don’t know about that. I think all of this yanking consumers around by the gas nozzle fosters anger and ill will toward oil companies. It makes me want to send a big “fuck you” to Exxon and Chevron and find another way of getting around town.

And yes, I did buy a used bicycle a couple weeks ago.

Here’s a handy reference tool to keep bookmarked for the coming debate. Next time you hear a politician tell us we need to “drill here, drill now,” follow the oil money.

Comments Off on >Why Are Gas Prices Going Up AGAIN, V.2

Filed under gas prices

>Why Are Gas Prices Going Up Again?

>Oil prices are falling, demand is down, and gas prices are still going back up. What gives?

Blame the refiners, not the fact that we aren’t “drilling here, drilling now,” says USA Today:

A big reason for the disparity: refiners. Beset by weak consumer demand and losses on gasoline sales, oil refiners have scaled back production since late December. The average utilization rate at U.S. refineries was 81.5% as of Feb. 6, the lowest in 17 years, not including hurricane-related slowdowns, according to the Energy Information Administration. As recently as early December, refineries were running at 87.4% of capacity.

Refineries typically shut some units for maintenance this time of year. But many are trimming output because demand is anemic. That tends to rile consumers who view low gas prices as a small silver lining in a dismal economy. But go easy on the poor refiner, analysts say.

“If you’re losing money on something and you’re producing at 90%, you’re going to cut back,” says OPIS chief oil analyst Tom Kloza.

“If there’s no demand, … there’s really not a whole lot of point to making extra gasoline,” says Bill Day, spokesman for Valero, the largest independent U.S. refiner.

And as oil prices drop, the poor, beleaguered refineries will increase their profit margin by earning more on every gallon they do refine. Nice.

Of course, if there’s no demand, it doesn’t make any sense to drill any more oil that won’t get refined, either. And if oil prices keep dropping, it doesn’t make sense to drill in some of these off-shore areas where it’s so much more expensive to drill.

I’ve written dozens of blog posts about how lowering demand lowers gas prices more immediately than ridiculous ideas like opening up ANWR to oil drilling. But “Drill Here, Drill Now” was all an election year ploy anyway, designed to rally the base, raise money and grab headlines. It was completely dishonest, since the oil companies are already sitting on gazillions of oil leases they have no intention of tapping. It was dishonest, everyone knew it was dishonest, except for the morons who slapped “Drill Here, Drill Now” stickers on their SUV bumpers. You know who you are.

Anyway, now that demand has dropped to the point where refineries are cutting back on production, perhaps we’ve reached a kind of steady-state at $2/gallon. Refineries certainly don’t have an interest in seeing that price drop or they’d up their capacity.

Comments Off on >Why Are Gas Prices Going Up Again?

Filed under gas prices