Gasoline at $4 Coming to a Pump Near You - Mercedes-Benz Forum

LinkBack Thread Tools Display Modes
post #1 of 36 (permalink) Old 04-22-2007, 09:56 PM Thread Starter
Jakarta Expat's Avatar
Date registered: Aug 2006
Vehicle: PM me to Join the Expat Muslims for Obama Club........
Location: Jakarta, Indonesia
Posts: 17,697
Mentioned: 0 Post(s)
Quoted: 3 Post(s)
(Thread Starter)
Gasoline at $4 Coming to a Pump Near You

Gasoline at $4 Coming to a Pump Near You

By Joe Carroll
April 23 (Bloomberg) -- Whether it's $50 to fill up your Prius or $130 for the Ford Expedition, $4-a-gallon gasoline is coming to a pump near you.
Fuel prices are rising at a pace not seen since Hurricanes Katrina and Rita knocked out a third of the U.S. oil refining industry in 2005. Gasoline consumption is climbing twice as fast as last year and will accelerate when summer travel begins late next month.
``What we're surprised by is the increased demand,'' said James Mulva, chief executive officer at ConocoPhillips, whose refineries from California to New Jersey produce 56 million gallons of gas a day, enough to meet 14 percent of the country's needs. ``Even though the price of gasoline is up, the demand is up,'' he said in an April 12 interview in Houston.
Population gains and U.S. economic growth are causing an increase in fuel purchases, according to Orlando, Florida-based AAA, the nation's largest organization for motorists. The U.S. economy will expand at a 2.4 percent annual pace in the second quarter, up from 1.8 percent in the first three months, according to the median estimate of 74 economists surveyed by Bloomberg. Gasoline use is rising almost 5 percent above the five-year average.
Americans are resigned to higher prices, says David Pursell, a principal with Pickering Energy Partners, a consulting firm in Houston.
``Last year, we had pump prices well over $3 for the summer and gasoline demand was up,'' Pursell said in an interview. ``Would $4 gasoline cause demand contraction? I think it will, but I also thought $3 gasoline would.''
Pump Prices
Gasoline inventories, measured by the days of demand they will cover, are at the lowest level in two decades for this time of year because of refinery fires, power failures and maintenance work oil companies failed to complete in 2006. No new U.S. refinery has been built in three decades, increasing the strain on existing plants.
Pump prices in the U.S. may increase to $4 a gallon from a nationwide average of $2.87 today, especially if hurricanes threaten Gulf of Mexico refineries, says Peter Beutel, an analyst at Cameron Hanover Inc. in Stamford, Connecticut, who helps industrial consumers manage energy costs.
``Hurricanes are always the huge wild card,'' said Beutel. ``We're all praying for a year like 2006 rather than 2005.''
The June-to-November Atlantic Ocean hurricane season may produce 17 tropical storms, with nine reaching hurricane force and four becoming major hurricanes whose winds exceed 111 miles per hour (179 kilometers per hour), London-based forecasters at Tropical Storm Risk said. Some of the storms will strike the Gulf Coast this year after a benign 2006, predicted.
Inflation Risk
Higher pump prices will make winners of refinery owners such as ConocoPhillips, San Antonio-based Valero Energy Corp. and Royal Dutch Shell Plc of The Hague. Shares of Valero and Sunoco Inc., whose only business is refining, are rebounding after a decline at the end of last summer.
The increase in fuel costs threatens to quicken inflation and restrain consumer spending in the U.S. An appreciation to $4 a gallon would add more than $10 for a driver who fills the 12- gallon tank of a Toyota Motor Corp. Prius. The owner of an Expedition, a Ford Motor Co. sport-utility vehicle with a 34- gallon capacity, faces an increase of almost $40.
Many Americans have no choice but to drive more, says Christopher Knittel, an economist who studies fuel consumption at the University of California in Davis.
More Commuters
``We live farther from our jobs than we did in the 1970s, and with the rise of dual-income households, we now have two people who drive those distances every day,'' Knittel said.
Consumers also do more driving for things such as taking children to soccer practice, which they are unlikely to quit, he said. The U.S. population has increased 1 percent a year in the past decade to 301 million in 2007, adding to demand for gasoline, economists said.
Rising fuel prices make it less likely that Federal Reserve policy makers, who have cited inflation risks for the past year, will cut interest rates to spur economic growth. Before the hurricane-induced peak in 2005, U.S. gasoline topped out at $1.42 a gallon in March 1981, or $3.21 when adjusted for inflation, according to the Energy Department.
Economies in Europe and Asia are less likely to be hurt by gasoline prices because fuel already is subject to high taxes designed to encourage conservation. A gallon of unleaded costs about 3.25 pounds a gallon ($6.49) in the U.K., and in Japan it's 130.3 yen per liter ($4.16 a gallon).
$4 Barrier
U.S. consumers will get little relief on gasoline prices from Europe this year, unlike 2005, when oil companies shipped more across the Atlantic after the hurricanes. Europe's gasoline inventories in February were 114.2 million barrels, down 11 percent from two years earlier, according to the International Energy Agency in Paris. The drop in Europe was almost twice the 5.7 percent decline in U.S. supplies in that time.
``Just as we used to think $3 a gallon was an impenetrable barrier, now it's $4,'' said Peter Morici, a professor at the University of Maryland School of Business in College Park and former chief economist for the U.S. International Trade Commission. Gasoline at $3.50 is likely, Morici said, and a conflict with Iran or any event that disrupts crude supplies may push it to $4.
Pump prices rose 33 percent in the past 11 weeks, the fastest rate of gain since a six-week, 34 percent rally to the record $3.069 in September 2005, Energy Department data show.
Bodman's `Worry'
U.S. Energy Secretary Samuel Bodman in an interview last week said the national average pump price could break the record this summer. While his agency's official forecast is for gasoline to peak next month at about where it is today, hurricanes, refinery closures or crude oil supply cuts may send prices higher, he said.
Higher prices are ``a legitimate worry,'' Bodman said. ``We have trouble spots all over the world'' that could boost crude oil prices. ``We're in a very tight situation.''
Spending on fuel in the U.S. consumes half as much household income as in the early 1980s, which means gasoline would need to reach almost $6 a gallon to have the same effect on the economy as in 1981, according to the Federal Reserve Bank of Dallas.
Storage tanks at U.S. refineries, terminals and ports hold enough gasoline to cover almost 22 days of domestic demand, 8.2 percent less than the five-year average and the lowest for this time of year since the 1980s, Energy Department figures show.
Valero-owned filling stations in Denver and Colorado Springs, Colorado, ran dry after a Feb. 16 explosion and fire shut the company's McKee refinery in Sunray, Texas. A day earlier, a blaze at an Exxon Mobil Corp. plant in Nanticoke, Ontario, slashed output, resulting in shortages and higher prices across eastern Canada.
The McKee shutdown strained supplies so much that ConocoPhillips postponed maintenance at its Borger, Texas, refinery north of Amarillo to prevent shortages in the region.
``Refineries are becoming more complex,'' Mulva said in the Houston interview. ``What we're finding is it's more difficult keeping reliability up with more sophisticated pieces of equipment that are highly integrated.''
Tesoro Corp. of San Antonio, the second-largest refiner in the western U.S., said first-quarter refinery use dropped because oil companies delayed until this year maintenance that could have been done in 2006. The portion of U.S. refining capacity that was in operation in the first quarter declined to 87.3 percent from 88.9 percent a year earlier, according to Energy Department data.
`Refineries Blow Up'
``Prices will depend entirely on whether we have a couple of refineries blow up,'' said Philip K. Verleger, an economist who runs a consulting firm in Newport Beach, California. ``It's almost impossible we'll get to $4 a gallon if all the refineries run well this summer. But if something happens and there are problems, then anything's possible.''
The average share gain for Valero, Tesoro and six other oil-refining companies is 26 percent this year, outperforming the 4.1 percent gain for Exxon Mobil and a 4.7 percent increase for the Standard & Poor's 500 index.
The shares will continue to rally, said Paul Carlson, who helps manage $3 billion at HGK Asset Management in Jersey City, New Jersey.
``Refiners are doing very well these days,'' said Carlson, whose holdings include ConocoPhillips, the second-biggest U.S. refiner. ``There will be lots of demand for any new refining stocks.''
`Back in Favor'
As recently as August, investors were selling oil refiners on concern an economic slowdown would slash fuel demand in the U.S., the world's largest energy market. During seven weeks last August and September, Valero shares fell 29 percent, wiping out $12 billion in market value.
``Refining is very much back in favor,'' said Douglas Ober, who helps oversee $2.3 billion at Baltimore-based Adams Express Co. ``Even with higher prices, we haven't seen any substantial cutback in demand. They're cranking out as much of this stuff as they can, and we're throwing it in our tanks as fast as we can.''
The margin earned from processing crude oil into fuels rose to $24.68 a barrel on April 11, the highest since right after the hurricanes in September 2005. The margin has since retreated to $22.12 a barrel, still about double the five-year average.
``It'll be a fairly tight gasoline market all through the summer,'' said Robert Hinckley, an analyst at Rochdale Securities in New York.

Bloomberg Printer-Friendly Page
Jakarta Expat is offline  
Sponsored Links
post #2 of 36 (permalink) Old 04-22-2007, 09:59 PM
Zedd's Avatar
Date registered: Feb 2004
Vehicle: 82 300D VNT, 80 240D 3.0T
Location: Denver
Posts: 3,926
Mentioned: 0 Post(s)
Quoted: 1 Post(s)
$4 per gallon? Good, we need it.
Zedd is offline  
post #3 of 36 (permalink) Old 04-22-2007, 10:02 PM
CH4S Artist
Teutone's Avatar
Date registered: Sep 2004
Vehicle: 1985 500SEC, 1991 190E 2.6.
Location: Los Angeles / Hannover Germany
Posts: 33,433
Mentioned: 11 Post(s)
Quoted: 936 Post(s)
Lifetime Premium Member
Compared to Western Europe, still very cheap.
Attached Images
File Type: jpg bush_almighty.jpg (59.0 KB, 83 views)
Teutone is offline  
post #4 of 36 (permalink) Old 04-22-2007, 10:28 PM Thread Starter
Jakarta Expat's Avatar
Date registered: Aug 2006
Vehicle: PM me to Join the Expat Muslims for Obama Club........
Location: Jakarta, Indonesia
Posts: 17,697
Mentioned: 0 Post(s)
Quoted: 3 Post(s)
(Thread Starter)
I calculated the other day and I still pay the equivilent of USD 2.66 per gallon for Shell 95 octane
Jakarta Expat is offline  
post #5 of 36 (permalink) Old 04-23-2007, 06:28 AM
BenzWorld Elite
Roch207's Avatar
Date registered: Jul 2004
Vehicle: 2005 E320 CDI, 1995 E300D, 2002 Avalanche
Location: Southcoast Massachusetts
Posts: 1,485
Mentioned: 0 Post(s)
Quoted: 0 Post(s)
Don't worry Robert, when nearly every Chinese family has a car you will be paying a lot more for a gallon. That day is coming soon.
Roch207 is offline  
post #6 of 36 (permalink) Old 04-23-2007, 06:37 AM Thread Starter
Jakarta Expat's Avatar
Date registered: Aug 2006
Vehicle: PM me to Join the Expat Muslims for Obama Club........
Location: Jakarta, Indonesia
Posts: 17,697
Mentioned: 0 Post(s)
Quoted: 3 Post(s)
(Thread Starter)
^Suits me fine, wife and I own shares in 4 oil and gas wells in Texas, please fill up your natural gas at home before winter ends besides you'll need natural gas for the AC's this summer.
Jakarta Expat is offline  
post #7 of 36 (permalink) Old 04-23-2007, 07:06 AM
BenzWorld Elite
elau's Avatar
Date registered: Oct 2002
Location: Maryland
Posts: 5,392
Mentioned: 0 Post(s)
Quoted: 4 Post(s)
I am paying $3.60 here in Annapolis already, and it's not even the summer travel months yet.

'95 R129
'04 G35.5 BS
'10 X204
elau is offline  
post #8 of 36 (permalink) Old 04-23-2007, 09:52 AM
BenzWorld Elite
Date registered: Jul 2006
Posts: 5,543
Mentioned: 0 Post(s)
Quoted: 0 Post(s)
Already here. $3.97 yesterday near SFO International.
maine_coon is offline  
post #9 of 36 (permalink) Old 04-23-2007, 11:09 AM
BenzWorld Senior Member
v8mbp's Avatar
Date registered: Feb 2003
Vehicle: 2008 E350 AMG Sport Package, P2
Location: Sunnyvale, Ca
Posts: 505
Mentioned: 0 Post(s)
Quoted: 0 Post(s)
I knew it was going to hit $4. For premium here in south bay $3.65, last week was $3.55

Last edited by v8mbp; 04-23-2007 at 11:11 AM.
v8mbp is offline  
post #10 of 36 (permalink) Old 04-23-2007, 11:14 AM
BenzWorld Elite
mcbear's Avatar
Date registered: Apr 2004
Vehicle: E500Es
Location: The BlueGrass State
Posts: 29,579
Mentioned: 0 Post(s)
Quoted: 2 Post(s)
Originally Posted by Teutone
Compared to Western Europe, still very cheap.
Yes but much of Europe get a health care system paid for from part of the proceeds of their gas taxes [close to 80% of the total cost of fuel is taxes from my understanding] AND their fuel costs are based somewhat on the deflated dollar as oil is bought and sold on the dollar.


Being smart is knowing the difference, in a sticky situation between a well delivered anecdote and a well delivered antidote - bear.
mcbear is offline  
Sponsored Links

  Mercedes-Benz Forum > General Mercedes-Benz Forums > Off-Topic

Quick Reply

Register Now

In order to be able to post messages on the Mercedes-Benz Forum forums, you must first register.
Please enter your desired user name, your email address and other required details in the form below.

User Name:
Please enter a password for your user account. Note that passwords are case-sensitive.


Confirm Password:
Email Address
Please enter a valid email address for yourself.

Email Address:


  • Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
    Thread Tools
    Show Printable Version Show Printable Version
    Email this Page Email this Page
    Display Modes
    Linear Mode Linear Mode

    Similar Threads
    Topic Author Forum Replies Last Post
    Gasoline christian001 W220 S-Class 5 11-15-2006 05:27 PM
    CDI Owners coming to a pump near you drivbiwire W211 E-Class 9 05-15-2006 07:30 PM
    Gasoline??? Jwgraves W203 C-Class 9 04-09-2005 12:44 PM
    gasoline patrick8 General Mercedes-Benz 2 10-18-2004 02:52 PM
    Leaks from gasoline pump/filter area. fastneutron W202 C36 AMG, C43 AMG 3 12-25-2003 06:10 AM

    Posting Rules  
    You may post new threads
    You may post replies
    You may not post attachments
    You may not edit your posts

    BB code is On
    Smilies are On
    [IMG] code is On
    HTML code is Off
    Trackbacks are On
    Pingbacks are On
    Refbacks are On


    Title goes here

    video goes here
    description goes here. Read Full Story
    For the best viewing experience please update your browser to Google Chrome