Gas $4 this summer

[RetireBy90]

CNBC reported a story that gas prices will rise this summer.

The Consumer Price Index rose 0.2 percent Friday, but underlying the tame number was a 0.9 percent gain in gasoline prices
...
Gasoline prices at the pump hit a national average of $3.52 per gallon this week. That is up 15 cents from a month ago and already 40 cents above last year's level, according to AAA.
...
Tom Kloza, analyst and founder of Opisnet, said he expects gasoline to reach an average somewhere between $3.75 and $4.25 when it peaks, in late April or May.
"We're starting to see the $4 number pop up regularly on the west coast," Kloza said.

So if we see gas continue to $4 or higher, people start cutting down on trips, summer vacations would be affected, probably airlines adding fuel surcharges, etc... So is this enough to stop the growth in the economy, slow as it is already?

Just wondering what others think, WITHOUT BLAMING ANYONE PLEASE.

 

[Texas Proud]

I think that a lot of people will feel the pain..

I also do not think that a lot of people learned their lesson the last time gas prices spiked...


Will we make changes to our driving habits etc? Nope, my DW does not want to.. she would rather have less savings than (as she would put it) enjoy life...

 

[REWahoo]

I don't believe $4 gas will "stop" the economy, but it will certainly be a drag on growth.

 

[Oddjobdth]

I don't believe $4 gas will "stop" the economy, but it will certainly be a drag on growth.

My feelings too.

 

[Gone4Good]

The economy looks to have entered a self-reinforcing recovery - finally. I think the economy is going to surprise to the upside.

Higher gas prices are a symptom of the increased demand - not something that will de-rail the economy unless we get a meaningful suppy shock (war with Iran, for example).

 

[REWahoo]

Higher gas prices are a symptom of the increased demand...

You would think that would be the case, but then there is this:

U.S. gasoline demand last week was the lowest level for this time of year in weekly data since 2003, Energy Department data show. Consumption over the past four weeks was 6.4 percent below a year earlier.

Looks more like the price hikes are supply side driven:

Gasoline Rises to Six-Month High as Refinery Outages Curb Supply - Businessweek

 

[Coolius]

In Northern California, prices are already very close to the $4 mark. In fact, premium grade is at $4.02 right now at my neighborhood gas station.

 

[RetireBy90]

The economy looks to have entered a self-reinforcing recovery - finally. I think the economy is going to surprise to the upside.

I'm asking this while thinking of last year about this time. All were happy and thinking all was good, economy was expanding, party time. Could $4 gas be enough to tusanami us? Probably not, just asking.

 

[Midpack]

Higher gas prices are a symptom of the increased demand - not something that will de-rail the economy unless we get a meaningful suppy shock (war with Iran, for example).

You would think that would be the case, but then there is this:
Looks more like the price hikes are supply side driven:

U.S. gasoline demand last week was the lowest level for this time of year in weekly data since 2003, Energy Department data show. Consumption over the past four weeks was 6.4 percent below a year earlier.

Supply as you mention and

• as the rest of the world develops, global demand is less and less about US demand.
• plus we get the "benefits" of a weak dollar rolled into what we see in the US.

Delving further into fundamentals, both supply and demand factors promise to push crude oil. Despite a weak global economy, Asian demand for oil is expected to rise by 0.98 million barrels per day (mbd) this year to 29.33 mbd, after a 0.82 mbd increase in 2011. A third of that comes from China, the region’s powerhouse, the rest coming from India, Korea, Japan, and the rest of the fast-growing Asia-Pacific region. That’s 92% of the global demand increase expected for 2012, as European and North American demand slide.

U.S. gasoline demand last week was the lowest level for this time of year in weekly data since 2003, Energy Department data show. Consumption over the past four weeks was 6.4 percent below a year earlier.

GasBuddy has projected $5/gal gas for this summer, but I'd be surprised and no one else seems to be projecting anything that high (low $4/gal range mostly?).

 

[NW-Bound]

Yesterday, I already paid a bit less than $3.40/gal at Costco.

This summer? Banff timeshare resort already confirmed, and fees paid.

That's a 3,400 mi round trip, and that alone is $1500 for the gas-guzzling RV. And other detours might just mean an additional 50% to the total mileage for the summer trip. And of course gas is more expensive in Canada.

Let's see... Airfare RT up there and back, $360/passenger. Darn!

Hopefully, the stock market will rise enough that the gas expense will be just a round-off at the bottom of the Quicken screen. Besides, one cannot take it with him, heh heh heh... I am still goin' RV'in ...

 

[ziggy29]

And all pieces like this will do is encourage speculators to bid up the price of oil and ensure that economic recovery is killed by oil prices. Thanks, folks.

We simply can NOT continue to base our economy's health on a commodity that endures regular huge price swings and can singlehandedly end fragile economic recoveries with a spike in the futures markets.

 

[brewer12345]

A lot depends on where you are, as the refined products market is now highly marginalized. I just paid 3.05 for mid grade in the heartland.

 

[REWahoo]

And all pieces like this will do is encourage speculators to bid up the price of oil...

Ahem. Uh, er... I realize it is a lot to ask, but since you were so kind to come to our rescue in 2009...

http://www.early-retirement.org/forums/f28/time-to-kill-the-oil-market-again-44726.html

 

[Koolau]

Only fairly recently has our average gas price DROPPED back down to around $4.00/gal (paid. $4.04 yesterday). It actually dropped below $4 briefly a few weeks ago and is now headed higher again. Of course, our mix of oil comes from far different sources than most on the mainland. Only about 4% comes from the US (primarily from Alaska IIRC).

From the vehicles a lot of folks still drive here (new SUVs and pick-em-ups), $4.00 gas doesn't seem to be an issue anymore. Our prices went to over $4.50 when oil got to its highest per bbl price a couple of years back. There was a lot of carping (and there still is some) but I certainly haven't seen much change in driving habits.

Full disclosure, we do have a relatively high proportion of Prius type vehicles here. They make a lot of sense because most of our driving is "city cycle" rather than highway. Even on the freeway, it's more like city with all the stop-go-slow-down we experience. When DW drives, she's either pushing the gas or the brake. Works well for a Prius, but for an old Honda, not so much. When she drives, we're lucky to get 20 mpg. When I drive, it's always 25+ mpg.

Heh, heh, YMMV.

 

[TromboneAl]

"The Consumer Price Index rose 0.2 percent Friday, but underlying the tame number was a 0.9 percent gain in gasoline prices."

Lousy writing at CNBC. the price index didn't rise .2 percent in one day, and I'm not sure what they meant by "underlying.". A bigger number can't be the cause of the smaller inflation rate.

Logic police out.

 

[Buckeye]

I heard on the radio a few days ago that gasoline speculators are stockpiling waiting for the Iran situation to explode (pun intended). I don't recall hearing about gasoline stockpiling. Seems like it's always been oil.

I guess they have to start dumping some of it onto the market when they run out of storage if we keep staying under historic demand.

 

[jebmke]

Some of this may be offset by the plummet in natural gas prices and reductions in electricity. We don't use NG but our electric rates have declined. I have no idea what the balance is of gasoline vs. other energy.

 

[HFWR]

"The Consumer Price Index rose 0.2 percent Friday, but underlying the tame number was a 0.9 percent gain in gasoline prices."

Lousy writing at CNBC. the price index didn't rise .2 percent in one day, and I'm not sure what they meant by "underlying.". A bigger number can't be the cause of the smaller inflation rate.

Logic police out.

Core inflation is minus food and energy, because they are more volatile.
The 0.2% number was for CPI-U, or CPI for All Urban Consumers.

Consumer Price Index Summary

 

[ziggy29]

Core inflation is minus food and energy, because [-]they are more volatile[/-] leaving them out allows the government to report benign numbers that don't increase COLAs or interest payments.

Fixed!

 

[HFWR]

Fixed!

Though, if you note on the web site, all the numbers are there...

Or maybe they really ARE out to get us!

 

[ziggy29]

Though, if you note on the web site, all the numbers are there...

Or maybe they really ARE out to get us!

The numbers are there -- I don't think there's any grand conspiracy to hide them. But that doesn't help people of modest means who have seen their cost of living steadily rise due to food and energy costs even as they get no COLAs because the price of big screen TVs and cruise vacations came down.

 

[Mulligan]

Some of this may be offset by the plummet in natural gas prices and reductions in electricity. We don't use NG but our electric rates have declined. I have no idea what the balance is of gasoline vs. other energy.

If "fracking" doesnt get shut down, natural gas will get a chance to become the substitute to gasoline. Bountiful supply and comfortably under $2 a gallon equivalent for a car. Infrastructure in some cities are now being built out. You can even install your "own pump" by tapping into your home fuel line. There is one model that runs nat. gas but until economy of scale kicks in, the savings in fuel costs are ate up by increased purchase price. Where I live it is "only" $3.31 a gallon, so its not a budget buster yet.

 

[ziggy29]

If "fracking" doesnt get shut down, natural gas will get a chance to become the substitute to gasoline. Bountiful supply and comfortably under $2 a gallon equivalent for a car. Infrastructure in some cities are now being built out. You can even install your "own pump" by tapping into your home fuel line. There is one model that runs nat. gas but until economy of scale kicks in, the savings in fuel costs are ate up by increased purchase price. Where I live it is "only" $3.31 a gallon, so its not a budget buster yet.

I for one would love to see this happen, provided that we can provably "frack" safely and cost-effectively. Last I read, we have a domestic natural gas supply that is expected to last 75 years or more for our own usage, even if we converted many gasoline-powered engines to natural gas. And if we can rely on Canadian sources as well (certainly more than we can rely on stable Middle East sources), that almost doubles. And, of course, natural gas burns a helluva lot more cleanly than gasoline...

 

[ls99]

Though, if you note on the web site, all the numbers are there...

Or maybe they really ARE out to get us!

Only in Black helicopters.

 

[Koolau]

I for one would love to see this happen, provided that we can provably "frack" safely and cost-effectively. Last I read, we have a domestic natural gas supply that is expected to last 75 years or more for our own usage, even if we converted many gasoline-powered engines to natural gas. And if we can rely on Canadian sources as well (certainly more than we can rely on stable Middle East sources), that almost doubles. And, of course, natural gas burns a helluva lot more cleanly than gasoline...

Not only more cleanly in terms of less unburned hydrocarbons and CO, but by the nature of the fuel, it puts out a lot less CO2 per equivalent energy unit. Why we are not exploiting this fuel more aggressively, I do not know. There are so many advantages to this fuel (cost, domestic jobs, geopolitical, energy independence, green, known technology, little change in current engine technology, existing infrastructure, etc. etc.) Now, it appears to be abundant as well. Instead, we are pushing wind/solar, etc. (all fine if they are viable on their own) and finding ways to delay using CH4. Most of the potential disadvantages of taking CH4 out of the ground have applied to liquid petroleum for 100 years. Suddenly, we're worried about those risks for CH4 when we accept them for liquid HCs. Load gun, shoot foot, rinse, repeat. But, if you have a differing opinion, YMMV.