$4 Gas - Here We Come

[Mountain_Mike]

Experts: $4 a gallon gas coming soon
Pricing analysts say consumers can expect even higher prices at the pump.
August 31, 2005: 12:37 PM EDT
By Grace Wong, CNN/Money staff writer

NEW YORK (CNN/Money) - Consumers can expect retail gas prices to rise to $4 a gallon soon but whether they stay there depends on the long-term damage to oil facilities from Hurricane Katrina, oil and gas analysts said Wednesday.
"There's no question gas will hit $4 a gallon," Ben Brockwell, director of pricing at the Oil Price Information Service, said. "The question is how high will it go and how long will it last?"

OPIS tracks wholesale and retail oil prices and provides pricing information for AAA's daily reports on fuel prices.
Brockwell said with gasoline prices now exceeding $3 a gallon before even reaching the wholesale level, it "doesn't take a genius" to expect retail prices to hit $4 a gallon soon.

"Consumers haven't seen the worst of it yet," Brockwell said.
More….

http://money.cnn.com/2005/08/31/news/gas_prices/index.htm

 

[brewer12345]

Thank God for PCRDX.

 

[MasterBlaster]

People posting on the MSN money forum allude to gas prices going up almost a dollar a gallon overnight in some areas. (Pricing went from $2.57 to $3.45)

I have to fill up tommorrow so I better go to the ATM and get a big stash of cash.

 

[JPatrick]

If they are talking about the national average for unleaded regular- - -I'd be willing to bet against $4.
Labor Day travel should be interesting though

 

[azanon]

I hope it goes through the roof.   Its about time people start considering their consumption of non-renewable resources like oil.   There's SUV's everywhere and not even 1 out of 10 use them for how they're intended.  If it takes this level of price hike for people to start considering how they are consuming oil, then i gladly welcome it.

Not only do i not drive much/own fuel efficient cars, i also have quite a bit in a utility fund.   

Come on 4 dollar gas!

 

[Danny]

When I lived in the SF Bay Area..many of us would line up at key spots in the suburbs and strangers would pull up and take us to downtown SF....they needed 3 in a car to take the sane lanes and avoid the Bay Bridge toll...we got a free ride... another little thing that helped me FIRE

Below are how some folks are trying to save on gas:

http://www.csmonitor.com/2005/0831/p13s02-usec.html

 

[justin]

Azanon, I certainly share some of your sentiments, but also fear what those gas prices would do to our economy. Although long term, high gas prices may be good for us. Please, no one shoot me, but I'd personally like to see an increase in gas taxes (the per gallon tax) that would subsidize smart energy development. Increasing the gas tax will never happen at a time like this though.

On a different note, I just checked the NYMEX market quotes. Oil is down slightly. The gas quote is $2.90/gal wholesale for September. That is up almost a dollar/gallon from where it was a few days ago. I think some areas will see $4/gallon soon. The futures price drops sharply for the months after September. I think we're seeing a temporary price spike.

(edit) The sept. contract closed at $2.57, way down from the intraday high. Maybe we still have a while before we see $4/gal gas.

 

[azanon]

I'd like to see some of the overall traffic levels cut down too; and more car pooling.  Again, higher gas prices should encourage both of these things happening.

 

[moghopper]

Azanon, I certainly share some of your sentiments, but also fear what those gas prices would do to our economy. Although long term, high gas prices may be good for us. Please, no one shoot me, but I'd personally like to see an increase in gas taxes (the per gallon tax) that would subsidize smart energy development. Increasing the gas tax will never happen at a time like this though.

I won't. I also agree. Higher prices are the only thing that will really change attitudes, IMO.

However, no matter what you do, or the reasoning behind it, "they" will claim you're trying to hurt the poor.

 

[Marshac]

Here in WA, we jumped about $.30/gallon between yesterday and today.

 

[Danny]

$2.99 reg here in my neighborhood near Minneapolis...

 

[justin]

$2.69 in Raleigh, NC at 9:30 am. I heard of one station that ran out of gas. The shortages seem few and far between. Hopefully we'll just have high prices and no shortages!

 

[OldAgePensioner]

At any one time here in Chicago, there are probably 50 Hummers just in the downtown area.  Gas is $3.49.   Probably 40% (or more) of the cars have one person. Kinda gives me a laugh as I pay my $2 for a roundtrip EL ride to Midway and realize gas alone would cost them $10.

We had our chance during the first OPEC gouging.  And just look at the size of our cars today.  We are gonna pay a price.

Is it time to get out of the market? That's the big question.  Will gas drag the economy to a halt?

 

[moghopper]

Please note that "Fuel Efficiency" and "Fuel Economy" are not the same thing.

There seems to be a feeling that there have been no improvements in Fuel efficiency. Not true. Fuel injection and advanced, computer controlled electronics have improved efficiency greatly. However, cheap oil, coupled with the fact that CAFE standards have not changed for 15 years, leads to no motivation to increase fuel economy (pretty well flat since 1986). Instead of greater economy, however, we've chosen much higher horsepower (up ~40% since mid 80s). This is what people have been buying. I don't think we need to look any further than our own mirrors.

http://www.nhtsa.gov/cars/rules/CAFE/FuelEconUpdates/1999/Index.html

Passenger Cars
Fuel Engine HP /
Year Economy Size Weight
(cu.in.)
1978 19.9 260 3.68
1979 20.3 238 3.72
1980 24.3 187 3.51
1981 25.9 182 3.43
1982 26.6 173 3.47
1983 26.4 182 3.57
1984 26.9 178 3.66
1985 27.6 177 3.84
1986 28.2 169 3.89
1987 28.5 162 3.98
1988 28.8 161 4.11
1989 28.4 163 4.24
1990 28.0 163 4.53
1991 28.4 164 4.42
1992 27.9 169 4.56
1993 28.4 164 4.62
1994 28.3 169 4.79
1995 28.6 166 4.87
1996 28.5 164 4.92
1997 28.7 164 4.95
1998 28.7 161 5.05
1999 28.3 166 5.21

 

[laurence]

$2.87 here in SD. Funny, we've decided to sell the VW, and a friend at work has a little chevy cavalier with low miles they have agreed to sell us for a song (total cost about 1k, with the promise to sell to her sister once she gets back to the states a year from now). Now I'm thinking until we sell the vw, we'll park the jeep!

Coworker and I have been carpooling for two years now, even today we cruised up the carpool lane alone while the single riders choked up the regular lane all the way through the intersection. I agree the pain will be felt more via higher prices for goods. Feel really bad for truck drivers...

 

[brewer12345]

I needed to gas up tonight and I have been hearing the s-word ("shortage") about some local markets in the midwest, etc. I hit Home Depot before I went to the gas station. They were sold out of 5 gal. gas cans, so I picked up a couple of 2 gal cans. When I hit the gas station (one that hadn't taken a big price increase yet) it was mobbed. The proprietress was amazed at the frenzy. When I said that people seem to be scared, she said "I'll still have gas tomorrow." I filled up the car and the cans and headed home. When I passed another lower priced station, there were lines.

I'm not old enough to remember the lines in the 70s. However, I was getting flashbacks from "Roadwarrior". I'll happily pay whatever the going rate is for gas, just don't impose price controls or otherwise screw up the supply.

 

[Danny]

Status of Key Energy Facilities
August 31, 2005 6:23 p.m. Wall Street Journal

Sorry for the length..have to be a subscriber to access, but thought seeing this current status report would give us idea of what is to come in some of our neighborhoods...

Hurricane Katrina, which plowed into the U.S. Gulf Coast energy industry, shut eight refineries and the bulk of all U.S. offshore oil and natural gas production. The current status of key facilities is outlined below:

Refineries
• Valero Energy Corp.: St. Charles refinery in Norco, La., has a refining capacity of 260,000 barrels a day remains shut but suffers no serious damage. The refinery is expected to restart on Sept. 12. Currently has no power and access is restricted, the company says. Krotz Springs refinery that produces 86,000 barrels a day is operating at 70% capacity due to trouble getting supply through pipelines, the company said.
• Motiva Enterprises: Norco, La., refinery that has a capacity of 225,000 barrels a day remains shut. Limited access to the facility has delayed a damage assessment, Motiva says. The company's Convent, La., refinery also remains shut but has suffered no damage that would affect a restart. Motiva hasn't given an estimate for a restart date.
• Murphy Oil Corp.: Meraux, La., refinery remains shut and has been evacuated. Murphy has no information on damage or a potential restart date and reports worsening flooding in the area.
• Exxon Mobil Corp.: Chalmette, La., refinery that has a capacity of 183,000 barrels a day remains shut and evacuated. Exxon has given no information on damage or a potential restart date and reports flooding in the area has worsened. Baton Rouge refinery that produces 494,000 barrels a day is in "cutback mode," operating at reduced rates due to supply problems.
• ConocoPhillips: Alliance refinery in Belle Chasse, La., that has a capacity of 255,000 barrels a day remains shut. The company has given no information on damage or a potential date for a restart. Plaquemines Parish reports extensive damage and television reports say there are whitecaps on the water in the streets of Belle Chasse, quoting State Treasurer John Kennedy. Exxon says it is doing flyovers.
• Marathon Oil Corp.: Garyville, La., refinery that has a capacity of 245,000 barrels a day remains shut. The company on Tuesday brought additional workers to the plant, which wasn't fully evacuated.
• Chevron Corp.: Pascagoula, Miss., refinery that has a capacity of 325,000 barrels a day remains shut and evacuated.
• Premcor: Memphis refinery that has a capacity of 190,000 barrels a day is reportedly producing at reduced rates due to crude-oil supply snags.
• Total SA: Port Arthur, Texas, refinery that has a capacity of 180,000 barrels a day is running at reduced rates due to a problem with a hydrogen compressor, not the storm.

Fuel Pipelines and Terminals
• Colonial Pipeline kept mainline from Houston to Greensboro, N.C., shut on Wednesday. The company says it is bringing in generators to provide power and expects limited restoration of service this weekend. The pipeline delivers 95 million gallons a day of fuel from the Gulf Coast to East Coast markets.
• Kinder Morgan Energy Partners' Plantation Pipeline remains shut Wednesday due to lack of power. Power restoration is uncertain, according to a spokesman.
• Royal Dutch Shell PLC says Motiva joint venture's fuel terminals in Kenner, La., and Collins and Meridian, Miss., are closed due to flooding and power outages. Convent distribution terminal is operating. Company has frozen prices charged to fuel wholesalers at its terminals in storm-hit areas of Louisiana, Mississippi, Alabama and Florida.
• Exxon Mobil warns some fuel-supply disruptions are inevitable. The company says it is keeping retail gasoline prices at company-owned stations unchanged.
• Chevron is restricting supplies of gasoline to wholesalers from its East Coast terminals.

Crude Oil Supply to Refineries
• Louisiana Offshore Oil Port remains shut due to lack of power, but the company indicated on Tuesday that there was no serious damage. LOOP moves about 1 million barrels a day of oil, 10% of U.S. imports.
• Royal Dutch Shell: Capline pipeline system remains shut due to lack of power, but the company says the system is undamaged and has given no restart estimate. The system moves 1.2 million barrels a day of crude oil from the Gulf of Mexico and imports from Gulf Coast to Midcontinent refiners.
• Mississippi River traffic to be halted for "many, many days," U.S. Coast Guard says, while navigation system is repaired. Channel determined clear and river deemed safe for transit; river is a source of crude-oil shipments to refineries such as ExxonMobil Baton Rouge.

Production
• Marathon said that it is in the process of reboarding its platforms in the Gulf of Mexico -- three at South Pass, one at Ewing Bank, and the Vermillion platform. The three South Pass platforms and Ewing Bank platform combine to produce 18,500 barrels of oil per day, and 25 million cubic feet of gas.
• U.S. Minerals Management Service says 95% of daily oil output and 88% of daily natural-gas output was shut down in the Gulf of Mexico as of Tuesday.
• Port Fourchon sees no severe flooding, but siltation is a concern and power is out. Thee key facility is needed to support the workers and equipment that will get Gulf platforms pumping again.
• Royal Dutch Shell reports topside damage at Mars oil and gas platform and confirms photo showing what appears to be serious damage.
• Newfield Exploration Co. says its A production platform at Main Pass 138 appears lost in the storm; facility was producing 1,500 barrels a day.
• Kerr-McGee Corp. is restarting 60,000 boe/d Western Gulf output; inspecting central, eastern Gulf, company says.
• Seven semisubmersible rigs are adrift in Gulf of Mexico, U.S. Coast Guard says.
• Noble Corp. semisubmersible rig Jim Thompson broke moorings and was moved 17 miles by the storm. Flyover shows no "damage of a material nature," the company says.
• GlobalSantaFe Corp. says all five drilling rigs in path of Katrina are accounted for, though two are listing slightly and one drifted off its location and grounded in shallow waters near the mouth of the Mississippi River

 

[BigMoneyJim]

I just paid $3.199 for regular near Indianapolis. I haven't paid over $40 for a fillup since I had my truck. (4 years ago--whew, glad I sold it!)

I didn't think the prices would go up so much...I had thought the Gulf of Mexico producers only turned on the switch when the prices went up and shut down when oil was cheap. Apparently I'm wrong.

I occasionally think about a locking gas cap, and after the fillup I stopped by an auto parts store and apparently there's been a bit of a run on locking gas caps, too. The clerk confirmed there's been a sudden increase in demand since Monday and they're out of the one for my car.

My work lot should be safe as it's restricted access, but I live in an apartment complex that seems to have gone a bit downhill lately.

I guess I need to start thinking about what to do if my gas is siphoned and there's gas shortages.

 

[brewer12345]

So it sounds like there has been significant damage to the gulf infrastructure. At the very least, we are likely to be hurting for a month or so. After that, it depends on how quickly the broken stuff is repaired, how fast the electric poswer system is restored, and what demand is like for $4 gas. I think it is not looking pretty.

 

[Marshac]

If we actually do hit $4 fuel within a week or two (even it's just the premium that hits $4), the psychological impact on the consumer of reaching $4 so quickly after passing $3 will be huge.

In the grand scheme of things, $3 or $4 gas doesn't really crimp my style, and I drive 80 miles a day for work (so it's ~+$60/month per dollar increase). It will however impact consumers who are already at the margin, and in this era of underemployment, those ranks are growing. Anyone want to guess which Q GDP growth goes flat?

In other news today- the yield curve inverted between the 2 and 3 year.

 

[Danny]

U.S. Releases Oil
From Stockpile
To Ease Crunch

By JOHN J. FIALKA in Washington, RUSSELL GOLD in Dallas and RAFAEL GERENA-MORALES in New York
Staff Reporters of THE WALL STREET JOURNAL
September 1, 2005

With fuel prices rising amid fears of 1970s-style shortages emerging in the aftermath of Hurricane Katrina, the Bush administration scrambled to ease the pain by releasing oil from government stockpiles and suspending air-pollution rules to gin up extra gasoline supplies.

Gasoline prices are now likely to stay above $3 a gallon the rest of the year, according to the Petroleum Industry Research Foundation. Yesterday, there were scattered reports of price increases -- from Ohio to Maine -- that pushed pump costs above that level.

More disturbing were signs of fuel-supply disruptions, as pipeline and refinery outages continued for a third day. Petroleum Traders Corp., one of the country's largest independent gasoline wholesalers, said BP PLC, one of the nation's biggest gasoline suppliers, had said it was cutting off delivery.
I've been doing this for 26 years and I have yet to see a national disruption of this scope," said Michael Himes, president of closely held Petroleum Traders, of Fort Wayne, Ind. He added that he has gasoline-station owners calling him saying they will pay "any price, I just need the fuel."

A BP spokesman said it doesn't comment on individual customers, but said it isn't unusual during natural disasters for refiners to first supply their contracted customers. He said suppliers who don't have contracts and shop around for the best price run the risk of supply disruptions.

Red Cavaney, president of the American Petroleum Institute, which represents most segments of the oil industry, warned that the impact on oil and natural-gas supplies "will be significant and protracted." Making a rare pitch for people to drive sparingly, Mr. Cavaney said: "Right now will be a good time for people to ramp up their energy conservation."

Hoping to avert a wide-scale energy crisis, the Bush administration announced an emergency, temporary easing of some pollution-control standards on gasoline and diesel fuel. "It is clear the consequences of the hurricane have become more widespread," said Stephen Johnson, head of the Environmental Protection Agency as he announced the moves. Under existing federal air pollution rules, many cities must have special "reformulated" gasoline to curb smog, which requires refiners to make and store a variety of different fuel blends. Yesterday's waiver allows existing supplies to be marketed over broader areas.

Meantime, Energy Secretary Samuel Bodman said his agency has already given one major oil company permission to borrow crude oil from the 700 million barrel Strategic Petroleum Reserve and was working out the details of similar swaps with several other companies.

But some of the government's emergency stockpile must travel through the same immobilized pipelines that normally supply oil from the Gulf, so it was not clear how quickly the government aid might ease the supply shortfall. "You can't put products in the pipeline if you don't have any pressure," Mr. Cavaney said. He also noted that refineries must undergo a period of testing, once their electricity and supplies are restored, before they can begin to produce gasoline.

Another prospect for stretching gasoline stocks in the Eastern U.S. would be importing gasoline from Europe, where refiners have excess stocks because much of Europe's fuel demand is for diesel oil. But John Felmy, the petroleum institute's chief economist, said that it will take two weeks or more to get additional gasoline from Europe.

The big unknown is whether recovery will take days or weeks. Storm flooding and widespread electricity outages in the Gulf area kept key pipelines shut down that would supply both crude oil to the region's refineries and ship refined products, including gasoline and heating oil north to the Midwest and the East Coast.

The key problem will be the lag before new supplies reach major gasoline markets. Transportation Department teams scrambled yesterday to hook up dozens of emergency generators to oil pipelines in an effort to get the Gulf's oil circulation system running again. Meanwhile, according to the API, 25% of the nation's domestic oil production -- most of it coming from platforms in the Gulf -- remained shut down.

Also immobilized, for lack of electricity, was the Louisiana Offshore Oil Port, the docking facility for supertankers 28 miles offshore in the Gulf that is the main offloading point for supertankers bringing imported crude oil to the U.S. Some officials were concerned that Port Fourchon, La., which is the major ingress point for pipelines, and which supplies crews and supplies to offshore oil rigs, could be closed for as long as a month because the storm drove silt into its shipping lanes.

Widespread flooding and power outages conspired to keep eight refineries shut down yesterday morning and a ninth, Exxon Mobil Corp.'s gigantic Baton Rouge facility, on a reduced run. Crews were unable to reach at least four major refineries because of flooding.

Mr. Felmy said that until supplies began moving again, gasoline, propane, heating oil and other products could be in short supply, especially in the Midwest and upper East Coast, areas which are normally fed with both crude oil and refined products from the Gulf.

Paul Fiore, executive vice president of Service Station Dealers of America and Allied Trades -- which represents state service stations around the country -- says he hasn't heard of any supply shortages or outages among gasoline retailers. He said, however, that he has heard prices at the pump rose by as much 50 cents to more than $3 per gallon overnight, an increase he hasn't seen in 25 years in the industry.

 

[Danny]

If we actually do hit $4 fuel within a week or two (even it's just the premium that hits $4), the psychological impact on the consumer of reaching $4 so quickly after passing $3 will be huge.

In the grand scheme of things, $3 or $4 gas doesn't really crimp my style, and I drive 80 miles a day for work (so it's ~+$60/month per dollar increase). It will however impact consumers who are already at the margin, and in this era of underemployment, those ranks are growing. Anyone want to guess which Q GDP growth goes flat?

Agreed, what concerns me is being able to get gas.
I just came from the garage to check fuel levels..I'm up near full, but I was prepared to go out and get some...My memory is still very strong of when we had shortages back when...

 

[dex]

Don't feel sorry for truck drivers - we will eventually pay the higher price for their higher costs.

 

[REWahoo]

Not much comfort in this but you can bet the oil companies will pull out all the stops to get oil production and refinery operations back up to speed ASAP. With prices at the levels we're fearing expecting, they will have huge incentive$ to be up and running again in short order.

REW

 

[wildcat]

I needed to gas up tonight and I have been hearing the s-word ("shortage") about some local markets in the midwest, etc.

Yep yep. Alive in well. In fact it could get real ugly when it comes to deciding who gets what. Plus some midwest areas have higher EPA standards so that has bumped up the price as well. However, EPA announced it would lower the standards for the time being. Legs sure are tired from walking