Gas $4 this summer

[ziggy29]

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.

Frankly, assuming the fracking question can be answered safely and responsibly, I'm totally with Boone Pickens. Natural gas should be the bridge between oil and "green" renewables. We certainly have enough of it to bridge the gap. Ramp up with that in the next 10 years, kiss the Middle East goodbye, and slowly replace all fossil fuels with green renewables as the technology becomes more cost-effective.

 

[REWahoo]

Frankly, assuming the fracking question can be answered safely and responsibly...

On that subject, I saw this news bit today:

University Of Texas Researchers Find No Direct Link Between Fracking And Contaminated Groundwater

 

[Chuckanut]

$4 a gallon gas does not surprise me. The only thing that has held oil prices down so far has been this big recession. A recovering economy will bring higher oil prices.

 

[audreyh1]

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

It was .2% for both core CPI and CPI. Since the numbers are some kind of weighted average, something else must have gone down to make up for the 0.9% gas increase.

 

[ziggy29]

It was .2% for bothe core CPI and CPI. Since the numbers are some kind of weighted average, something else must have gone down to make up for the 0.9% gas increase.

Sure, technology like electronics and a lot of discretionary services are dropping in price. The problem is, these aren't the things that households on a tight budget and a COLA are buying.

 

[Nords]

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

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.

Like Ko'olau says, I can't believe that you guys would bitch about $4/gallon gas. Around here we call that a "bulk discount".

Last week our Oahu electric company actually complained to the PUC that they needed to raise their rates. Was it the damage from the last hurricane? No. Was it the high cost of anti-pollution devices? No. Was it the high cost of fuel oil to run the generators? No.

It's because too many people have solar water heaters and photovoltaic systems, so the cost of generating electricity is now being shared among a smaller customer base.

Oahu's citizenry shouted down the whole idea before the PUC even got a chance to trash it.

BTW, my Prius gets 55 mpg. If I'm driving in rush-hour traffic it's closer to 60 mpg. If it's cool enough to shut off the A/C then it's over 60 mpg.

 

[jazz4cash]

On that subject, I saw this news bit today:

University Of Texas Researchers Find No Direct Link Between Fracking And Contaminated Groundwater

2nd paragraph.....
The study, however, does not exonerate the shale drilling industry, noting that contamination can and often does occur from spills or mishandling of wastewater.

 

[Walt34]

BTW, my Prius gets 55 mpg. If I'm driving in rush-hour traffic it's closer to 60 mpg. If it's cool enough to shut off the A/C then it's over 60 mpg.

If high mileage is a goal then a Honda 250cc motorcycle is a viable choice. A guy at work has one and in an effort to get 100 mpg with it he did get 99.5 mpg stock, no modifications. Close enough. They're popular worldwide for that reason.

2012 Rebel Overview - Honda Powersports And they're cute. I've been trying to get DW on one for a couple of years.

Back on topic, I don't see a huge change in behavior until gas gets to $6 or more, accompanied by much gnashing of teeth, whining and moaning. The people with low-mileage vehicles would have to write off so much loss on them that they'll stay with them for as long as they can.

Like last time though, motorcycle sales will soar.

 

[Texas Proud]

If high mileage is a goal then a Honda 250cc motorcycle is a viable choice. A guy at work has one and in an effort to get 100 mpg with it he did get 99.5 mpg stock, no modifications. Close enough. They're popular worldwide for that reason.

2012 Rebel Overview - Honda Powersports And they're cute. I've been trying to get DW on one for a couple of years.

Back on topic, I don't see a huge change in behavior until gas gets to $6 or more, accompanied by much gnashing of teeth, whining and moaning. The people with low-mileage vehicles would have to write off so much loss on them that they'll stay with them for as long as they can.

Like last time though, motorcycle sales will soar.

And if so, more people will die... not a great tradeoff IMO....

 

[HFWR]

For both national security reasons, and economic reasons, we should be utilizing the energy resources we have available, thus coal, crude, and nat gas will be with us for a while. I'm not naive enough to think "green" energy will generate any significant percentage of total energy consumed in the near-term, and/or longer, though if energy prices somehow reflected "hidden" costs, it might make solar or wind somewhat more competitive. I'm also not naive enough to believe the extraction and use of hydrocarbons or coal is somehow "clean". And declarations of how we have some hundred or two years of energy resources will be cold comfort for those a hundred or two years hence...

 

[mf15]

Seems to me it is all about supply and demand, the only problem is big oil controls the supply of finished gasoline. They are closing down refineries left and right.
Link

Old Mike

 

[brewer12345]

Seems to me it is all about supply and demand, the only problem is big oil controls the supply of finished gasoline. They are closing down refineries left and right.
Link

Old Mike

Refiners would be overjoyed not to have to close those refineries. Unfortunately, the economics of refining on the east coast are absolutely terrible and refiners are subject to the economics of their business regardlss of whether hey are controlled by a big oil company or not.

Fas prices by me have been around 3 bucks a gallon for quite some time and have not budged even as they have jumped on the coasts. The market has regionalized because there is not enough pipeline capacity and the specific oil east coast refineries are dependent on is Brent, which is trading at a large premium.

 

[skipro3]

I absolutely LOVE the price of gas going up. It keeps traffic down. I'd happily pay $5 or more a gallon if it meant I'm not sitting in traffic with everyone else this summer. Obviously, gas is way too cheap; last night I was returning from DS and DIL's home in Napa to my place in the mountains near Lake Tahoe. From their driveway until i was through Sacramento, over 60 miles of 4 and 5 lane freeway, I never got over 40 miles an hour due to all the traffic. The extra 45 minute drive added an additional 2 gallons of fuel to the drive. Normally the drive takes me 5 gallons each way. At $4 a gallon, heavy traffic cost me an additional 40% more in fuel, not to mention the time involved. If gas was 40% higher in cost; $5.60 a gallon, my bet is that the traffic wouldn't have been near as much and I would have paid the same for my drive and gotten home at a regular time. Count in the wear and tear, stress, potential for an accident and insurance affects, and high gas prices end up being a cost savings.

 

[NW-Bound]

Talk about traffic jams in California, just as we thought it could not get any worse, it never failed to amaze us.

Thirty years ago, we used to do many road trips through California, from San Diego onto San Fran and beyond. Traffic was always heavy, but probably nothing like it is now. In the last 20 years, we have not done much of that. Two years ago, driving the MH through LA at 10PM, the heavy traffic drove me nuts.

We have a niece who works in LA and lives in a small apartment. Her home is in San Diego. She said that when she wanted to go home on a Friday night, she would have to wait until near midnight to start the trip. Good grief!

I remember in the late 70s, I was in Long Beach for a vacation, and decided to make a day trip down to SD to visit a friend. Traffic was heavy, but the fact that I was able to make it back to LB in the same evening is something that current residents could only dream about.

I am planning the RV trip for this summer, and again, one leg of the trip calls for driving down California. This time, I am cutting to the east of the Sierra Nevada, and probably going through Death Valley. Will see if traffic is going to be heavy there!

 

[Independent]

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!

The CPI-W and the CPI-U, which are used to index SS benefits and TIPS returns, include food and energy.

The BLS provides many numbers, including CPIs without food and energy. The Fed tends to emphasize the "without", partially because it's less volatile, and partially because food and energy don't respond to changes in the US money supply in the same way as most other prices.

 

[JOHNNIE36]

Walt34 mentioned that he thinks people habits won't change until gas get to around $6/gal. Stop and do a calculation. Never mind, I already did. If you travel 12000 miles per year, get 25 miles/gal and spend a $1 MORE per gal ($4 going to $5) it will cost you an additional $480 per year out of pocket. Will this kill the average person? No, but I might start affecting the people that don't have two nickels to rub together. They will be hurting like they always do when gas goes up. It's when the price of products go up significantly to cover the fuel cost is when the economy really gets affected. Grocery prices have already gone up due to fuel prices. Will they another hike? Stay tuned.

 

[haha]

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.

The world is full of liquids supply tanks, and they hold gasoline, diesel, sometimes ethanol, ng liquids that are liquid at normal temps, etc. They are the big cylindrical flat topped tanks, although these may hold crude.

They are basically an inventory managment tool, but it is also alleged that speculators store product in these waiting for price spikes.


Also re:fracking, that is not the only issue with shale gas. Lee Raymond, recently chairman of Exxon, has pointed out that the shale industry is very promotional and boosterish, with not much knowledge of how long these deposits will produce at economic flow rates. So far it appears that the production profile suggests a very rapid exhaustion of the well, as in 3-4 years. In contrast to this, some big midcontinent conventional fields like the Hugoton in Kansas and Oklahoma have been econmically producing since the 1930s.

Raymond wrote this piece to warn about investing a lot of money in LNG export facilities which he said may never pay a positive return because of insufficient input to amortize the investments.

Currently, many dry gas shale plays are being shut down so that the short-lived production is not used up on $3/mcf gas. Wet gas is a different story, as the liquids pricing comes off of crude prices.

Ha

 

[ronocnikral]

Frankly, assuming the fracking question can be answered safely and responsibly, I'm totally with Boone Pickens. Natural gas should be the bridge between oil and "green" renewables. We certainly have enough of it to bridge the gap. Ramp up with that in the next 10 years, kiss the Middle East goodbye, and slowly replace all fossil fuels with green renewables as the technology becomes more cost-effective.

Boone Pickens is what I like to refer to as oilfield trash and he'll screw 10 different ways before your eyes can even cross. what he is saying (and I don't know specifically what he said, nor do I care) may be reasonable solution, I would be very cautious that he'll screw everyone over. Case in point--Mesa petroleum, 1970's, drilling contract.

2nd paragraph.....
The study, however, does not exonerate the shale drilling industry, noting that contamination can and often does occur from spills or mishandling of wastewater.

My opinion is this is a very rare instance. Not something that happens "often." Also, a halliburton exec recently drank a glass of their new clean frac fluids. And of course, the main "non-green" frac fluids contain mainly what is found in many foods (guar bean), fresh water and what I treat my newborn's dry skin with. Not that I have tried drinking DD's baby oil or anything on a wellsite that wasn't labeled evian.

nat gas is plentiful in our country. I worked on a project in west africa where they were planning on shipping over 1 BCF/d in natural gas to the US, but they will be shipping to other markets in western europe. Also, the liquids from natural gas (either associated or processed) tend not to be used for gasoline. Countries such as Japan, which use nat gas pretty well, still have gasoline fuel a good majority of their vehicles. I'm not sure if natural gas will have a large impact on gasoline prices. Technically, it can be used to fuel vehicles, it's the infrastructure that will difficult to implement. my 2 cents.

Of course, I still haven't filled up with gas in 2012! Our budget, fortunately, isn't very sensitive to the gasoline price, mainly because I ride a bicycle everywhere (ironic for a guy who drills, completes and produces oil & gas wells for a living). DW and I have been wanting a truck, maybe we'll have some one pay us to haul their's away once we get over that $4 mark.

 

[Nords]

DW and I have been wanting a truck, maybe we'll have some one pay us to haul their's away once we get over that $4 mark.

And then you can convert it to run on natural gas...

 

[glippy]

Count me in as one more who thinks gas is way too cheap.

And I don't see why $6/gallon would really cause any change...

I mean, I see people every day driving with one passenger and no freight in giant SUV's and trucks 75mph down the freeway, accelerating and braking hard, getting what must be somewhere between 6-10 mpg. Whereas I go a steady pace in the right hand lane doing 55-60mph in my 33mpg sedan. Which means, they are essentially using 5 and a half times as much fuel as I am to accomplish the same task, getting from point A to point B.

Which apparently means the price of gas could go up 5.5 times, and they could still afford to drive around as much as they do now, they'd just have to trade in their vehicle for a sedan.

So that means the price of gas could go up to $3.50 * 5.5 = $19.25/gallon and they could still afford to drive around just as much as they do now, just in a different vehicle.

So why would $6/gallon gas do anything?

 

[Texas Proud]

Also, a halliburton exec recently drank a glass of their new clean frac fluids. And of course, the main "non-green" frac fluids contain mainly what is found in many foods (guar bean), fresh water and what I treat my newborn's dry skin with. Not that I have tried drinking DD's baby oil or anything on a wellsite that wasn't labeled evian.

It is not what they use to frac that people say is the problem, but that after fracing what used to be separate from the water is not anymore... ie, gas, oil etc. is now leaching into the water supply... so a stunt by the Halliburton exec means nothing to me.... just a stupid trick...

 

[rescueme]

Since I retired, I only fill up my primary vehicle once a month, on average.

So for me, cost is not a big factor.

Being that/DW lived through two gas shortages (1973, 1979 as I remember), sitting in line (if there was one, since a lot of stations were out), getting just a few gallons rather than a fill-up, and only on alternate days (depending on tag) was something I certainly would not want nor wish happen to today's commuters.

High gas prices are one thing; lack of product is worse, IMHO.

 

[frank]

Fixed!

+1

 

[frank]

High gas prices hurt the economy because they push up the prices of products that need to be transported and everything in one way or another needs to be shipped, plus all the high price of gas does is take the money out of the economy and put it in the hands of people who speculate on gas and push the price upwards. the price of gas is not relevant to cost of production or transport it is due to speculation.

 

[TromboneAl]

What we need is a fast jump in prices to get people to drive less. Otherwise they just get used to it.

People have gotten used to ridiculous traffic jams. If you live in the boonies for a while and then go back to a population center, you think "WTF, people do this every day? It's not possible.". Too many people.