Gas prices heading back up (wholesale, not crude)

[Slimprofits]

David R. Baker, Chronicle Staff Writer
Saturday, January 10, 2009

Gasoline prices nationwide have jumped since the turn of the year, with the nationwide average rising 11 cents per gallon since Monday alone. The national average, tracked by the AAA auto club, hit $1.78 for a gallon of regular on Friday. California's average reached $1.96 and may top $2 this weekend.

Prices started rising in Washington, Oregon, California, Michigan, Illinois, Indiana, Kentucky, Ohio and Wisconsin in mid-December.

Oil industry representatives say that gas prices last year fell so far and so fast that many refineries actually lost money making fuel. Americans are buying less gasoline, and the refineries have to cut production in response, industry representatives say.

"With declining demand and poor (profit) margins, what are you going to do?" said John Felmy, chief economist for the American Petroleum Institute, the industry's main lobbying group.

Ruin the party? Everyone on Main Street and on the BusinessNewsInfotainment networks has been celebrating the gasoline prices on a daily basis for the last three months.

Starting in late December, oil prices staged a two-week rally, rising from a low of $33.87 per barrel on Dec. 19 to $48.81 on Jan. 5. That rally has now worked its way into gasoline prices.

At the same time, some refineries are slashing the amount of fuel they produce.

Refining company Valero reported in December that it would cut gasoline production, and others appear to be following suit, particularly on the West Coast.

In addition, the owner of a Bakersfield refinery filed for bankruptcy protection late last month, and the plant has stopped production, at least temporarily.

Last week, California refineries produced 12 percent less gasoline than they did during the same week last year, according to the California Energy Commission.

[World Traveler]

Agriculture and Oil: Leading Indicators for Inflation?

I found this comment on another board. I would attribute, except poster is anonymous.

What post says make some sense. Where to look for leading indicators that inflation has finally become the problem?

We all know that inflation will be the ultimate problem, question is when does it start showing up and how will we know? Poster is saying in non-discretionary consumables.

"Ag will be the leading indicator of inflation - not housing prices. So far, conditions are setting up for a bullish environment by early summer.

"Yes, lower housing prices will help depress money flow but eventually something else has to give and that will be in food prices. As you know food and energy are the most inflation sensitive items for consumers (and naturally excluded or sidelined from most government statistics).

1) Farmers are already stressed by lower credit availability.

2) Early warning forecasts on US governmenet satellites are showing La Nina conditions developing in the Pacific"

[Slimprofits]

Re: Gas prices heading back up (wholesale, not crude)

La Nina conditions seen continuing into 1H 09-NOAA

Despite the late start to this year's La Nina pattern, CPC said it expects it will lead to above-average precipitation over Indonesia with below-average rains over central and eastern equatorial Pacific through March.

In the United States, the CPC said above-average rains were possible in the Ohio and Tennessee Valleys and below-average precipitation across the South during the same period.

CPC will update its outlook for La Nina on Feb. 5.

[BadJuju]

Re: Gas prices heading back up (wholesale, not crude)

La Nina conditions seen continuing into 1H 09-NOAA

Despite the late start to this year's La Nina pattern, CPC said it expects it will lead to above-average precipitation over Indonesia with below-average rains over central and eastern equatorial Pacific through March.

In the United States, the CPC said above-average rains were possible in the Ohio and Tennessee Valleys and below-average precipitation across the South during the same period.

CPC will update its outlook for La Nina on Feb. 5.

It has rained practically every day for the past two weeks in my area of Tennessee.

[Slimprofits]

Re: Gas prices still headed back up (wholesale, not crude)

Why are gas prices up, when oil is staying steady?

WSLS NEWS STAFF
NEWS@WSLS.COM
Published: February 5, 2009

It’s the question more and more people are asking. Why are gas prices going up, while the price for a barrel of oil is staying around the $40 range?

AAA’s Windy VanCuren says the reason gas prices have been increasing in the past few weeks, “Is because gasoline refiners have been severely cutting back their output of gasoline either by design or due to “maintenance and operational issues”.“ VanCuren adds, “Industry watchers who trade gasoline trade futures seem to be persuaded the industry will eventually be able to cut the nation’s gasoline inventories enough to keep retail prices at an elevated level.“ Basically meaning they expect the law of supply and demand to swing prices higher as supplies of gas shrink.

[..]

Also potentially contributing to the gas price spike, news that came out last week about workers affiliated with the United Steel Workers Union, contemplating a strike this week at about one-third of the nations’ gasoline refineries. “While a strike is normally an unwelcome occurrence by most companies, news that labor and management were at loggerheads seemed to be welcomed by a market looking for more ways to cut back gasoline production and justify higher prices and profits for refined products,“ VanCuren said.

Looking forward, VanCuren said, “February will be an interesting month for gasoline price watchers because this is the time of year when the industry on the west coast needs to begin working hard to deplete its inventory of winter fuels and start preparing for the introduction for warm weather blends. In normal times – and these appear to be anything but normal times – consumers should expect to see some price relief before prices rebound in March, April and May. So far that relief has not been forthcoming, so it remains to be seen if it will make a belated appearance this year.“

VanCuren added, “If this much-anticipated-by-AAA retail price decline does not occur, then consumers may find themselves facing another spring season of aggravatingly higher gasoline prices even as the price of oil remains in the basement. This is because as gasoline is made in small and smaller quantities, less and less oil is consumed.“

**************

In the article, VanCuren also says that U.S. demand for gasoline is down yoy from the same period last year and it's still falling. She apparently hadn't looked at the data from the week ending January 30th. And beyond that there is a bigger picture.

Weekly U.S. Finished Motor Gasoline Product Supplied jumped from 8,650 barrels/day to 9,015 for the week ending January 30th.

This is slightly more than the same time period in 2008 and slightly less than in 2007. Has demand really fallen? Analysts across the board went a little nuts because of the dropoff of demand from August into the fall, but I don't think a single one of them has pointed out that it happens every year. It happened a little more in 2008 with the sudden stop in September and prices being as sky high as they were. The housing bubble had already popped, but note that despite the $4.00 + nationwide averages, demand was up during the summer of 2008 over 2007. Demand destruction? No. I think it was the September panic.

I have been saying for a few months now that despite the mass layoffs we'll see demand pick up with these prices and as the weather warms up and am sticking to it. The U.S.A. that I know will spend money on almost nothing else if only to keep their cars running, at least until August. Demand always drops with the leaves.

In 2000, from 8,960 at the end of August to 7,819 at the end of September.
In 2001, from 9,035 in the 3rd wk of August to 8,514 at the end of September.
In 2002, from 9,297 in the 1st wk of August to 8,582 at the end of September.
In 2003, from 9,688 in the 3rd wk of August to 8,690 at the end of September.
In 2004, from 9,521 in the 2nd wk of August to 8,922 at the end of September.
In 2005, from 9,406 in late August to 8,840 at the end of September.
In 2006, from 9,610 in late August to 9,081 at the end of September.
In 2007, from 9,762 in the 3rd wk of August to 9,120 at the end of September.
In 2008, from 9,424 in late August to 8,730 at the end of September.

[metalman]

Re: Gas prices still headed back up (wholesale, not crude)

Why are gas prices up, when oil is staying steady?

WSLS NEWS STAFF
NEWS@WSLS.COM
Published: February 5, 2009

It’s the question more and more people are asking. Why are gas prices going up, while the price for a barrel of oil is staying around the $40 range?

AAA’s Windy VanCuren says the reason gas prices have been increasing in the past few weeks, “Is because gasoline refiners have been severely cutting back their output of gasoline either by design or due to “maintenance and operational issues”.“ VanCuren adds, “Industry watchers who trade gasoline trade futures seem to be persuaded the industry will eventually be able to cut the nation’s gasoline inventories enough to keep retail prices at an elevated level.“ Basically meaning they expect the law of supply and demand to swing prices higher as supplies of gas shrink.

[..]

Also potentially contributing to the gas price spike, news that came out last week about workers affiliated with the United Steel Workers Union, contemplating a strike this week at about one-third of the nations’ gasoline refineries. “While a strike is normally an unwelcome occurrence by most companies, news that labor and management were at loggerheads seemed to be welcomed by a market looking for more ways to cut back gasoline production and justify higher prices and profits for refined products,“ VanCuren said.

Looking forward, VanCuren said, “February will be an interesting month for gasoline price watchers because this is the time of year when the industry on the west coast needs to begin working hard to deplete its inventory of winter fuels and start preparing for the introduction for warm weather blends. In normal times – and these appear to be anything but normal times – consumers should expect to see some price relief before prices rebound in March, April and May. So far that relief has not been forthcoming, so it remains to be seen if it will make a belated appearance this year.“

VanCuren added, “If this much-anticipated-by-AAA retail price decline does not occur, then consumers may find themselves facing another spring season of aggravatingly higher gasoline prices even as the price of oil remains in the basement. This is because as gasoline is made in small and smaller quantities, less and less oil is consumed.“

**************

In the article, VanCuren also says that U.S. demand for gasoline is down yoy from the same period last year and it's still falling. She apparently hadn't looked at the data from the week ending January 30th. And beyond that there is a bigger picture.

Weekly U.S. Finished Motor Gasoline Product Supplied jumped from 8,650 barrels/day to 9,015 for the week ending January 30th.

This is slightly more than the same time period in 2008 and slightly less than in 2007. Has demand really fallen? Analysts across the board went a little nuts because of the dropoff of demand from August into the fall, but I don't think a single one of them has pointed out that it happens every year. It happened a little more in 2008 because prices were at $4.00+ / gallon nationwide.

I have been saying for a few months now that we'll see demand pick up with these prices and as the weather warms up and am sticking to it. That is despite, the layoffs. The U.S.A. that I know will spend money on almost nothing else if only to keep their cars running, at least until August. Demand always drops with the leaves.

In 2000, from 8,960 at the end of August to 7,819 at the end of September.
In 2001, from 9,035 in the 3rd wk of August to 8,514 at the end of September.
In 2002, from 9,297 in the 1st wk of August to 8,582 at the end of September.
In 2003, from 9,688 in the 3rd wk of August to 8,690 at the end of September.
In 2004, from 9,521 in the 2nd wk of August to 8,922 at the end of September.
In 2005, from 9,406 in late August to 8,840 at the end of September.
In 2006, from 9,610 in late August to 9,081 at the end of September.
In 2007, from 9,762 in the 3rd wk of August to 9,120 at the end of September.
In 2008, from 9,424 in late August to 8,730 at the end of September.

very good point. the american hierarchy of of needs...

1. food
2. shelter
3. gasoline