Oil/gas prices better high or low?

[Miami High Rise]

The Washington Post supports domestic oil drilling and the auto industry

Still, it's nice to see someone else has looked at the other side of this largely one sided conversation, although not for the points I made.

Will high oil prices hurt the recovery—or help it?

http://www.washingtonpost.com/blogs/...QwHR_blog.html

These days, the U.S. economy’s looking rosier, with one exception: oil. Crude prices are ticking past $100 per barrel — thanks, in part, to tensions with Iran — and gasoline remains pricey. That, in turn, could imperil the recovery. But let’s see how this might happen.


Workers load equipment onto a truck to be transported to a ship for a delivery to oil rigs in Malaysia. (Bazuki Muhammad - Reuters) The conventional story is this: If U.S. consumers are spending more on gasoline, all that money gets spirited to overseas producers. Consumers have less funds for other purchases, which hurts the recovery. Manufacturers, too, see their profit margins sliced. The standard rule of thumb is that a $20 increase in the cost of a barrel of oil — roughly what we saw in 2011 — shaves about 0.4 percentage points off growth and boosts unemployment by 0.1 percentage points. Put another way, last year’s price increase cost the United States about $125 billion, which would be enough to negate the effects of the just-agreed-to payroll tax holiday.

But not everyone’s so gloomy. Economist Karl Smith, who’s generally been bullish on the recovery, observes that higher oil and gasoline prices might ripple through the economy in a variety of ways. On the bright side, higher prices could cause more investment in domestic oil drilling — remember, the oil and gas industries have been a significant driver of the current recovery — and they could also spur many consumers to swap out their old, inefficient cars for new ones, boosting auto sales. “So,” he notes, “its hard to say even if higher gas prices are contractionary or expansionary.”

Then again, there’s also the Federal Reserve to consider. As the Wall Street Journal points out Thursday, an oil shock could make the central bank jittery about rising prices, even if it’s only temporary inflation. That, in turn, could complicate the Fed’s willingness to stimulate the economy. Does another round of quantitative easing become less likely if oil prices keep nosing upward? “In the past,” the paper explains, “the Fed has been willing to look past temporary spikes in inflation, but it isn’t clear it would be willing to do so again.”

As ever, there are plenty of complicating factors at play. A slowdown in China could ease the pressure on oil prices. The mild winter means that consumers in the Northeast have to spend somewhat less on heating oil. Low natural gas prices are holding down resource costs for many companies. And, as discussed in this post, Americans have been driving less and buying more fuel-efficient cars as higher gas prices become the new normal (each year since 2008 has seen a growing share of days with gas above $3 per gallon). So there’s no guarantee that pricey oil will squelch the economy. But it’s certainly a big factor to watch.

[Miami High Rise]

$104.06 is the price locked in for the weekend.

Highest price since the peak last spring that led to $4/gallon gas.

http://oil-price.net/

[LarryKing]

Originally Posted by Miami High Rise

The Washington Post supports domestic oil drilling and the auto industry

Crazy s@#t, we don't need high paying manufacturing jobs or have oil dependency. Its better for us to turn to a giant trailer park and to finance every dictator and mass murderer that want us dead.

[CalleOchoGringo]

I just bought me a 40 mpg car. It's a small light efficient (and inexpensive) gas car that gets better mileage than almost any Hybrid out right now. Plus I can telecommute to work most days since, thankfully, my job doesn't depend on me being in a certain location. So bring it on!

[Miami High Rise]

Now at $3.50, this spring peak should beat the one last year when oil got up to $114/barrel, only $10 more than it is now.

Gas prices are highest ever for this time of year (Expect $4.25 by April)

NEW YORK—Gasoline prices have never been higher this time of the year.
At $3.53 a gallon, prices are already up 25 cents since Jan. 1. And experts say they could reach a record $4.25 a gallon by late April.

"You're going to see a lot more staycations this year," says Michael Lynch, president of Strategic Energy & Economic Research. "When the price gets anywhere near $4, you really see people react."

Already, W. Howard Coudle, a retired machinist from Crestwood, Mo., has seen his monthly gasoline bill rise to $80 from about $60 in December. The closest service station is selling regular for $3.39 per gallon, the highest he's ever seen.

"I guess we're going to have to drive less, consolidate all our errands into one trip," Coudle says. "It's just oppressive."

The surge in gas prices follows an increase in the price of oil.

Oil around the world is priced differently. Brent crude from the North Sea is a proxy for the foreign oil that's imported by U.S. refineries and turned into gasoline and other fuels. Its price has risen 11 percent so far this year, to around $119 a barrel, because of tensions with Iran, a cold snap in Europe and rising demand from developing nations. West Texas Intermediate, used to price oil produced in the U.S., is up 4 percent to around $103 a barrel. That's 19 percent higher than a year earlier.

Higher gas prices could hurt consumer spending and curtail the recent improvement in the U.S. economy.


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A 25-cent jump in gasoline prices, if sustained over a year, would cost the economy about $35 billion. That's only 0.2 percent of the total U.S. economy, but economists say it's a meaningful amount, especially at a time when growth is only so-so. The economy grew 2.8 percent in the fourth quarter, a rate considered modest following a recession.

High oil and gas prices now set the stage for even sharper increases at the pump because gas typically rises in March and April.

Every spring, refiners suspend operations to switch the type of gasoline they make. Supplies of wintertime gas are sold off before March, when refineries need to start making a new formula of gasoline that's required in the summer.

That can mean less supply for service stations, resulting in higher gas prices. And summertime gasoline is more expensive to make. The government mandates that it contain less butane and other cheap organic compounds because they contribute to the formation of ground-level ozone, a primary constituent in smog. That means more oil, a costlier component, is needed to produce each gallon.

The Oil Price Information Service predicts that gasoline could peak at $4.25 a gallon by the end of April. That would top the record of $4.11 in July 2008.

The national average for gasoline began the year at $3.28 a gallon. The average price for February so far is $3.49 a gallon. That's up from $3.17 a gallon last February, a record at the time. Back in 2007, before the recession hit, the average for February was $2.25 a gallon.

Prices are higher on the East and West Coasts, where gasoline has risen above $3.70 in Connecticut, New York, Washington D.C. and California. This isn't unusual—states on the coasts charge some of the nation's highest gas taxes.

High gas prices put a strain on many people's budgets.

Americans spent 8.4 percent of their household income on gasoline last year when gas averaged an all-time high of $3.51 a gallon. That's double the percentage a decade ago. They could pay even more this year, even though demand is the lowest in 11 years as people drive fewer miles in more efficient cars, says Tom Kloza, chief oil analyst at OPIS.

(segway to public transportation)

Gary Goodman commutes into Manhattan from Edgewater, N.J., because gas, tolls and parking make the cost of driving prohibitive.

Goodman, an accountant, commutes by bus. He uses his car mostly for trips to the grocery store or for occasional nights out. He says he has no choice but to eat the higher gas costs.

"I already drive as little as possible," he says.

Paul Dales, a senior economist at Capital Economics says it would take a bigger shift in the global economy—say, a deep recession in Europe or a slowdown in Asia's manufacturing—for pump prices to drop noticeably. Either event would slow oil demand, depressing prices.

But experts expect demand to keep rising. World oil demand is expected to increase by another 1.5 percent to 89.25 million barrels a day in 2012, according to the Energy Information Administration.

In the short term, tensions with Iran are feeding fears that oil supplies could be blocked.

The U.S. and Europe are tightening economic sanctions against Iran over what the West believes is Iran's attempt to build a nuclear bomb. World leaders fear Israel may be planning a strike against Iran, the world's third largest oil exporter.

In response, Iran has threatened to withhold its own oil deliveries and to block the Strait of Hormuz, a waterway along its coastline through which one-fifth of the world's oil flows.

On Friday, an international banking clearinghouse crucial to Iran's oil sales said it is prepared to discontinue services to Iranian financial institutions being targeted by the EU and U.S. sanctions. That could ratchet up the pressure on Iran, but also send oil prices soaring.

The price of Brent crude fell 53 cents on Friday to $119.58. WTI gained 93 cents to $103.24.

Gas prices are already an issue in the presidential campaign. Republican candidate Newt Gingrich spoke several times this week about opening up more federal land to oil and gas drilling as a path toward U.S. energy independence—and lower pump prices.

"Our goals should be to get gasoline to $2.50 or less so that working families can actually get to work and retired families can travel," Gingrich said at a campaign event in Los Angeles Thursday.

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[CalleOchoGringo]

Energy educated people tend to forget (and the rest simply didn't know any better), that the only reason fuel prices ever came down from the epic levels they were in 2008 is because the world economy cooled WAY down. As it heats up again expect it too rise back to that and beyond.

The worst part is that, these days as a nation, we have less control than ever over that. In the past as prices would go up, Americans cut back on driving and the prices leveled off and eased some. But today more and more of that world price is controlled by the demand of fuel from India and China. We might even see a point where American's cut back and the price STILL continues rising (abet more slowly).

Hope you live in a walkable community, cause it's about to get a whole lot more expensive to live in the suburbs. The good news... there will be somewhat less traffic on the roads.


Welcome to the future.

[theEmbarcadero]

This thread bores me...

No matter what....gas prices will remain high...and we pay at the pump....whether it is the greed of the Saudis...or the big oil companies...we are powerless to do anything about it...

We could build more mass transit....but alas....gringos love their gas guzzlers and are addicted to gasoline....

One day, you will all be sorry that you didn't build more rail lines...!!!!!

PS....I parked my Jeep Grand Cherokee in the USA and moved to Costa Rica....and I rely on mass tranist....which is better in Alajuela...than it is in Miami...!!!!

Sad ...but true....

[exMiami]

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[Miami High Rise]

image hosted on flickr

Oil Price sunday night 105.31 fdfs by rcadimenisa, on Flickr

SINGAPORE — Oil prices jumped to a nine-month high near $105 a barrel Monday in Asia after Iran said it halted crude exports to Britain and France in an escalation of a dispute over the Middle Eastern country's nuclear program.

[LarryKing]

Powerless my a#@
Don't like don't vote for a governement that prevented the Canadia oil pipe and drilling in the US. We got exactly what we voted for.

Originally Posted by theEmbarcadero

This thread bores me...

No matter what....gas prices will remain high...and we pay at the pump....whether it is the greed of the Saudis...or the big oil companies...we are powerless to do anything about it...

We could build more mass transit....but alas....gringos love their gas guzzlers and are addicted to gasoline....

One day, you will all be sorry that you didn't build more rail lines...!!!!!

PS....I parked my Jeep Grand Cherokee in the USA and moved to Costa Rica....and I rely on mass tranist....which is better in Alajuela...than it is in Miami...!!!!

Sad ...but true....

[CalleOchoGringo]

I'm still on the fence about which side is lying/exaggerating more on the benefits/consequences of the pipeline issue. And while I'm no environmentalist, as a national energy security and trade surplus nut, I would like to see us ween ourselves off oil for good.

Here's what I do know that very few "regular folks" know about this project. I know that Trans Canada can get way more money from selling this oil abroad than in the USA. So what they intend to do is pipe it down to the Texas coast, refine it, then sell it overseas. This will do nothing to help the energy security or price of gas in the United States. If Americans figured this out, most would not want the pipeline at all, but by they time most do figure it out, TC will have gotten their pipeline already and won't have to care. In face, repeated attempts to pass a bill that this piped oil must be sold to the US market have been shot down in congress due to TC's successful lobbying efforts.

My current conclusion is that I don't believe this pipeline really is in the interest of anyone in the US except a few low population states and of course Trans Canada (a non American oil conglomerate) will be the biggest beneficiary by far.

[CalleOchoGringo]

As for drilling in the US well... here's something you might not know. All the drill baby drilling in the country won't help lower gas prices, because the bottle neck in oil isn't getting it out of the ground, it's in refining it. All the wells in the country aren't going to change how much oil can be converted into gasoline or diesel, just create a bigger backlog of oil waiting to be refined.

Of course this suits oil companies just fine. Why should they invest in a refinery that does nothing but lower the cost of their product by increasing supply without the equivalent increase in demand. They would of course, if we had somewhere else to buy the gasoline and were forced to compete with that supply, but it's pretty much a captive audience. Oil can be purchased from anywhere in the world, but refining it nearly always happens somewhere in the general region where it is consumed.

[LarryKing]

Originally Posted by CalleOchoGringo

I know that Trans Canada can get way more money from selling this oil abroad than in the USA. So what they intend to do is pipe it down to the Texas coast, refine it, then sell it overseas. .

Prices per barrle are set and if they intended to sale it over seas the project would have included additional Texas-Beijing pipeline.
You can ween oil right now, just turn of the light, heating, your PC and never drive or take public transportation. Problem solved.

[CalleOchoGringo]

I'm not sure if you were being facetious or not with the Texas to Bejing pipeline (I hope to God so), but of course the only way to get oil that far is to ship by sea.

Weaning will only happen when market forces make something more expensive than the alternative, thus incentiveizing us all to switch to electric cars say, in order to save money. Though, as I said in my prev post, I'm not sure the pipeline would make it any cheaper for us so maybe this will happen soon.

[LarryKing]

Originally Posted by CalleOchoGringo

I'm not sure if you were being facetious or not with the Texas to Bejing pipeline (I hope to God so), but of course the only way to get oil that far is to ship by sea.

Weaning will only happen when market forces make something more expensive than the alternative, thus incentiveizing us all to switch to electric cars say, in order to save money. Though, as I said in my prev post, I'm not sure the pipeline would make it any cheaper for us so maybe this will happen soon.

Pipelines and shipping cost money. If there's a massive demand already (USA) and the oil is already refined here, than that's were it will stay. Canada is building its is own line to BC and will ship it to Asian from there, makes much more sene the Than Albertaa-Texas-China.
In other words we missed on a secure supply of oil, thousands of jobs and a chance to lower our gas price.

[CalleOchoGringo]

I'm not sure if your aware of this but currently over 42% of our refined oil is exported to overseas markets. Here's a link to a story about that:

http://finance.yahoo.com/blogs/daily...174452881.html


Point is, the refined product gets higher prices elsewhere and TransCanada knows this as well as anyone. They don't want to corner themselves into having the US as their only customer where they could get bullied into selling it at a lower price. If they had their way they would build all the pipelines out to BC to export to wherever it's needed. But Canadian Enviros have stopped most of that.

The world price of oil is going up up up. There is no president that can stop the markets. Not even Newt and his space stations on the moon, $2.50 gallon oil, a chicken in every pot and a car in every garage bullshit. He'll only stop saying that crap once the sheep stop believing the shit he is shoveling.

[I-275westcoastfl]

Exactly. Fact is gasoline demand in the US is still at a lower demand then pre-crash levels. Gasoline prices are set from a group of people who "speculate" what the demand will be. They proved when the prices spiked before that they over speculated the prices, and it wasn't really related with demand as much as people thought. It's just people have short term memory especially Americans. I remember right after the prices fell, sales of SUV's and trucks picked up in a matter of months. When the bp oil spill happened people started being against drilling, now watch people will start supporting it again with higher fuel prices. It's just a big game with lots of money to be made.

[casamagda]

Originally Posted by LarryKing

In other words we missed on a secure supply of oil, thousands of jobs and a chance to lower our gas price.

Sad but true.

From $1.87 in Feb. 2009 to $3.60 in Feb. 2012. Up 92.5%.
That is almost doubled.
It's $4 per gallon in the Brickell area.


Source: Gasbuddy