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Page added on March 13, 2012
The Astounding Fuel Price Conundrum
Republicans have been out in force, trying to tar President Obama with gas prices that are approaching $4 a gallon, and that appear to be shooting for an all-time high into the driving season. But no one has even tried to out-claim Newt Gingrich, who in his desperation claimed that gas would miraculously plunge to $2.50 a gallon if he became President but would hit a world-ending $10 a gallon if Obama stayed in power.
The strategy worked: Obama’s disapproval rating on handling the “situation with gas prices” has reached 65%, and his disapproval rating on the economy as a whole has jumped to 59% over the weekend from 53% in early February.
Meanwhile, oil companies worldwide and our special friends, like Iran, are drooling over these gorgeous prices, while consumers are getting rattled as the cost of a tank of gas is dreadfully close or already exceeds their pain threshold. Gallup, which excels at finding irrelevant averages to everything, has found one for the pain threshold as well: $5.30 a gallon, the price at which people would “make significant cutbacks” in spending in other areas. In fact, 17% would do so with gas under $4 (now happening), and an additional 28% would do so with gas between $4 and $4.99. So 45% would cut back significantly in other purchases before gas ever hits $5.
The White House feels the heat—and is fighting back. Already, 85% of the people want Obama and Congress to take “immediate action” to lower gas prices, and 65% actually believe that the government can do so. Consequently, you can’t turn on the TV today without seeing Obama discussing energy.
The White House also released a report that touts energy feats already accomplished or to be accomplished, some as soon as 2025. Many of them are laudable, such as reducing oil imports by a third by, well, 2025—they’re already down by a million barrels a day over the last three years. Yet, in the biggest non sequitur of mankind, given that high fuel prices sparked the report in the first place, the report also brags about the refining sector that has become … a net exporter.
Turns out the place where gas prices tend to be the highest in the nation, San Francisco….
March 12, 2012
…. is just across the Bay from five major oil refineries that together are the largest exporters of petroleum products in the nation (Brooking Institution, New York Times, May 8, 2012). In 2010, the period of the report, the five refineries exported $7.8 billion in petroleum products, an increase of 10% over prior year. Other refineries on the West Coast have also experienced booming export sales. Last December alone, West Coast refineries exported over one million barrels of gasoline, eight times as much as in 2007.
The Census Bureau’s trade report confirms the trend nationwide: in January exports of petroleum products jumped 16.8% to $8.9 billion from December’s $7.6 billion, and were up 8.8% from January last year.
Why? Because that’s where the money is. Domestic demand is stagnating. In California, based on data from the State Board of Equalization, which collects taxes on motor fuels, gasoline sales have actually slid 14% from 2006 through last year:
People in California—and in many other places—are driving slightly less, and their vehicles are slightly more fuel efficient. It adds up. So we’ve got a little problem—sagging demand—that should push gasoline prices down. But business is business:
“Our options were to reduce production, lay off workers, close refineries, or find markets for our products,” said Tupper Hull, a vice president at the Western States Petroleum Association. And those markets are in Mexico, Brazil, China, and other developing countries where demand for refined petroleum products is growing.
Oil and refined petroleum products are worldwide commodities whose prices are determined by the markets, not Newt Gingrich. Or President Obama. Central banks, however, are another story. They’ve handed trillions to their cronies for the purpose of driving up asset prices. And some of this money has hit oil. For just how helpful this has been, read…. The Fed’s Rain Dance at the Bottom of the Stairs.
As always, consumers pay the price, this time at the pump. They’re already squeezed, particularly those at the lower half of the income spectrum. And people who just finished their higher education, the future of America, are struggling like never before. For the whole fiasco of the costs of higher education, and how they’re mauling young people, read…. Next: Bankruptcy for a whole Generation.
14 Comments on "The Astounding Fuel Price Conundrum"
Kenz300 on Tue, 13th Mar 2012 2:32 am
Rising demand from China and India are the driving force in oil prices. Oil production can not keep up with the growth in China and India.
BillT on Tue, 13th Mar 2012 2:40 am
“…Oil and refined petroleum products are worldwide commodities whose prices are determined by the markets, not Newt Gingrich. Or President Obama…”
Well, finally, in print, some truth. But the blamers will not believe it because they want to think that gas prices are something the US government has control over. To accept that it does not, might mean that they have to start doubting such things as employment growth, low inflation, and other ‘statistics’ put out by the propaganda mills in DC. Too bad! Reality is a bitch!
MrEnergyCzar on Tue, 13th Mar 2012 3:40 am
Eventually people will find out there is no solution, just hard choices and changes to the way we live…
MrEnergyCzar
Kenz300 on Tue, 13th Mar 2012 6:04 am
Too many people and too few resources.
If the planet had 4 billion people instead of 7 billion people there would be plenty of resources and jobs to go around.
DC on Tue, 13th Mar 2012 7:49 am
Funny, amerika is not useing less oil because of a new found fondness or availability even, of ‘fuel’ efficent cars(whatever those are supposed to be), or because there cities are suddendly walkable, etc. Not even because amerika has invested in mass-transit. Oil use is down, because yer all broke! Even amerika, the land designed to waste oil, is haveing a hard time justifying hauling there obese kids and chin-less wives to dennys 6 days a week anymore. If amerika somehow manages to inflate yet another economic bubble that creates a fake burst of ‘wealth’, that missing million will come back and then some. Simple as that. Of course, since they will bidding against the rest of the world for it, the price will go up and knock out any make-beleive recoveries the US attempts to stage.
Dammed if you do….
Plantagenet on Tue, 13th Mar 2012 8:21 am
DC doesn’t even know how to spell the word “America”
Hahahahahahahahahah!
Arthur on Tue, 13th Mar 2012 9:55 am
Haha, “world-ending 10$ a gallon”.
Here a newsitem about an old German getting a fatal heart attack from the bill at the pump:
http://m.depers.nl/opmerkelijk/632814/Eerste-benzine-dode.html
Price 1.75 euro per liter.
Conversion factor 4.98
8.75 $ per gallon
Again, war in the Gulf means that oil prices, anti-Americanism and anti-semitism will go through the roof world-wide.
BillT on Tue, 13th Mar 2012 10:17 am
Plantagenet. DC is aware of his spelling. I am sure it is his way of saying that the Us is no longer the America we knew but a more sinister, police state resembling some past Empires. Just as I use ‘Us’ because America is shrinking…not growing.
dsula on Tue, 13th Mar 2012 11:50 am
>> Even amerika, the land designed to waste oil, is haveing a hard time justifying hauling there obese kids and chin-less wives to dennys 6 days a week anymore
I call that good news. High oil prices are the best cure for the world. And Europe by the way will go through the same pains.
And, DC, is your C key broken? It’s AmeriCa, with a C, not K. Don’t tell me you’re too old to learn?
Ham on Tue, 13th Mar 2012 11:57 am
Canadians may ponder in the future as to why the boreal forest has been cut down, turning one third of their country into toxic mine shaft, so that numbskulls in the US can drive SUV’s to the box store and back. The system is broke: the people are broke. It is way past time that Politicians, the media and their ilk start explaining to the public that we need to make adjustments to an energy constrained future: instead of peddling fantasies of unlimited Alice in Wonderland oil.
george on Tue, 13th Mar 2012 1:32 pm
can’t wait for it to hit ten bucks so I can finally cross the street again .
Arthur on Tue, 13th Mar 2012 1:36 pm
@dsula – there are many countries, all much older than the US, where ‘America’ is written ‘Amerika’. Like in Holland or Germany or Sweden or Denmark. Maybe nitpicking over spelling is not the most impressive way in contributing to a discussion about energy. Just a tip.
Arthur on Tue, 13th Mar 2012 1:41 pm
@george – I can tell you from direct experience that unfortunately 10$/gallon is not enough to sweep the streets clean. Congestion is still the norm here, not empty roads.
James on Wed, 14th Mar 2012 1:59 pm
I think DC is using “Amerika” as an insult to the U.S. for its wasteful, elitist, attitude. The World is waking up to the fact that the U.S. isn’t as “good” as we once were.