[KevO]

5 years?

$this->bbcode_second_pass_quote('', ' ')Crude oil prices will soar to more than $200 (U.S.) per barrel over the next five year – driving Canadian pump prices to $2.25 a litre ($10 plus a gallon) and forcing a fundamental transformation in the North American economy, says Jeff Rubin, chief economist with CIBC World Markets Inc.

In a new report, Mr. Rubin forecast a continued run-up in crude prices, despite a slowing world economy and slumping petroleum demand in United States, the world's leading oil consumer.

He said he expects crude prices – now trading at above $116 (U.S.) a barrel - to average $150 by 2010, and more than $200 by 2012. That would translate into pump prices of $7 (U.S.) per gallon in the United States, and $2.25 per litre in Canada, double the current levels.

[MonteQuest]

As crude oil rises in price it's share or effect on gasoline, jet fuel, and diesel prices will be much more sigificant.

In 2007, the price of crude oil averaged about $68 per barrel and accounted for about 58% of the national average retail price of a gallon of regular grade gasoline, while in 2000 to 2007 it averaged about 48%.

At $100.00/barrel it was 68 % of the pump price of gasoline.

In April, 73 percent of the price of gasoline was the cost of crude oil.

At $134.00/barrel it must be well over 75%.

Connect the dots about the quick rise in the cost of gasoline we can expect as we head towards $140.00 and beyond.

[roccman]

Well - just off the top of my head.

Aug 31, 05 - Katrina - oil went to $75 and gas in Phoenix was around $3.50

We should be at $6 gas today in Phoenix.

We will be...very soon.

[biofuel13]

Yep $6 a gallon is just weeks away.

[Troyboy1208]

When you look at charts at sites like gasbuddy.com you can see that crude oil has "decoupled" from gasoline. Refiners must be taking a loss with their crude stock being so expensive. At some point the two must merge. And I don't think that crude oil is going to come down halfway...

[cube]

Crude oil and gasoline are two different commodities, that's why there's a commodity futures contract for each.
http://www.nymex.com

If *hypothetically* the price an oil refinery got paid for refining crude into fuel was constant, say $25. Then there would be no need to have a separate commodity futures contract for gasoline. The formula would simply be
gasoline = crude + $25.
An oil refinery's profit margins Crack spread can vary widely.
I think in the future crack spreads will go up. The price of almost everything is going up. Building a refinery is more expensive these days thanks to the cost of raw material inputs going up like steel, just one example.

Iron ore prices increase 5 fold since 2001 --> increase in steel prices --> makes it more $$$ to build an oil refinery --> crack spreads will go up

Exactly how much will this go up in relation to rising crude prices, I don't know. If I did I'd be a very rich man.

my 2 barrels of oil

[SoylentGreen]

With the US process of refining approx. 45% of a barrel of oil gets converted to gasoline. The other 55% is turned into kerosene,jet fuel, diesel, fuel oil and other petrochemicals including asphault.At 42 gallons per bbl. and $135 per. 21 gallons of gas is just under $70 just from a basic OIL cost, not including transport, refining, distribution.

[evilgenius]

Don't forget about what is also happening when it comes to near source supply of crude depleting. Mexico in particular, and to some extent Venezuela, are losing the battle to maintain production levels. Because of this the string of tankers from farther places has to become longer. When there aren't enough tankers in the world to make such a long string in a market timeframe, then the US has to outbid the rest of the world not just for oil, but for tankers. The result is that the stocks of oil go down. All of this flies in the face of demand destruction at home, where the stocks of gasoline are actually going up.

The thing is not in equilibrium. I don't think it has a chance of reaching it either unless aggregate oil demand in the US comes down on a permanent habitual basis. We'll see what the rising dollar can do, but at the end of the day using currency exchange to freeze the competition out of the market is only a short term solution. What, when gas comes back down to $2.90 a gallon is it logical for the SUV culture to go back to business as usual?

[dunewalker]

$this->bbcode_second_pass_quote('evilgenius', 'D')on't forget about what is also happening when it comes to near source supply of crude depleting. Mexico in particular, and to some extent Venezuela, are losing the battle to maintain production levels. Because of this the string of tankers from farther places has to become longer. When there aren't enough tankers in the world to make such a long string in a market timeframe, then the US has to outbid the rest of the world not just for oil, but for tankers.

[evilgenius]

$this->bbcode_second_pass_quote('dunewalker', '')$this->bbcode_second_pass_quote('evilgenius', 'D')on't forget about what is also happening when it comes to near source supply of crude depleting. Mexico in particular, and to some extent Venezuela, are losing the battle to maintain production levels. Because of this the string of tankers from farther places has to become longer. When there aren't enough tankers in the world to make such a long string in a market timeframe, then the US has to outbid the rest of the world not just for oil, but for tankers.

[DantesPeak]

In additon to what dunewalker and evilgenius said, it should be noted that US refineries are not only optimized for a certain output of products but require a certain type of oil input too.

While there is some leeway, a refinery that for example uses high quality oil from Nigeria can't replace that with a lower quality crude.
Even declining volumes of heavy crude from Catarell in Mexico must also be replaced by a similar heavy crude from somewhere else.

Adjusting a refinery to new inputs or outputs outside of certain range is not only expensive, but takes a long time. With uncertainty as to where supplies will come from, it's not surprising then that refineries are slow to adjust to changing oil market conditions.

[MonteQuest]

Just out:

$this->bbcode_second_pass_quote('', 'E')IA analysis of the petroleum market points to the cost of crude oil as the main contributor to the record high gasoline prices that we are now experiencing.

The cost of crude oil now accounts for about 73% of the gasoline pump price. World crude oil prices are at record highs due mainly to high worldwide oil demand relative to supply. Other contributing factors include political events and conflicts in some major oil producing regions, as well as other factors.

[SchroedingersCat]

One thing I haven't seen mentioned is the rising value of the oil and gasoline that are required for MOL (minimum operating levels). 270 Mbbls of oil at $50 per barrel is quite another matter when oil is $135. Since keeping the MOL is a requirement for the oil suppliers and refiners that is a significant chunk of change that they need to keep on the books. Let's see, if oil hits $200 the value of the MOL is up to $54 billion dollars? At $5 per gallon it is another $35 or $36 billion for the MOL of gasoline? I think this could encourage producers to keep as close to MOL levels as they can.

[Electric_Economy_2025]

Every $20 dollars for crude oil is about $1 dollar for gas so $140 oil is $7 gas, also gas prices are normally 2 to 3 month behind crude prices.

[MonteQuest]

$this->bbcode_second_pass_quote('Electric_Economy_2025', 'E')very $20 dollars for crude oil is about $1 dollar for gas so $140 oil is $7 gas, also gas prices are normally 2 to 3 month behind crude prices.

[cube]

$this->bbcode_second_pass_quote('Electric_Economy_2025', 'E')very $20 dollars for crude oil is about $1 dollar for gas so $140 oil is $7 gas, also gas prices are normally 2 to 3 month behind crude prices.

[Electric_Economy_2025]

$this->bbcode_second_pass_quote('Drifter', '')$this->bbcode_second_pass_quote('cube', '')$this->bbcode_second_pass_quote('Electric_Economy_2025', 'E')very $20 dollars for crude oil is about $1 dollar for gas so $140 oil is $7 gas, also gas prices are normally 2 to 3 month behind crude prices.