Gas Prices Hit Record Level In Ohio, Nation

[thriftybob]

Quote from Vinny1:

How can demand go down when most people have no choice but to drive to work, so they are forced to take it up the ass and pay whatever the price is.

Once gas is $20/gallon (not sure why the oil companies don't charge that much now, when they could probably get away with it), auto manufacturers will need to come up with cars that get 200 mpg, otherwise, the streets of this country will be littered with horse shit.

The sad thing is that those cars are available in places like India already, and they sell for under $3000. With a 1 liter motor, it wouldn't be difficult to get 75 mpg and be able to do 75 mph max, but its just that Americans have demanded (bought) big trucks and SUV's instead, so no carmaker is going to build anything cheap and efficient because they wouldn't make any money doing it, unless they can charge and arm and leg for it because it gets tax breaks, etc, like with the "hybrid" craze where they charge an extra $5000 or $10000 for the novelty.

If gas were $7 or $8 like in europe, consumers WOULD demand the efficient cars and the consumption of fuel would drop, and if it dropped enough, the price of oil would drop, too.

 

[dougcs]

Quote from PJKIII:

The issue is not the oil companies propping the price up, or the speculators driving it up, it is an issue of refining capacity. We have not built a new refinery in 30 years in the US, and our demand (and the rest of the world's too) for refined products increases every year. Not only do we not have enough refineries, but the ones we do have are aging and beginning to fall apart. There have been a huge number of hiccups at refineries this year which has limited the refining industry's ability to build stocks to sufficient levels to meet demand for the busy summer driving season, and that is why prices have been rocking. Note that today prices are pulling back, with gasoline down 6 cents on the Nymex currently, and it has been off as much as 8.25 cents.

for those keeping score, in 1970 there were 276 refineries in the USA; now it has dwindled to 148.

 

[ByLoSellHi]

I'm short three refining companies as of yesterday and today.

 

[my2cents]

Quote from PJKIII:

The issue is not the oil companies propping the price up, or the speculators driving it up, it is an issue of refining capacity. We have not built a new refinery in 30 years in the US, and our demand (and the rest of the world's too) for refined products increases every year. Not only do we not have enough refineries, but the ones we do have are aging and beginning to fall apart. There have been a huge number of hiccups at refineries this year which has limited the refining industry's ability to build stocks to sufficient levels to meet demand for the busy summer driving season, and that is why prices have been rocking.

PJKIII-

Isn’t it funny how refining capacity has increased over the past 30 years despite the number of refineries that have shut down. The shut down of those plants was a conscious economic decision by the refiners themselves. The development of new technologies and refining processes has given refiners the ability to squeeze more product out of a barrel of crude with the utilization of fewer plants than at any other time in the past. The efficiencies of refining oil today have made incredible advances over the past 30 years thus making many plants obsolete and economically unfeasible. That is why the plants have shut down.

I live 25 miles from where 10% of this nation’s oil is refined. Yes, I know these plants are running at 98% capacity, I can see the glow of the burnoff towers off on the horizon. Yet at the same time I’ve been watching one of the local refiners disassemble a fluid catalytic cracking tower due to the fact that it is no longer needed since they implemented a heat recycling energy savings plan for the facility. They now have the ability to produce 20% more product with 25% less facility. So even though the total number of refineries continues to fall, overall output over the past decade has risen by the equivalent of a new medium-sized refinery every year.

Lest few forget it was merely 10 years ago that we had too much refining capacity which led to the oil companies spending less on development and more on acquisition of other companies. This is how we reached the point of where we are today. Keep in mind that there is a rapid expansion of refining facilities overseas that are now delivering finished product to our shores and it is our domestic oil giants that are investing and building those overseas facilities. We have now reached a point in time where we are outsourcing the production of our finished distillates to overseas plants much the same way any other consumer product is manufactured today.

So before you buy any of that argument that we don’t have enough refining capacity I want you to consider this. Over the next year 17% of the refineries in the US will be shut down and brought off line for maintenance work, overhaul and plant upgrade. Yet it will only disrupt 5% of our nations refining capacity. Do you see the hole in the refining argument yet?

This argument you propound is near and dear to the heart of big oil today and is usually followed by the argument that they need fewer environmental restrictions in order to build new refineries. I've lived by these plants all my life and have witnessed firsthand the environmental damage they produce. It’s been 30 years since I’ve seen a blue heron walk the tidal marshes but recently they have returned. Any setback in current environmental legislation for the benefit of a major industry group is simply a sin that cannot be forgiven. Examine the argument that you have made and then consider its source, the truth is often very revealing.

Just,
my2cents

 

[ByLoSellHi]

There was a blurb on Bloomberg today about how a pipeline in South Carolina is REFUSING to transport additional refined gasoline - they don't have the capacity because there is so much refined gasoline flowing right now (both from domestic sources and imports). They are transporting 1.3 million gallons of refined product per day through their pipeline - an all time high.

They are literally bursting at the seams with rbob

I am not fabricating this. If someone finds the actual story before I do and links it, kudos to you.

Tomorrow's inventory report is going to be spectacular.

 

[deviltrader]

I should feel sorry for Americans, but somehow I don't. I don't want to argue whether the stories about refining capacity are made up, about whether tough environmental regulations are driving prices up (to some extent I'm sure they do....). We are where we are with gas prices and the dependency on the automobile.

I don't care if gas goes up to $5/gal next month. Americans are whiny little crybabies. This country wants the convenience and luxury of 5000 lbs individual transporation but doesn't want to pay the costs. Too bad, I don't feel sorry for anyone. People in the US were too naive or stupid to think long-term, and thus got into this situation where a handful of oil companies have a firm over millions of peoples lives. You reap what you sow.

 

[ByLoSellHi]

Quote from deviltrader:

I should feel sorry for Americans, but somehow I don't. I don't want to argue whether the stories about refining capacity are made up, about whether tough environmental regulations are driving prices up (to some extent I'm sure they do....). We are where we are with gas prices and the dependency on the automobile.

I don't care if gas goes up to $5/gal next month. Americans are whiny little crybabies. This country wants the convenience and luxury of 5000 lbs individual transporation but doesn't want to pay the costs. Too bad, I don't feel sorry for anyone. People in the US were too naive or stupid to think long-term, and thus got into this situation where a handful of oil companies have a firm over millions of peoples lives. You reap what you sow.

Well, to be fair, is this what happens when one's government plans transit around an interstate and intrastate highway system, with feeder roads.

You don't even need a car in many parts of Europe and Asia.

But yes, individuals share some of the responsibility, too, for purchasing vehicles with anchors.

 

[Beebers]

Quote from thriftybob:


If gas were $7 or $8 like in europe, consumers WOULD demand the efficient cars and the consumption of fuel would drop, and if it dropped enough, the price of oil would drop, too. [/B]

They are probably still paying the same with the Euro having appreciated 50% against the dollar in the past 6 years or so.

 

[Casey30]

Quote from deviltrader:

I should feel sorry for Americans, but somehow I don't. I don't want to argue whether the stories about refining capacity are made up, about whether tough environmental regulations are driving prices up (to some extent I'm sure they do....). We are where we are with gas prices and the dependency on the automobile.

I don't care if gas goes up to $5/gal next month. Americans are whiny little crybabies. This country wants the convenience and luxury of 5000 lbs individual transporation but doesn't want to pay the costs. Too bad, I don't feel sorry for anyone. People in the US were too naive or stupid to think long-term, and thus got into this situation where a handful of oil companies have a firm over millions of peoples lives. You reap what you sow.

And the rest of the world is graciously efficient perfect long-term thinkers and of course never wasteful. God bless the rest of the world for being so good and efficient. Whatever.

 

[PJKIII]

BuyLo - Haven't seen that article, I did look for it but am not a Bloomberg subscriber...if you can find it please post. Here's to hoping that the inventory report is spectacular, but the last few weeks have been less than exciting.

2Cents - Hadn't known those figures, but I'll trust you as a reliable source being so near to it all. Interesting point on the outsourcing of refining, but my question to you is: why aren't we getting the products we need? I know refining capacity and efficiency has improved (was not aware how greatly the number of refineries had dropped), and expansions to existing refineries have been made, but with daily refinery shutdowns for various reasons, we have a problem amassing necessary stockpiles of products for the summer, and as rich as we are I think we should be updated and have sufficient capacity to meet demand. The money is there to do it, but the profit motive is not...