Time to fill up
 

I have a feeling that gas has bottomed out and will climb sharply very soon. Might be time to fill up.

The price now is artificially low and unsustainable. Refiners are paying over a dollar a gallon for crude oil and selling gas for 78 cents. They've already started slowing production and shutting down some refineries.

I fill up about once a week. Gas prices can't really do much to change that.

OPEC can only cut production so much before it effects their bottom line. When this occurs they will be forced to again increase production in order to generate required economic revenues. The simple fact is that they continue to cut production, but demand and speculation are decreased therefore the price continues to drop. People seem to think that the US gets massive quantities from OPEC. In fact, US largest external suppliers are Canada and Mexico. Neither are members of OPEC. So we hold you by the ******.....Lollllll

I have notice prices here in mid-Mo have been holding steady at $1.59 for the last two weeks. Wouldn't be surprised to see prices going back up.

Yeah, but we pay for your oil just because we are being polite. If Canada ever decided to cut us off, we'd just take it.
Canada and the US have a strange relationship. Almost symbiotic.

Besides, the topic is gasoline, not oil. The two have an effect on each other but are not necessarily directly related.
People are starting to get over the shell shock of last summer. They are starting to realize that gas is really cheap now. The conservation movement that was driven by $4.50 gallon gas is starting to wain. Refiners are cutting production out of shear necessity.
I see $2 a gallon in So cal by new years and $2.25 by February which is a reasonable price right now based solely on production cost.
BTW I paid $1.63 yesterday.

I filled wifey's car up at a station last night....$1.34.9/gallon for regular.

Filled the V70 last night $20 - woo hoo!

$1.23 per gallon. Nope, that can't last.

Less than $10 fill up my bike.

Yesterday in the Indy area, price in the AM were about 1.35. Alas, as the day went on the price rose to 1.59 about noon, and then 1.79 at 5pm. Now come-on, 45 cents per gallon in one day. But wait, there's more; they came down .1cent today. I felt great that it had fallen down so much today that I filled my tank. If they have the balls to raise prices in this kind of economy, then I think we will really be in the tank. Can you say price gouging. Wait, I forgot; we are already in the tank.

Traffic deaths down 10%, people are just driving fewer miles.

goddamn its already back to 1.70 here.

Call me Pavlov, because this all feels really cheap. I'm not one to complain.

Just saw oil went up $5 a barrel.

I paid $1.43/gal and filed my SUV for $22 last time. It felt good and I wish it would last.

Aurel

oil has been bouncing around in a trading range, Vinny. I imagine gasoline demand is still down.

That's an absurd price really.

I'm paying that per liter up here.

Certainly won't last.

The electric wheel is going to drop the demand for gas and diesel like the internal combustion engine dropped the demand for horses. The 150mpg Ford F150 Crewcab at Sema said something. Same electric wheels as on those 500 250+mpg Mini-Coopers.

Gasoline is going to stay cheap...now a $1 a gallon is a bit low....
The real price should be around $1.50 a gallon.

I got used to paying $4.50 a gallon and really didn't mind it that much. This is pretty weird. (Reason I didn't mind is because I don't drive that much, miles-wise). Now it's $1.69 in L.A. and there aren't even any lines at the stations.

The thing that will keep oil cheap in the near future is the global depression/recession, demand is just WAY down. Everything is cheap right now. My question is why is diesel still ~$1.00 more a gallon than regular unleaded?? Used to be cheaper than gas.

Wait for the independent refineries to start shutting down & reducing gas production.

Low sulphur regulations

OK, but $1.00 a gallon difference?? :mad:

Update: Diesel prices are finally coming down. I've seen ~$2.30 in CA. and just saw lots of $2.00 diesel in AZ. and NM this week. That's good news for keeping inflation in check. It also contributes to lower gas and diesel prices, ironically, since transporting it to the stations was adding to the cost. It was a self-fulfilling loop.

It is because of this attitude that the USA is loved around the world!;)

Wait till it is something you really need (like fresh water), that is when your neighbors to the north need to be concerned!!

That will be a huge factor in prolonging recession too. Everything important in the production, distribution and harvesting sector is diesel powered.It adds big bucks to the cost of food and the cost of transporting all goods to markets.

Yes, that is strange. Countries all over the world are supported by the US, protected by the US, they exist because the US wanted it that way. Yet they don't say thank you. Instead they don't like us because we occasionally remind these other countries what we have done for them.
And for that we are considered rude. Go figure.

If it were up to me (and you are glad it's not) the US would completely cut off all financial and military support to foreign countries for a while. All of it.
Those countries that were still whole might have a different attitude after that.

I +1000

Low sulfur regulations have little or nothing to do with it. OK, maybe 10 cents a gallon difference.

Up until recently, there was plenty of diesel to go around. We were importing quite a bit of cheap diesel fuel and that kept prices down. Then, other countries started competing for that cheap diesel fuel because their demand went up. Their industrial demand increased, they wanted the same cheap diesel as us, so it wasn't as cheap as gasoline anymore.
We (the US) cannot currently produce enough diesel to meet our own demands. The US imports about 6.3 million gallons of diesel per day. When that diesel (distillate fuel oil) was cheap, we sold it cheap.
When it went up, we had to pay more so you had to pay more.

The US refineries are scrambling to change that, we are modifying our process plants to increase our diesel production at the cost of gasoline production. The refinery where I work has managed to increase diesel and jet production by about 500,000 gallons per day. We had to kill 600,000 gallons of gasoline production to do it. That's about as much as we can do without major construction which is in the works.
That is how we are staying alive. Diesel and jet fuel is profitable, gasoline is a loser right now. Gas costs more to make than we are selling it for. We're still making is just to maintain cash flow, but we can't do that for much longer. The industry is already starting to slow down production and shut down some plants.

Unfortunately it takes a long time and many $millions to change process unit designs to be able to make significantly more diesel.
Over the next year or two these projects will come on-line and the price of diesel will drop. All those millions we are spending to make more profit will eventually cut our profits and will be a waste, but the consumer will benefit. And they will curse us for making their life better because they are ignorant and don't know any better.

Sammyg, what refinery do you work at? I have done some work at Chevron El Segundo. Barge Crane operator for mooring service and boat captain for core sampling.

With all the profit that was pulled in by big oil during the last few years, it surprises me that there wasn't more of an investment in infrastructure.
Sure it costs big coin to make these changes and any shutdown time is nothing but money not being made, but it seems like the massive profits should have been partially reinvested.
How old are some of the production lines you work with and or have seen at some of your refineries?
Recently in Alberta, Petro Canada lost a line on at their refinery and their gas stations were dry for quite some time. Kept fuel prices in Alberta artificially high.
It is hard to plan for break downs but they are running these refineries hard with very little or no redundancy.
Prices of oil and fuel will rebound in short period of time as world supply is dwindling and the cost of producing oil/fuel from non traditional supplies is high. Once the current economic bump in the road is behind us the speculators will take oil prices and run with them again. Current prices certainly reflect how much of the price of oil was driven by speculators.

Profits in crude don't necessarily translate into profits for the refiners. The companies that produce AND refine crude may have done well, though.

I work for an independent refiner in Wilmington but I've worked in 11 different refineries over the past 3 decades including Chevron El Segundo. I was a reliability consultant for a while and bounced around quite a bit.

Regarding the age of the infrastructure, some of it was built in world war II. Most of it has been replaced over the years many times.
Every refiner and pipeline operator has a corrosion monitoring plan. It's the law, you can't operate without it.
The plan typically details every place that will be measured and monitored, how often it will be measured, by whom, and what corrosion allowance is acceptable. If the pipe gets thinner than is acceptable it must be taken out of service immediately. We all do that. Where I work we have an army of inspectors crawling all over the hundreds of miles of piping checking the thickness with ultrasound, radar, and x-ray. They do it constantly.
Why did that refinery lose a line? Was it corrosion? What is defective? Did it freeze? did some brain-dead contractor run into it?
You suggest it failed because it was old. I'd be interested in knowing more about that. Pipes in certain services last a hundred years. Others have to be replaced every 5 years. it depends on the severity of the conditions the pipe sees.

I am curious why you suggest that "big oil" didn't spend more on infrastructure. Please elaborate. Just exactly how much did they actually spend on infrastructure in the past 12 months and how much did you think they should have spent? Since you came to the conclusion you must have some numbers to back that up besides just a hunch, right?

The refinery I work at is relatively small and is owned by a smaller company, but they have dedicated $1.1 BILLION in infrastructure and equipment improvements over the next 5 years for just this one refinery. These are not necessarily improvements to boost production either. Most of them are just to make the place more reliable and safer and more environmentally compliant.

While we're on the subject of "big oil", lets elaborate on those huge profits. We're talking 40%, 30%, 40% net profits, right?
Nope. Not even close.
Try 11% for the pacesetter in the group.
A significant portion of their gross earnings did go to infrastructure, maintenance, and exploration.
The rest belongs to the owners of the company. The shareholders. People with 401Ks and retirement savings plans. That is who owns the big bad oil companies.
People who scrimp and save and manage to stash away a few bucks after the bills are paid. They take that pitifully small amount that they worked so hard to get and they invest it so they won't have to eat dog food when they get old. They would like to get decent return on their investment. 10% historically is what everyone talks about, right?
OK, they are trying to get a 10% return on their investment. For 8 quarters out of the last 400, they manage to get closer to 12% and that bothers some people. They ask why the company didn't spend that money. They seem to suggest that a company that makes 11.8% net profit for it's shareholders (owners) is somehow a bad thing. I don't get that. They are being manipulated by the sensationalistic stories the media puts out hoping to get a rise from people who are too ignorant to know better. They say things like "XOM reports record profits" and "oil company makes biggest profit ever".
They don't say things like "oil company profits look huge but aren't that big compared to sales" or "oil company record profits are still small compared to many other industries".
If they did that it wouldn't sell papers or advertising.

Lets take a closer look to see who owns exxonmobil:

% of Shares Held by All Insider and 5% Owners: ZERO (it's not a few fat cats. It's a whole bunch of very small investors like you and me).

% of Shares Held by Institutional & Mutual Fund Owners: 51%
This is who owns most of exxonmobil:

VANGUARD 500 INDEX FUND
SPDR TRUST SERIES 1
VANGUARD TOTAL STOCK MARKET INDEX FUND
VANGUARD INSTITUTIONAL INDEX FUND-INSTITUTIONAL INDEX
COLLEGE RETIREMENT EQUITIES FUND-STOCK ACCOUNT
FIDELITY EQUITY-INCOME FUND
SELECT SECTOR SPDR FUND-ENERGY SELECT
WASHINGTON MUTUAL INVESTORS FUND
SPARTAN U.S. EQUITY INDEX FUND
VANGUARD SPECIALIZED-ENERGY FUND

Sounds pretty evil to me, until I look closer and figure out that I probably have money invested in a couple of those funds and I'm not getting rich off of them. Why not? At a historical average return of 4% from XOM, I should be as rich as Bill Gates, right?
Nope, Microsoft usually pulls in around 25% net profit.

That makes exxonmobil's one time record 11.85% profit seem kind of puny, doesn't it?
What about the rest of the oil companies who typically earn a small fraction of that?

Here is a quick example of perhaps propaganda touting the record profits from 2005 for oil companies at $60/ barrel. http://www.msnbc.msn.com/id/8646744/#storyContinued
I am one of those small investors who has some of my retirement savings in resources. If I averaged out the last 10 years they would yield exactly what you had said at 10%. The last few years, some of them were (finally) paying off at aprox. 38 to 45%. So not really a hunch but a reality that profits were there and paid out to people (like me) who deserved decent return on the dollar. There were quite a few pretty bad years in there before this peak.
The Petro Canada thing, going from memory I think they first lost their steam plant to some failure then within a month lost a catalyst or catalytic cracking unit? that took them down for another period of time.
It was reported a while back on how much demand has increased on North American refineries, and how little new capacity has been added. It would be my hunch that the proper re investment has not been made.
What percentage of the refiners would you say are independents in your industry?