16 February 2012

Gasoline: $5 per gallon this year ?

From a story in the Los Angeles Times:
U.S. motorists have seen the national average for regular gasoline rise above $3.50 a gallon in just three different years, but it has never happened this early.

The national average hit $3.523 a gallon, the Energy Department said Monday, up 4.1 cents from a week earlier. Analysts said the early price shocker is likely a sign that pain at the pump will rise to some of the highest levels ever this year...

"There's a chance that the U.S. average tops $4 a gallon by June, with some parts of the country approaching $5 a gallon."..

This time, the dubious milestone was hit weeks before prices usually rise because of refineries typically shutting down for spring maintenance, and weeks before the prices rise again when states switch from less expensive winter blends of gasoline to more complicated and more expensive summer blends...

There are plenty of reasons for the high prices, and lots of reasons to expect a big price surge in the spring, said Tom Kloza, chief oil analyst for Oil Price Information Service.
"Early February crude oil prices are higher than they've ever been on similar calendar dates through the years, and the price of crude sets the standard for gasoline prices," Kloza said.
In addition, several refineries have been mothballed in recent months, he said, and some of those refineries "represented the key to a smooth spring transition from winter-to-spring gasoline." 
Few things put the brakes on the U.S economy more effectively than rising gasoline prices.  Factor in the Israel/Iran tension and this being an election year in the U.S. - should be interesting.

18 comments:

  1. Interesting? Yeesh. At $5 a gallon, I begin to seriously contemplate riding my bicycle to work. Which, in truth, wouldn't be so bad unless it rained.

    ReplyDelete
  2. This is one of the biggest economic separations between Americans and Europeans. Here in Portugal, our regular unleaded gas is currently about $8.60 per gallon, with an estimated 30% price increase if Iran goes through with its threat to suspend oil exports in retaliation for European sanctions. And all of our major freeways are toll roads. A round-trip freeway drive to Lisbon and back (about 3 hours each way) costs us $52 in tolls plus $100 for the single tank of gas. This is about the same time and distance for a trip I frequently made back in the US, between my home town and the nearest big city, except back there I paid no tolls and a tank of gas (even at $3.50 per gallon) was less than $45.

    A train ticket to Lisbon, on the other hand, costs $60. That's round trip, first class on the high speed train (which takes the same amount of time as driving). So for up to two people, it's cheaper to take the train, not to mention safer, more comfortable, and far less hassle (finding parking in Lisbon is a nightmare). It's not until there are three people in the car that driving becomes economical.

    The high cost of car travel here really, really changes people's behaviors and choices. It also changes the entire transit infrastructure. Car dealers sell almost no SUVs or trucks -- those are considered luxury items that few can afford to buy or operate -- and a lot of smartly-designed, fuel efficient cars. Roads aren't designed for big, wide vehicles and neither are towns or parking areas. The average American pickup truck would not even fit in the entry of an underground parking garage; in fact, I once saw one jammed in the curve of just such an entrance. Since town and city parking is such an almighty bitch, most people prefer to walk or take mass transit. Therefore, towns and city centers are laid out for pedestrians, not cars. The number of pedestrians in any given Portuguese town (and in fact every European town or city I've visited so far) is shocking to an American. So is the lack of obesity.

    I do miss cheap American gas and being able to hop in my car and drive all day long on two $20 bills. But I hate what that cheap gas has done to my birth nation. Personally I think the US could do with some $6/gallon gas, because that is the only thing that will ever spark some real change.

    ReplyDelete
    Replies
    1. Part of the complexity of the situation arises from the fact that the gas price affects not just personal transportation, but commerce as a whole, because so much material is transshipped around the country. $6 gas may change driving habits and auto choices, but it also makes it more expensive for the North Carolina furniture maker to sell chairs in Illinois, and for Wisconsin cheese to be sold in Oklahoma. I suppose ultimately that's good in terms to stimulating localism, but abrupt changes are hard to cope with because local infrastructure/production may not be present or adequate.

      Delete
    2. One US transportation issue is the size of the country and the distance between smaller rural communities (think the Dakotas, Montana, Idaho, New Mexico, and so on) that makes it more difficult to provide mass transportation that reaches to more than just the few major cities in these states and would be cost effective.

      That said, I'm strongly in favor of more mass transportation in the majority of the US if it can be provided in a time efficient manner and at a cost comparable to or less than automobile travel. But I hate driving and automobile travel.

      CCL

      Delete
    3. The UK is coasting along with the worst of both worlds - the cheapest petrol to be had in my city is over $9 a gallon, and public transport is expensive too. I decided to take the bus to a couple of places today rather than the car, and worked out that even with petrol that price it still would have been cheaper to drive.

      Delete
  3. For a nation that has spurned efficient mass transit systems in favor of a hugely inefficient and oil dependent asphalt and automobile system this is going to be catastrophic.

    ReplyDelete
  4. To see the US in a smaller scale, visit New Zealand....

    ReplyDelete
    Replies
    1. By my calculations here in NZ we're already at 6.6 USD per gallon (this is for 91 octane). Or 2.10 NZD per litre as we read it.

      I remember a few years ago when it was first approaching the psychological $2 per litre mark. The newspapers were doing surveys asking if people would stop driving to work and start cycling or taking the bus. The response seemed to indicate we would have a lot less cars on the road, but it never really happened. People just kept on driving.

      I think you'll be surprised at how little the behavior of people changes when you reach $5 per gallon, mostly it will be the people for whom the increase is actually crippling. A few other people may take up cycling or public transport where the infrastructure supports it. But mostly people will continue to drive.

      Delete
    2. It's possible the behavior will not change - but if that's the case, the increased expenditures on gasoline will siphon money out of people's "discretionary" funds, leaving less for other purchases, thereby dragging down the retail economy.

      Delete
    3. I agree. I wasn't saying that I didn't think it would have an effect on the economy. I was saying I'm not sure people will really attempt to do anything useful about it. Unfortunate as that is.

      Delete
  5. It couldn't be manipulation by the oil industry in an attempt to unseat a president unfriendly to their agenda? When they say, "several refineries have been mothballed in recent months," coupled with the fact it is an election year, it makes me suspicious.

    ReplyDelete
    Replies
    1. That was going to be my observation. I don't believe in coincidences. Not that there's a conspiracy, per se, but there does seem to be a correlation...

      As long as I don't have to get anything other than groceries and am willing to pay higher prices due to low volume for both food and toiletries, I can walk to the most essential services save medical in my little hamlet. However, my doctor is 4.5 miles away, the closest hospitals are 13.5 and 19 miles away, and the closest retailers where I could really help to keep the economy rolling are between 30 and 39 miles away depending on direction. The cost of gasoline hurts my congregation because it directly affects the IRS reimbursement rate - and as much as I wish I could donate any work milage to the cause, the cost of gas makes that impossible.

      Delete
  6. Before we go all conspiracy theory here, people should take a look at this: http://inflationdata.com/inflation/inflation_rate/gasoline_inflation.asp

    The link above shows that the price of gas has generally gotten cheaper over the last century. And as Fletcher points out above and anyone who travels knows, gas is quite cheap in the U.S. compared to most of the World. Thus, throughout the last century, it has made perfect sense for the U.S. to invest in roads & automobiles & trucks -- instead of rail.

    Watch this: http://www.youtube.com/watch?v=F6pUMlPBMQA

    -Chuck

    ReplyDelete
  7. Of course it is cheaper here in the US of A = we subsidize, why wouldn't it be?
    Want to drill in an unfriendly area? We've got you covered with free military protection. Spill one of the biggest man made disasters? Go ahead a pay some of it now, we'll let you write it off later. The same corporations that cry for the free market lobby for legislation that protects them from alternative energy sources.
    If you consider how expensive gas SHOULD be - since it is volitile, shipped half way around the world, repackaged numerous times (drill site silo, portside silo, container ship, portside silo, refinery silo, fuel trucks, gas station), and tremendous ecological damages of which only some are regulated against... 5 bucks is a bargain and I'd pay more, too.

    ReplyDelete
  8. Gas is $4.15 a gallon where I live, down from about $4.65 this summer. We may well see gas over $5 a gallon this summer. It may affect how often I go on aimless sightseeing drives, or how much I go hiking up country. No chance for mass transport in the Alaskan wilderness, and little cars don't cut it for lots of people here. I'm planning on biking to work more this summer (11 miles each way), but not for financial reasons. Life goes on, I guess.

    ReplyDelete
  9. i kindly direct you to an explanation of the most infuriating kind; http://www.reddit.com/r/politics/comments/pwbpn/guess_what_law_goes_into_effect_the_same_exact/

    ReplyDelete
    Replies
    1. Yeah. I noticed that thread this morning; it's just too gloomy to blog on a nice sunny day here...

      Tx, caferacers66

      Delete