General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsGas Could Easily Go To $5 And Crush The National Economy
Everyone is talking about gas this past week, and for good reason. The price at the pump has been tearing higher. According to the papers this morning the national average price for regular gas is $3.65. Unfortunately for me, the price the media is spouting has nothing to do with my cost. As of this morning, my local gas guy is charging $4.85 for premium fuel, and thats the stuff my car uses.
I doubt the numbers being bandied about regarding prices at the pump actually reflect the real economic consequences.
I'll probably take some flack for this, but I believe it's true. The only thing that matters is the price of gas in California and New York.
The USA has evolved into a two-tier gas market. The supply of crude from Canada and the Bakken fields has created a lower cost of supply for the central portion of the country. This differential is most notable in the market spread between WTI (a futures contract that settles physical delivery in Oklahoma) and LLS (Louisiana Light Sweet Crude) - the pricing of crude for the big Gulf refineries.
Read more: http://www.businessinsider.com/bad-news-gas-could-easily-go-to-5-and-that-would-crush-the-national-economy-2012-2
We need pipelines from Canada/Midwest to New England and MidAtlantic states, and we need more refinery capacity there. The proposal to reverse the pipelines from Montreal to Portland and bring Canadian oil to the coast should be expedited.
We also need to simplify the gasoline blending requirements to reduce refining costs and dead time while refineries change from winter to summer blends.
Initech
(100,080 posts)But pipelines aren't going to do shit to the fuel prices. We need to make speculation trading illegal. That's what will curb the prices.
... you need to make the Federal Reserve stop debasing the dollar by 'printing' and handing them out to bankers.
No country has ever gotten away with massive debasement of their currency and we aren't either. Why would an oil producer trade his precious commodity for a piece of paper that is being trashed monthly?
Of course, the Fed can't stop printing now, so expect oil prices to rise continually, with only a world depression (massive falling demand) to put a temporary stop to it.
The fact that all of the easy to get oil has been got isn't helping either.
NashvilleLefty
(811 posts)The CFTC is trying to implement new rules, but they are being sued by Wall Street.
Trying to blame it on The Fed is delusional Ron Paul bullcr@p.
sendero
(28,552 posts).. it is not. Speculation is part of it but printing money out of thin air in huge amounts is even more.
Why do you think many oil producing are actively trying to get away from the dollar?
Why do you think that the ones that come close to success with that find themselves in a war or dead (Iraq, Quadaffi, and soon Iran).
You apparently have NO IDEA what the Fed is currently doing and what the long term effects will be. Get a clue already.
New Yawker
(62 posts)and place in supermax prison for no less than 25 years.
Let the non-violent drug offenders go free to make room.
And make speculation a felony offense.
Initech
(100,080 posts)seeviewonder
(461 posts)FarCenter
(19,429 posts)It is delusional to think that the US can control the price of oil.
OffWithTheirHeads
(10,337 posts)FarCenter
(19,429 posts)And Prime Minister Cameron would take a very dim view. Unlike the Iranians, the UK does have nukes.
brentspeak
(18,290 posts)It's not rocket science.
appleannie1
(5,067 posts)CAPHAVOC
(1,138 posts)Nixon tried that. Never works. The price would never go down. Speculation goes both ways.
Nye Bevan
(25,406 posts)Same sentence?
seeviewonder
(461 posts)msongs
(67,417 posts)napoleon_in_rags
(3,991 posts)Gas comes from oil like applesauce comes from apples. The gas is made from crude oil in refineries in the US, but the oil comes from overseas. Look here:
http://www.eia.gov/dnav/pet/pet_move_wkly_dc_NUS-Z00_mbblpd_w.htm
Under the row "exports", second row down "crude oil". 37. Compare that with the imports at the top. America is totally dependent on oil imports.
bullwinkle428
(20,629 posts)we're exporting these days.
In addition, if you make the conscious decision to buy a car that requires premium fuel, you have to know that you're always going to be paying more than the average bear for a tank of gas. I've done the same kind of number crunching when looking at new vehicles. Yeah, the VW TDI easily does 50 mpg on the highway, but do I want to pay an extra 80 cents per gallon for that diesel? It essentially cancels out the fuel savings I get over a gas-fueled 40 mpg car.
FarCenter
(19,429 posts)We imported 845 thousand barrels per day of gasoline, mainly in the form of gasoline blending components, and we exported 616 thousand barrels per day of finished gasoline.
The larger export of finshed product is distallate fuel oil (diesel) where we imported 122 kbpd and exported 1124 kbpd. This reflects a market for diesel in Europe where diesel cars are far more popular than in the US.
Additionally, all the excess refining capacity is in the Gulf Coast. Refineries have been closed in the New York and Philadelphia area, so what happens is that gas is imported to the East Coast and West Coast and a little less is exported from the Gulf Coast to the Carribean and Latin America.
We've been really good at exporting the idea of free markets to other countries. They have figured out how to play that game better than we do.
KamaAina
(78,249 posts)Well, if more refining capacity is truly needed, wouldn't someone just reopen them? Much cheaper and easier than siting and building a new one.
FarCenter
(19,429 posts)Conoco to sell or shut Pennsylvania refinery
http://www.reuters.com/article/2011/09/27/us-conocophillips-trainer-idUSTRE78Q5R320110927
"We are very disappointed to hear the news that ConocoPhillips will permanently close its Trainer, Pa. refinery in six months if a buyer is not found," said United Steelworkers Union International Vice President Gary Beevers in a release. USW represents 215 workers at Trainer.
Over the last year, Sunoco has shut down its 145,000 bpd Eagle Point, New Jersey, refinery and PBF Energy has bought Valero Energy's (VLO.N) Paulsboro, New Jersey and Delaware City, Delaware, refineries.
Additionally, Hovensa LLC in the U.S. Virgin Islands, reduced the input capacity of its St. Croix refinery by 150,000 bpd. Western refining shut down its 66,300 bpd Yorktown, Virginia, refinery
The article also identifies:
Sunoco selling or closing Marcus Hook and Philadephia 500,000 bpd refineries,
Once closed, the refineries are never rebuilt.
KamaAina
(78,249 posts)Why, then, build a controversial pipeline from Canada right through the Midcontinent to the Gulf?! This is just surreal.
FarCenter
(19,429 posts)Conoco Philips sold its 50% of the Seaway Pipeline to Engridge and Enterprise. Since Conoco Philips has refineries in the Midwest, it did not have an interest in making Cushing OK oil more expensive. But they have now been bought out.
With the reversal of Seaway, the price at Cushing should go up to the world market price for seaborne oil. However, that is some months away.
Enbridge and Enterprise Agree to Reverse Seaway Crude Oil Pipeline From Cushing to U.S. Gulf Coast
CALGARY, ALBERTA and HOUSTON, TEXAS--(Marketwire - Nov. 16, 2011) - Enbridge Inc. ("Enbridge" (TSX:ENB) (NYSE:ENB) and Enterprise Products Partners L.P. ("Enterprise" (NYSE: EPD) today announced that they have agreed to reverse the direction of crude oil flows on the Seaway pipeline to enable it to transport oil from Cushing, Oklahoma to the U.S. Gulf Coast. Pending regulatory approval, the line could operate in reversed service with an initial capacity of 150,000 barrels per day by second quarter 2012.
"The Seaway Pipeline reversal provides an early opportunity to offer Gulf Coast access to midcontinent producers and other crude oil shippers," said Patrick D. Daniel, President and Chief Executive Officer, Enbridge Inc. "A Seaway reversal will provide capacity to move secure, reliable supply to Texas Gulf Coast refineries, offsetting supplies of imported crude."
Michael A. Creel, President and Chief Executive Officer of Enterprise's general partner, said, "We congratulate Enbridge on its agreement to purchase a 50 per cent interest in Seaway. We believe that reversing the direction of crude oil movement on Seaway and the construction of additional infrastructure will accelerate access to Gulf Coast markets, reduce transportation costs, improve both producer and refiner economics and hasten the development of North America's crude oil reserves."
Following pump station additions and modifications, anticipated to be completed by early 2013, the capacity of the reversed Seaway Pipeline will be up to 400,000 barrels per day in mixed service. Enbridge and Enterprise expect that the reversed Seaway pipeline will be fully contracted. The partners anticipate conducting an open season to validate shipper support for an expansion of Seaway, through looping or twinning.
After reversing the direction that crude oil flows on the 500-mile (805-kilometer), 30-inch diameter, long-haul pipeline, Seaway will deliver crude from Cushing into the Houston-area market by utilizing existing affiliate and third-party pipelines as well as its Texas City local pipeline system. Enbridge and Enterprise plan to build a 45-mile (72-kilometer) pipeline that will link Seaway directly to Enterprise's ECHO crude oil storage terminal located southeast of Houston. This will provide shippers with enhanced connectivity and more efficient transportation to the Houston refining market. Additional investment required by the joint venture partners to reverse the line and construct supporting lateral and related facilities is expected to be approximately $300 million.
http://www.marketwire.com/press-release/enbridge-enterprise-agree-reverse-seaway-crude-oil-pipeline-from-cushing-us-gulf-coast-tsx-enb-1587719.htm
Historic NY
(37,451 posts)Obama should just flood the market with US oil reserves and then get the Commodities Futures Trading Commission off their asses.
Zalatix
(8,994 posts)that drives up prices here.
Spider Jerusalem
(21,786 posts)That won't do any good, over half on US oil consumption comes from imports. And oil is traded globally; what's the US CFTC going to do in London, exactly?
dogknob
(2,431 posts)Nye Bevan
(25,406 posts)I appreciate the environmental issues. But I'm more concerned about folks having to choose between buying gas and eating.
Hugabear
(10,340 posts)Do you feel the same way about fracking? That it's more important that we extract oil through whatever means necessary, and completely disregard the damage it does to the environment?
Nye Bevan
(25,406 posts)than I am about hungry human beings.
Hugabear
(10,340 posts)Where do you think our food and water come from? How about the air you breathe?
Thank you.
nadinbrzezinski
(154,021 posts)and humans?
Dirty water and air that will kill the frog will also kill humans.
I got a better solution... GREEN technologies, wake up to peak oil and DO something about it.
Otherwise, this oil based civilization WILL crash.
Arugula Latte
(50,566 posts)Do you not have a clue as to how all air, water, land, animal and plant systems are interwoven?
Zalatix
(8,994 posts)How much good will cheap energy be in the face of a global famine?
NickB79
(19,253 posts)How much corn, soy and wheat do you think we'll be growing when the kind of drought we just saw in Texas expands across half the Great Plains?
Nye Bevan
(25,406 posts)http://www.csmonitor.com/USA/Politics/monitor_breakfast/2011/1005/Interior-secretary-Fracking-can-be-safe-and-responsible-VIDEO
Is Obama's Secretary of the Interior full of shit? Do you think he should be fired?
Hugabear
(10,340 posts)Fracking has been proven to be very harmful.
Do you also believe the myth of "clean coal"?
MadHound
(34,179 posts)The pipeline is simply being built so that Canadian oil can reach a better port to ship it to China.
Why should be ruin our environment for Canada's sake?
yellowcanine
(35,699 posts)more than making up for the reduced demand for gasoline in the U.S. Refiners can get a higher price by exporting gasoline. That is what is pushing up the prices. There is actually a glut of crude oil right now in the U.S. so an operating Keystone Pipeline would do nothing.
FarCenter
(19,429 posts)Gasoline exports are about 620 thousand barrels per day.
Gasoline imports are about 700 thousand barrels per day.
DFW
(54,405 posts)And here in Germany, we don't pay anywhere near what they pay over in France or England.
Plus, the environmental guarantees that a huge amount of our nation's drinking water supply and
clean water for agricultural use will be 100% protected are not there. People can't eat if they have
no clean water with which to grow their food. Don't build the pipeline. Not under present circumstances,
anyway.
DCBob
(24,689 posts)Most of the rest of the world pays much more as you have noted in Germany.
Thanks for the reality check.
Nye Bevan
(25,406 posts)If we all lived in Montana, it would be less of a problem.
DFW
(54,405 posts)Germany is one of the cheaper countries in the EU for gasoline.
magical thyme
(14,881 posts)and come back to you, at least in part, in support and safety net services that we don't get here in the US?
DFW
(54,405 posts)A huge amount of that is government taxes. One ridiculous part (in Germany) of the tax law
adds the price of the gasoline plus the mineral oil tax, and then adds VAT onto the sum of the
two, in other words, you pay tax on the tax, and it's STILL cheaper than in France or the UK.
The mineral oil tax is used most for road maintenance and improvement. The VAT on top goes
partly to Brussels which then returns part of it to Germany, and THAT part is used for support and
safety net services that we lack in the USA.
magical thyme
(14,881 posts)I've read that in rural areas of the heartland, we are turning once-paved state roads into dirt roads because they can't afford to re-pave them.
I remember parts of Massachusetts seeming like one humongous pothole.
So mostly no could be headed toward more yes than recognized
FarCenter
(19,429 posts)With all the refinery closures in the midAtlantic, the asphalt has to be shipped from the Gulf Coast. Probably barged up the intracoastal waterway?
magical thyme
(14,881 posts)here in Maine we get a lot of stuff from Canada.
FarCenter
(19,429 posts)But I don't think their output is enough to repair highways, roads, streets, etc, throughout the Boston-Washington area.
Of course, much road repair is being done by grinding off and recycling the old asphalt.
Building of new roadways in new subdivisions and adding lane miles to existing highways is not being done so much.
We should stop buying land for "open space preservation" and let the developers and speculators be stuck with their undevelopable land in the outer suburbs.
magical thyme
(14,881 posts)they'll just build private roads, sell fake communities and then abandon them to become falling apart messes for the rest of us to clean up.
DFW
(54,405 posts)Your roads are one VERY vital part of your economic existence. Germany recognizes that,
and spends a fortune or road upkeep. So, in the sense that roads are vital for the well-being
of the country, then, yes, the road taxes do go toward the general welfare of the country.
CatholicEdHead
(9,740 posts)The locals end up being too cheap and just adapt to gravel roads. If you look around other rural towns you will find deterioration in them too as if you do not invest in the roads, you do not invest in town. There is so much short sighted thinking and just plain cheapness in rural areas.
marmar
(77,081 posts)The situation is very different here.
You'd think that with their dense network of local rail, light rail and public transportation, that places like
Germany and Holland would not be as dependent on motor vehicles as we are.
But it's not the case. Just try and get in or out of any major metropolitain area anywhere in Western Europe
at rush hour by car, and it'll make the traffic at the Lincoln Tunnel at 5 PM seem like a Kansas cornfield after
harvest season.
Snake Alchemist
(3,318 posts)DFW
(54,405 posts)My wife needs half an hour if she leaves by 6:30 AM and an hour if she leaves an hour later, and
two hours if by public transportation because there is no direct route from where we live to where
she works. I need 15 minutes to get to the airport, or 20 minutes to get downtown if I leave before
6 AM, but over an hour if I leave after 7:30. But since I work in a different country almost every day, I
sometimes need four hours to get to work, combining car/taxi, train/plane and public transportation
once I get to the city I have to be in that day.
The ones to really pity are the ones in suburbs of big towns like Hamburg, München, Frankfurt or
Berlin. To get into town by car at rush hour can take 90 minutes easily. Same goes for London,
Paris, Brussels. The whole of the Netherlands can be one big traffic jam during the week.
Snake Alchemist
(3,318 posts)I spent a lot of time in Germany years ago when I used to work for a company out of Bamburg. One of the things that amazed me was that I would meet a lot of twenty-something girls from places like Munich and the surrounding towns that had never been to Berlin. Just astounded me.
DFW
(54,405 posts)So getting in and out of there is probably way easier than up here in the Rheinland, where Köln to Düsseldorf to Duisburg to Essen to Bochum to Dortmund is almost one big city. I've heard it's a very petty town, too, but I've never been there.
My wife's commute is about 35 Km, but not along any Autobahn route. Mine are more complicated. It's now 5:50 AM here in Düsseldorf, and I have to be in Brussels by 10, and back here by 2:30 PM. Tomorrow, I have to be in Barcelona. You get the idea.
There is still quite a lot of provincial thinking in Europe, and you'd be amazed at the number of people who think that a major city five ours away by train was on the other side of the world, whereas the person sitting next to them might commute from Stuttgart to Singapore and back every month and not think it was a big deal.
Marrah_G
(28,581 posts)There are a couple reasons why. First reason is the size and infrastructure. Much of America was populated after cars became the norm. Most people outside of cities cannot get to work or even shopping centers without one. Also there are many taxes on gasoline in Europe that help to fund social programs that we pay out of pocket here.
If gas goes to 5 dollars a gallon here, the working poor are the ones that will be hurt the most. Cities have become to expensive to live in. Outside of cities, public transportation is either non existent or severely limited.
In my case I live next to the commuter rail and work next to the same commuter rail. Unfortunately, I cannot take that train to work because it does not stop in the town that I work.
DFW
(54,405 posts)Take western NJ, for instance. Plans were made for widespread commuter rail lines almost a century ago.
They were trashed by influential oil barons like the Rockfellers, who had every interest in Americans
depending on oil for everything.
As for shopping centers, most people here can't get to one without a car either, and American-style
shopping centers are growing in popularity, to the detriment of the European way of life. The working
poor here often pool resources with one car serving for several families. There is even a popular crime
show here about a private detective who always takes on clients with little money, and he can't afford
his own car, so he is always borrowing cars from friends who can ill afford to be without them.
The taxes on gas here go for road maintenance, not social programs. Those are funded from other revenues.
Marrah_G
(28,581 posts)Spider Jerusalem
(21,786 posts)£1.36 a litre, average (US$8.14 a gallon).
lunatica
(53,410 posts)Snake Alchemist
(3,318 posts)Number one being that it will encourage people to move closer to the cities and reduce the endless sprawl that we Americans seem to love.
Nye Bevan
(25,406 posts)No impact on one-percenters in Manhattan's Upper East Side. Devastating for rural New Englanders and Westerners who are forty miles from a good supermarket.
What exactly would you like the price of gas to be? Is $5 high enough for you? Or would you like it to be $10? Or $20?
Snake Alchemist
(3,318 posts)I do think a gradual rise would be better than a sudden jump though.
FarCenter
(19,429 posts)By now we'd have taxes at 3 or 4 dollars per gallon like the rest of the developed economies, and we'd have a much more energy efficient economy.
KatyaR
(3,445 posts)na
FarCenter
(19,429 posts)Nye Bevan
(25,406 posts)On a diesel-powered tractor?
FarCenter
(19,429 posts)Most food was grown on the farm. A potato field, orchard, and garden provided much of our fruits and vegetables which were canned and frozen. Flour, sugar, and salt were bought in large quantities. A steer, a couple of hogs, and few dozen roosters were raised and slaughtered each year.
Zalatix
(8,994 posts)due to the demand outstripping the supply. You can howl at that all you want but that's like fighting gravity.
We simply have to deal with it or find an alternative.
Sen. Walter Sobchak
(8,692 posts)Sounds like a winning proposal to me... if your goal is a public lynching for every proponent of the said policy.
Snake Alchemist
(3,318 posts)moparlunatic
(82 posts)If it gets people out of their cars I hope it gets as high as Europe.
ananda
(28,866 posts)More mass transit, and more electric cars.
ibegurpard
(16,685 posts)...from current high and escalating gas prices. Because we wouldn't see the results of that for a long time. However, it might ease fears on the markets which may bring prices down. Which shows that the problem is being caused by speculators in the first place.
FarCenter
(19,429 posts)If you take those off the table, the price comes down immediately.
ibegurpard
(16,685 posts)which seems to me to give us an opening for why we should be arguing for increased regulation on commodities speculation and not just flood the market.
FarCenter
(19,429 posts)The price for imported oil is set by the prices for Brent, Bonny Light, Dubai, and other internationally traded crudes. These prices, which tend to follow Brent, are what determine the price of imported crude oil. The price of imported crude sets the price into refineries on the US coasts.
The cash settlement price for Brent is established by Platts, based on their assessment of prices paid for cargoes at Brent and at a few other points in the North Sea.
http://www.platts.com/Products/crudeoilmarketwire
Although they are a subsidiary of McGraw Hill, it is doubtful that the US govt would have much control over them.
Global Network
Platts employs a total staff of more than 900, and maintains a network of correspondents spanning the globe. It has more than 15 offices in key cities, including major energy centers such as London, Dubai, Singapore and Houston, and global business centers such as Sao Paulo, Shanghai and New York, where its headquarters is located.
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Platts publishes news, research, commentary, market data and analysis, and more than 9,000 price assessments daily that are widely used as benchmarks in the physical and futures markets. Its products and services include real-time news and price information; end-of-day market data; newsletters and reports; geospatial data and maps; conferences; and a weekly television program broadcast in the US and online.
In addition, Platts serves customers through two business lines that operate under their own well-established brand names: The Steel Index (TSI), a price information specialist which compiles indexes through the collection of transaction data from industry participants, and BENTEK Energy®, a specialist in natural gas fundamental market data analysis.
taught_me_patience
(5,477 posts)Maybe we ought to self-reflect on our own consumption levels before building more pipelines.
RBInMaine
(13,570 posts)MadHound
(34,179 posts)That it is our food supply. If the price of gas goes up here, it will hurt you even more. No gas, no farms. No farms, no food.
FarCenter
(19,429 posts)Since Americans are rather obese, a little decrease in the food supply and a shift away from highly processed to basic foods will be good for us.
The percentage of energy that goes into agriculture is small, compared with other things like travel to attend sports events and religous services, so it is really not in danger. Plus, one of the major energy uses by agriculture is the production of fertilizer from natural gas, which is rather cheap right now.
unkachuck
(6,295 posts)....as long as we have a corrupt government that refuses to control its' economic system, the oil monopoly and the wall-street casinos will continue to put the American economy and consumer at risk....
NickB79
(19,253 posts)Alrighty, any other RW talking points that were missed?