Gas Pump Prices: Spring 2007 Edition
Yesterday, I was in Cedar Rapids running errands for Mom. I did some shopping at the HyVee on N. Edgewood and then thought to make good on the 3¢/gal. discount at the HyVee gas station. I didn't even look at the pump price before plugging in the nozzle and starting to fill with the 87 octane low-grade gas. Price at the pump: $3.39.9! The manager happened to be on duty so I asked him what was up? Was HyVee gouging to make up the discount? No, he said. His usual terminal in Iowa City was out of gas, so was the terminal in Dubuque and Davenport. He had to take delivery from W. Des Moines. Longer distance, higher price.
Which brings me to the following via The Oil Drum. In senate testimony last week, Paul Sankey of Deutchbank (PDF) said the following:
Read that again. US daily gasoline demand is 22 mb/d. US production capacity is 17mb/d. That's a 5 mb/d shortfall that has to be made up by importing finished gasoline products or out of stockpiles. As the stockpiles get drawn down, spot shortages are going to occur. Spot shortages means, sometimes there will be no gas to be had from the distributors. That will drive prices at the pump wild.
The only way this situation gets fixed is a) to build new refining capacity -- there has not been a new refinery built in the continental US in nearly two decades, or b) lower demand.
How do I handle this in my personal life? We do almost all our shopping for the week in one "mega-shop," usually on Sundays. Trips for incidentals during the week are done during the evening commute home or by bike to the Jewel just five blocks away.
I'm in a line of work where I have to drive quite a bit. Although we use remote access to PC's and servers as much as possible, there are lots of times where face-time with the client is a business imperative or physical interaction with hardware is technically required.
I drive a car that is pretty near the top of the fuel-efficiency stats for piston-engined vehicles, an '05 Toyota Matrix. Lastly, we pass on to the customer full mileage costs for all trips over 5 miles. That doesn't do anything on the demand side, but at least we recover our costs and the transportation costs are not "hidden." Having the cost of energy out in the open is an important first step to dealing with the demand issue.
Which brings me to the following via The Oil Drum. In senate testimony last week, Paul Sankey of Deutchbank (PDF) said the following:
Anybody who blames record high US gasoline prices on "gouging" at the pump simply reveals their total ignorance of global oil supply and demand fundamentals. The real reason for high pump prices is the lack of global gasoline supply relative to demand. Just in the US, overall US refining capacity, at 17 million barrels per day (mb/d), is far below demand at 22 mb/d. In turn, pump prices are effectively set by import prices. With strong demand outside the US on the back of global economic growth and a weak dollar, the era of abundant US oil supply augmented by willing international sellers is dead.
Read that again. US daily gasoline demand is 22 mb/d. US production capacity is 17mb/d. That's a 5 mb/d shortfall that has to be made up by importing finished gasoline products or out of stockpiles. As the stockpiles get drawn down, spot shortages are going to occur. Spot shortages means, sometimes there will be no gas to be had from the distributors. That will drive prices at the pump wild.
The only way this situation gets fixed is a) to build new refining capacity -- there has not been a new refinery built in the continental US in nearly two decades, or b) lower demand.
How do I handle this in my personal life? We do almost all our shopping for the week in one "mega-shop," usually on Sundays. Trips for incidentals during the week are done during the evening commute home or by bike to the Jewel just five blocks away.
I'm in a line of work where I have to drive quite a bit. Although we use remote access to PC's and servers as much as possible, there are lots of times where face-time with the client is a business imperative or physical interaction with hardware is technically required.
I drive a car that is pretty near the top of the fuel-efficiency stats for piston-engined vehicles, an '05 Toyota Matrix. Lastly, we pass on to the customer full mileage costs for all trips over 5 miles. That doesn't do anything on the demand side, but at least we recover our costs and the transportation costs are not "hidden." Having the cost of energy out in the open is an important first step to dealing with the demand issue.
posted by -cman- at 5/19/2007 10:53:00 AM
2 Comments:
Nothing prevented oil companies from expanding or updating current refineries over the past few decades and nobody forced them into closing around 176 refineries of their own accord to, in their own words, "tighten the margins." Running on empty pleases the shareholders, so that is why they do it. [andy rooney voiceover] And how come we still have refineries that can only produce one fuel at a time? :) [/andy rooney voiceover]
You're spot on about chasing the biofuel rainbow looking for a pot of gold though. It will only postpone the inevitable worldwide crunch for oil. Reduced consumption is the answer.
For my part I started with http://www.1000bulbs.com/category.php?category=2086 and always look for http://www.energystar.gov/.
Now if I could just find a decent paying job within city limits.
Actually, you rebut your own argument a bit there. Nothing prevented oil companies from... Running on empty pleases the shareholders. Well, nothing prevented them expanding or updating current refineries, except the dictates of the market.
Companies are going to do whatever they can to maximize profits that's what they do, it's all they do.
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