Skip to comments.America's oil boom and the price at your pump
Posted on 05/13/2014 6:52:05 PM PDT by re_tail20
After a harsh winter, it's time to get out and hit the open road. So what's with $4-a-gallon gasoline? North American oil production is on the rise, so you might have expected a break at the pump by now. Yet gas prices remain stubbornly high.
What happened to the homegrown energy boom? Wasn't North Dakota supposed to be America's Saudi Arabia? How come gas isn't back to $2 a gallon?
The boom is real, and North Dakota, along with states and Canadian provinces, is producing a gusher of oil. The North American energy bonanza now underway is helping the U.S. economy to pull out of the doldrums. It helped ease the pain of Chicago residents during the cold winter, since stepped-up natural gas production kept heating bills lower.
But gasoline, alas, is not going to be half price anytime soon, if ever. America's oil boom is delivering broad benefits, but not necessarily at the pump.
The good news is that oil analysts say gas prices probably peaked for this year in late April. Based on today's market conditions, prices should decline by a nickel or a dime over the next month. The U.S. Energy Information Administration expects a gallon of regular unleaded to sell for an average of $3.48 nationwide in 2014 and $3.39 in 2015. That's a steady, significant decline from $3.63 in 2012 and $3.51 in 2013. Chicago prices generally run higher than the national average.
Prices bounce around during the year. It's not unusual for prices at the pump to rise in the spring, ahead of the summer driving season. That's due in part to refineries switching to a different formula for gasoline that meets clean-air requirements during the warm-weather months...
(Excerpt) Read more at chicagotribune.com ...
“Even as America pursues free-trade deals in Europe and Asia, its energy policy is built on a glaring inconsistency. Federal law allows the export of gasoline, diesel and other refined products, but not crude oil. That ban began in 1975, after the Arab oil embargo. It continues to this day, despite the harm it does to America’s credibility with its trading partners and the distortion it creates in the U.S. economy.
For years, the export ban didn’t matter much because the U.S. was by far the world’s biggest importer of oil. Now that North America is producing much more energy, the ban does matter. If shale-oil production continues to expand as forecast, domestic crude will be a glut on the U.S. market, reducing the incentive to maintain that production.”
I didn’t know that, for the last forty years, it’s been illegal for us to export crude oil. This should be repealed.
Production may be at an all time high, but it doesn’t matter if the ways to deliver the oil to be refined is being restricted from getting to the refineries.
How much of that price per gallon at the pump is being siphoned off to the fed/state/local government?
If crude oil exports are permitted, you can expect the price of gasoline here in the U.S. to go through the roof. As the U.S. dollar loses its credibility as a global reserve currency it has lost a lot of value over time, which means that on an open market we would have a harder time paying global prices for our own oil.
Could you please say that again in English? Canadian English is somewhat foreign.
Double and triple, as the price is driven sky high, due to the flood of government paychecks at the cash registers. (including elsewhere such as the grocery store)
Maybe we can drink it
For whatever reason, even with the oil trade embargo in place, which according to the editors should lead to a glut of oil in America and downward pressure in price, the oil companies are still pumping it out of the ground.
The editors suggest we should get rid of the oil trade embargo so that oil companies will continue to pump oil out of the ground even with a supposed glut.
This is shear contradictory nonsense.
If we repeal the ban to be good libertarians then that is just so that our libertarian scruples won't be hurt. It might also help in the long term to keep the oil companies pumping out oil.
Meanwhile, according to the editors, there should be a glut of oil in the American market and gas prices should be plummeting.
The fact that they are not is quite suspicious.
This is reflected in an unusual gap between the market prices for West Texas Intermediate oil (the North American benchmark price) and Brent Crude oil (the European benchmark price) in recent years. Historically, WTI has been more expensive than Brent. But WTI is about 5% to 6% cheaper than Brent right now because of the pipeline capacity and refining capacity factors I described above -- and because WTI cannot be exported from the U.S.
Lift the cap on the export restrictions, and WTI suddenly becomes more expensive because then it would be available to buyers all over the world. In effect, the U.S. would increasingly resemble a Third World country where more and more of our own citizens wouldn't be able to afford the crude oil that we export to other nations.
This is the REAL driving force behind the Keystone XL project, by the way. It has nothing to do with providing more oil for U.S. consumers, and has everything to do with getting more pipeline capacity from the Great Plains and western Canada down to the Gulf Coast ... to be refined and exported.
This is the only English I know -- so if you can't understand it, then too bad. I'm not Canadian, either.
Federal tax on a gallon of gas is around 42 cents. The rest depend on the state. I believe the highest if 51 cents but I don’t remember the state.
Per gallon taxes are close to 20% of the price.
If the demand is greater than the supply, as your first paragraph describes, because the supply is constrained then how are prices artificially low? Prices rise when demand outstrips supply.
Ya take off der ya hoser! ;-D
The oligarchs running the show can’t even find decent enough editors to tell us peons believable lies.
The U.S. energy industry can legally refine gasoline and diesel fuel for export, but for that market foreign consumers and U.S. consumers face the same constraints. If U.S. pipeline capacity and U.S. refining capacity are constrained, then it doesn’t matter if you’re refining the fuel for U.S. consumption or for export. All of the crude oil is using the same pipelines and refineries, regardless of where the fuel ends up being sold.
Supply is much greater than demand for the first segment, involving the extraction of crude oil. The capacity of the North American energy sector to produce oil exceeds the "demand" for oil at the next two steps in the supply chain (pipeline transport to refinery, and refining for final consumption).
The constraints are in the last two steps of the supply chain: pipeline transportation and refining.
Want to bet who this rag would be blaming if this were 2007?They expended a lot of gobbledygook here.
And what none of these media outlets ever point out is that the value of the U.S. dollar relative to other currencies is probably the single biggest factor in our fuel prices. Fuel was very cheap in this country in the late 1990s when the U.S. dollar was trading at all-time highs against most major currencies.
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