Posted on 09/08/2003 11:29:16 AM PDT by Brian S
Mon September 8, 2003 01:45 PM ET By Tom Doggett
WASHINGTON (Reuters) - U.S. drivers can expect high gasoline costs through the autumn, with the national monthly pump price not falling below $1.50 a gallon until November, the government said on Monday.
Gasoline costs, which hit a record high of almost $1.75 a gallon two weeks ago, should fall to a monthly average of $1.67 in September, $1.55 in October and then finally drop below $1.50 in November, the Energy Information Administration said in its monthly energy forecast.
Pump prices jumped in August because of strong demand, and at the same time the power blackout closed several refineries and there was the shutdown of a major gasoline pipeline in the Southwest.
"This month, pump prices should begin to recede because many of the local supply problems have been alleviated and the driving season winds down following the Labor Day weekend" the Energy Department's analytical arm said.
Meanwhile, demand this winter for heating oil, electricity and natural gas should be lower, but consumers will be paying more overall to heat their homes with natural gas, EIA said.
The agency said it expects this winter to be normal, which should reduce demand for heating fuels compared to last year's much colder weather.
"We're assuming normal weather, so that's going to be warmer (temperatures from last year) and that means demand is lower," said EIA analyst Dave Costello.
As a result, the season's heating bills should also be lower. The one exception is for natural gas, which is expected to have less demand, but will cost much more to use, according to Costello.
"The natural gas (price) will be enough higher that it will offset the decline in demand for natural gas and the bills will actually be higher," he said.
Because price serves as a rationing mechanism. We simply bought gasoline on the world spot market.
When you demand a zillion gallons of gasoline for immediate delivery, you're going to get soaked.
there was plenty of gas for everyone during the late summer boom, and AAA reports miles driven at all time highs.
Uh-huh. We imported a bunch of gasoline from offshore refinieries, and we paid through the nose for it.
So where is the shortage due to lack of refined material?
It was overcome through the marketplace. The result was that we all paid higher prices.
this idea that oil companies force a price increase to cut down on demand because they don't have enough product is not true, demand was higher then ever, who wasn't able to get gasoline that wanted it?
People unwilling to pay the higher price, that's who.
Also, note that you can't just use any old formulation, anywhere, at any time these days. There's something like 34 different formulations of 87-octane unleaded mandated by the Nanny State of Californication. Pretty soon, the Nanny State will tell everyone to use their local winter formula. And that means that leftover "summer blend" gas will either be left to rot (gasoline DOES rot) or sold overseas (if anyone will take that particular formulation).
Not just that, but they've torn down a refinery near me a few years ago. "Those refineries are ugly smelly things. We can't have that in our back yard! And anyway, the Evil Big Oil companies are gouging us for gas."
I occasionally remind my envormentalist brother if this when he verbally assaults my choice of vehicle. This country's energy infrastructure is reaching the breaking point.
$1.50??? How about $2.10 in San Diego.
We haven't built a new refinery, but I'm pretty certain there have been some expansions of existing plants.
We are, however, to the point where we have to import refined gasoline, especially during the summer driving season.
Well, I've been paying $1.67 for the past two weeks. So, the two of us pay a national monthly average of over $1.50.
If the companies weren't in cahoots with each other, the ones who had more supply on hand would have underbid the others to capture market share. I guess oil companies don't work like airlines, telephone companies, etc. Why is that?
Actually, the problem is that we had to buy a bunch more gasoline than previously estimated, and we needed it delivered right way.
It doesn't matter what the commodity is, if you order a lot of it for delivery on very short notice, it will cost you more than if you order a lot for delivery in several months.
I guess oil companies don't work like airlines, telephone companies, etc. Why is that?
The airlines and telephone companies suffer from overcapacity. The refinery sector suffers from having barely enough capacity for routine operations inside the United States, IF nothing goes wrong.
In my area, gas prices are based on ability to pay. In poorer areas, like mine, gas is always the cheapest, $1.87 today. In more affluent areas, it's more expensive, like $195, or a bit more.
Tip: Buy gas in poorer areas!
They all do. But we haven't built a new refinery in this country since 1968, and we've torn down a bunch, because they're icky, they stink, and they're ugly, so no one wants one in his back yard...but everyone still expects cheap gasoline as some sort of birthright.
California is the worst of the bunch in this regard. We don't want to build more nuclear power plants (because they have the word "nuclear" in the name), they don't want to build more oil or coal-fired plants (because they put out icky stuff), they don't want any more hydroelectric dams built (because they make rivers less wild and scenic), and they don't want any more windmills built (because they're "condor cuisinarts")...but they still expect the damn light switch to work, and the bill to be nice and inexpensive.
Refinery capacity growth hasn't kept up with demand growth. So where we used to have a buyer's market, we now have a seller's market--and the buyers are (a) unwilling to make the changes necessary to make it a buyer's market and (b) resent the sellers.
At some point, Californication is going to outlaw "profit" because only "greedy people demand profits."
It would seem advantageous to some companies to have their own refineries, so they can capitalize on sporatic short supplies.
Yeah, well, try actually BUILDING a refinery in this country. No one will let you. EVERYONE will tell you to build it somewhere else. Everyone wants gasoline; no one wants the production facility in their neck of the woods.
They're all true, and some stuff you haven't heard.
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