Gas prices are highest ever for this time of year

Gasoline prices have never been higher this time of the year.

At $3.53 a gallon, prices are already up 25 cents since Jan. 1. And experts say they could reach a record $4.25 a gallon by late April.

“You’re going to see a lot more staycations this year,” says Michael Lynch, president of Strategic Energy & Economic Research. “When the price gets anywhere near $4, you really see people react.”

Already, W. Howard Coudle, a retired machinist from Crestwood, Mo., has seen his monthly gasoline bill rise to $80 from about $60 in December. The closest service station is selling regular for $3.39 per gallon, the highest he’s ever seen.

“I guess we’re going to have to drive less, consolidate all our errands into one trip,” Coudle says. “It’s just oppressive.”

The surge in gas prices follows an increase in the price of oil.

Oil around the world is priced differently. Brent crude from the North Sea is a proxy for the foreign oil that’s imported by U.S. refineries and turned into gasoline and other fuels. Its price has risen 11 percent so far this year, to around $119 a barrel, because of tensions with Iran, a cold snap in Europe and rising demand from developing nations. West Texas Intermediate, used to price oil produced in the U.S., is up 4 percent to around $103 a barrel. That’s 19 percent higher than a year earlier.

Higher gas prices could hurt consumer spending and curtail the recent improvement in the U.S. economy.

A 25-cent jump in gasoline prices, if sustained over a year, would cost the economy about $35 billion. That’s only 0.2 percent of the total U.S. economy, but economists say it’s a meaningful amount, especially at a time when growth is only so-so. The economy grew 2.8 percent in the fourth quarter, a rate considered modest following a recession.

Gas prices are already an issue in the presidential campaign. Republican candidate Newt Gingrich spoke several times this week about opening up more federal land to oil and gas drilling as a path toward U.S. energy independence – and lower pump prices.

“Our goals should be to get gasoline to $2.50 or less so that working families can actually get to work and retired families can travel,” Gingrich said at a campaign event in Los Angeles Thursday.

High oil and gas prices now set the stage for even sharper increases at the pump because gas typically rises in March and April.

Every spring, refiners suspend operations to switch the type of gasoline they make. Supplies of wintertime gas are sold off before March, when refineries need to start making a new formula of gasoline that’s required in the summer.

That can mean less supply for service stations, resulting in higher gas prices. And summertime gasoline is more expensive to make. The government mandates that it contain less butane and other cheap organic compounds because they contribute to the formation of ground-level ozone, a primary constituent in smog. That means more oil, a costlier component, is needed to produce each gallon.

The Oil Price Information Service predicts that gasoline could peak at $4.25 a gallon by the end of April. That would top the record of $4.11 in July 2008.

Read more here.

Texas congressman introduces bill to force Keystone XL approval

President Barack Obama will not be bringing up the Keystone XL Pipeline in his State of the Union address Tuesday night, but Texas Republican Congressman Ted Poe is intent on keeping the controversial oil pipeline project in the news and circumventing the administration’s denial of a permit to build it.

Tuesday, the Texas congressman introduced the “Keystone For A Secure Tomorrow Act” (K-FAST) to allow the 112th Congress to “directly and immediately” approve the Keystone XL Pipeline permit for TransCanada Corporation.

According to Poe, the approval of the pipeline is within Congress’ authority. In 1973, Poe noted, Congress passed the Trans-Alaska Pipeline Authorization Act to allow construction of the 800-mile-long north–south pipeline from frozen Prudhoe Bay to the ice-free port of Valdez.

The Keystone XL project, if authorized, would start in Canada and end up in Port Arthur, TX — part of Poe’s district. Poe estimates that he represents more refineries than any other representative in Congress.

“My bill would authorize the construction of the pipeline — except for the new route that has not been determined yet, that small route in Nebraska, that would still have to go through the normal channels. The rest of it would be authorized immediately,” Poe told The Daily Caller, adding that since Keystone is in “the national interest” Congress has the authority to pass the legislation.

Poe’s bill adds to proposals from other Republicans attempting to get around the Obama administration’s permit denial.

Read more here.

Get Ready for Higher Gas Prices

An oil refinery in St. Croix, U.S. Virgin Islands, will shut down by mid-February. It is owned by Hovensa, a joint venture of U.S.-based Hess Corp. and Venezuela’s state-owned oil company Petróleos de Venezuela, S.A. (PDVSA).

Losses at Hovensa . . . have totaled $1.3 billion over the past three years and were projected to continue due to reduced demand caused by the global economic slowdown and increased refining capacity in emerging markets, said Brian K. Lever, president and chief operating officer of Hovensa LLC.

There are various other causes for the shutdown and this may be among them:

In January, Hovensa entered into a consent decree with the U.S. Environmental Protection Agency and Justice Department in which the company agreed to invest $700 million on pollution controls after a series of chemical releases affected people living downwind from the refinery. Hovensa also agreed to pay a $5.4 million penalty for violating the Clean Air Act.

Under current market conditions and having experienced substantial losses during the past three years, investing an amount equal to 53.85 percent of those losses as required by the EPA could be quite burdensome.

Closure of the St. Croix refinery may well effect U.S. domestic gasoline prices adversely, particularly on the East Coast:

[T]he coming loss of gasoline supply shocked markets for gasoline futures, which are likely to be soon reflected at the pump. Gasoline for February delivery rose 5.41 cents to $2.8254 a gallon on the New York Mercantile Exchange on Thursday, settling at the highest point since Sept. 8.

In St. Croix, the refinery employs about 1,200 people in addition to about 900 contractors. In 2010, the population of the island was 50,601, so the loss of about 2,100 jobs will have a substantial direct economic impact plus a significant multiplier effect. Food stamps and other welfare benefits are available there and the U.S. federal government contributes. There will also be significant long-term impacts on the tax revenues of the U.S. Virgin Islands, reducing them by at least $60 million per year through diminished real property taxes and employee income taxes.

Read more here.

Rejecting Keystone is ‘insanity’

Washington Post columnist Robert Samuelson has some choice words for President Obama’s rejection of the Keytsone pipeline:

President Obama’s rejection of the Keystone XL pipeline from Canada to the Gulf of Mexico is an act of national insanity. It isn’t often that a president makes a decision that has no redeeming virtues and – beyond the symbolism – won’t even advance the goals of the groups that demanded it. All it tells us is that Obama is so obsessed with his reelection that, through some sort of political calculus, he believes that placating his environmental supporters will improve his chances.

[…]

Now consider how Obama’s decision hurts the United States. For starters, it insults and antagonizes a strong ally; getting future Canadian cooperation on other issues will be harder. Next, it threatens a large source of relatively secure oil that, combined with new discoveries in the United States, could reduce (though not eliminate) our dependence on insecure foreign oil.

Finally, Obama’s decision forgoes all the project’s jobs. There’s some dispute over the magnitude. Project sponsor TransCanada claims 20,000, split between construction (13,000) and manufacturing (7,000) of everything from pumps to control equipment. Apparently, this refers to “job years,” meaning one job for one year. If so, the actual number of jobs would be about half that spread over two years. Whatever the figure, it’s in the thousands and thus important in a country hungering for work. And Keystone XL is precisely the sort of infrastructure project that Obama claims to favor.

The big winners are the Chinese. They must be celebrating their good fortune and wondering how the crazy Americans could repudiate such a huge supply of nearby energy. There’s no guarantee that tar-sands oil will go to China; pipelines to the Pacific would have to be built. But it creates the possibility when the oil’s natural market is the United States.

This is the Obama we have come to know and love; piously proclaiming his priority being job creation while taking actions that directly contradict that priority. He says he wants business to thrive — and then throws up roadblock regulations to prevent it. He says he wants the economy to grow — and then advocates policies that stifle growth.

And then he blames his failures on others.

Energy independence, jobs, growth in the economy — all of these would have been affected positively by building the pipeline. Instead, the president decided to pander to his far left base of Luddites.

Huge increase in electric bills seen in the next few years

Via Ed Morrissey at Hot Air, this Chicago Tribune article pretty much confirms what President Obama promised; that our electric bills would “necessarily skyrocket” as a result of new environmental regulations that will make coal-fired electric plants virtually a thing of the past.

The increases are expected to begin to appear in 2014, and policymakers already are scrambling to find cheap and reliable alternative power sources. If they are unsuccessful, consumers can expect further increases as more expensive forms of generation take on a greater share of the electricity load.

“Each generator will have to decide for itself whether the investment required to meet environmental requirements can be justified based on its projection of market prices and the cost of its capital. In any case, those costs will be passed through to consumers,” said Mark Pruitt, director of the Illinois Power Agency, which procures electricity for Illinois.

American Electric Power, one of the country’s largest coal-burning electricity generators, said Thursday it will retire nearly a quarter of its coal-fueled generating capacity and that it will spend up to $8 billion to retrofit remaining units to meet regulations that start taking effect in 2014. Those moves will have an impact.

“The sudden increase in electricity rates and impacts on state economies will be significant at a time when people and states are still struggling,” AEP Chairman and CEO Michael G. Morris said.

There is also a chance that actual shortages – you know, the kind that occur regularly in Third World countires – might hit the grid with rolling blackouts, brownouts, and perhaps even regulations that would outlaw HDTV’s, certain refridgerators, and other appliances that consume a lot ot electricity.

Yes, but at least we’ll stop global warming in its tracks…or not. For every atom of CO2 we stop emitting in the US, China and India will put two into the atmosphere. Their economies will boom. Ours will shrivel.

Has there ever been a great nation that committed economic suicide for no real reason?

Comin’ this summer… $5 gas

The forecast for the summer driving season: Hit the road early. Not to beat the traffic, but to beat the higher gas prices expected in mid-July.

Goldman Sachs’ crystal ball is proclaiming that oil will soon soar to $135 a barrel, and likely have service stations jacking up fuel prices to $5 a gallon in New York just like the summer of 2008 that preceded the recession.

Indeed, analysts say Goldman and the other oil trading giant that also has the might to move prices, JPMorgan Chase, have already placed their energy bets for the summer. JPMorgan predicts oil hitting $130 a barrel in the coming weeks.
Thought for fuel: Oil prices already are sky high for the Memorial Day holiday, but gas is expected to go even higher later in the summer, banks believe.

Despite all the turmoil in the Middle East associated with the Arab Spring rioting, oil has fallen to the $100 level, closing out May with a stunning 12 percent drop.

But before the storm, the calm. There appears to be a backlash by some oil-pit analysts.

“Whoever would buy into these rising prices is just paying homage (to Wall Street firms) and helping the speculative positions,” said one oil trading source familiar with energy bets of Wall Street trading desks.

Gas prices, meanwhile, should benefit from the brief respite in oil prices.

“We should be seeing some big declines at the gas pumps after Memorial Day,” said energy analyst Peter Beutel of Cameron Hanover.

“Wholesale prices have been dropping, and that could cause some serious revisions downward at the pumps,” he said.

“The competition is fierce among the retailers, and whoever lowers his price first gets a big jump on everyone else and a lot of new business.”

Pump prices have dropped about 10 cents a gallon this week, while wholesale prices at the Nymex have steadily skidded 50 cents a gallon in the past two weeks.

Those declines came despite upward pressure on wholesale prices here in the past two days due to speculation that Mississippi River flooding could disrupt Gulf Coast refineries.

At the start of the Memorial Day holiday, the national average for gas was $3.80 a gallon.

Tom Kloza, an analyst at Oil Price Information Services, expects gas to fall to between $3.50 and $3.60 between now and the July 4 holiday.

Read more here.

Gas prices and industry earnings: A few things to think about the next time you fill up

Less than 3 percent of ExxonMobil’s earnings are from U.S. gasoline sales
ExxonMobil’s earnings are from operations in more than 100 countries around the world. The part of the business that refines and sells gasoline and diesel in the United States represents less than 3 percent – or 3 cents on the dollar – of our total earnings. For every gallon of gasoline, diesel or finished products we manufactured and sold in the United States in the last three months of 2010, we earned a little more than 2 cents per gallon. That’s not a typo. Two cents.

Oil is a commodity; prices are set in the global market
Crude oil is a commodity, and like all other commodities – such as corn, wheat or sugar – the price is determined by buyers and sellers in a global market. Buyers are paying more for oil because the global economy is strengthening, and demand for products derived from crude oil is on the rise. Political instability in some oil-producing nations is also contributing to uncertainty about future supply. Oil markets are well supplied today, but uncertainty about tomorrow’s supply is reflected in prices today. Finally, the U.S. dollar is at a three-year low against other currencies – accelerated last week after a warning by Standard & Poor’s about the country’s $14.3 trillion debt and relative economic weakness. The weaker the dollar, the less it will buy – meaning more is spent for the same amount of a commodity, whether it’s crude oil or nearly all of the commodities in the chart at right.

ExxonMobil doesn’t set oil prices
Take a look at the chart at right. ExxonMobil owns less than 1 percent of the world’s oil reserves, and it produces less than 3 percent of the world’s daily oil supply, so it’s really not credible to suggest that we are responsible for world oil prices. ExxonMobil actually buys more crude oil than we produce. Last year, we spent $198 billion on crude oil, which we used to make refined products such as gasoline.

What goes into the price of gasoline
The main component of the price at the pump is the cost of a barrel of crude oil. Another major component of the price of gas is state and federal taxes, which range from a high of 66 cents per gallon in California to a low of 26 cents per gallon in Alaska, according to January 2011 data. How are pump prices set at Exxon and Mobil stations? We don’t own 95 percent of them, and therefore we don’t set the price. Local stations are often owned by a businessman or businesswoman in your community, and they set their own prices based on local market conditions.

Read more here.

Obama Says will Take More than One Term to Destroy USA

As Obama and his Leninists continue to denigrate and rule over the USA and the American people, the Republican latent-integrity “go along to get along” electees — led by chief lame-pony John Boehner — continue to protect the Usurper-and-Dictator-in-Chief. After pretense upon pretense of shock as to how far the Obama syndicate has already taken the country into ruin, the wimpy “I sold my soul, how about you? And how much did you charge?” crowd of faux GOP-ers continue to vote with and for the tyrant.

The bogus budget battle was the strongest clue that the GOP joined the Marxist Party in no longer being in favor of continuing the United States of America as a free and solvent country. That which was a big disappointment at a $38.5 Billion cut in spending turned into a slap in the face when it was realized that the number had been faked and the real ‘cuts’ dropped to $14.7 in discretionary spending and some reports are that they were barely over $300 millions. In other words, no one in Congress had any intention of doing any spending cuts at all.

Our gas prices are currently over $4.00/gallon nationally and there is every indication (due to Obama’s intentions) that they will be at between $5-7.00/gallon soon. The tyrant is, also, still trying to find loopholes in order to saddle us with electric energy prices that “will necessarily skyrocket” as he promised us they would.

Obama is still convinced it will take him another term to complete his planned but, still unfulfilled chaos amidst the American public so that their lives, homes, work, God, country and all else they hold dear will be completely and utterly destroyed… with no chance of ever returning. If it were not so, we would be drilling for oil in our own country and not funding Brazil and other countries’ drilling programs. If it were not so, we would not be experiencing the worst power grab in our history by the now-rulers of what was once We-the-People’s country. And, if it was a lie, we would not be losing multiple freedoms on an almost daily basis.

Prior to the 2008 general election, I wrote a column titled “Is the USA Ready for an American Stalin?” Tragically, it was far more prescient that I had thought. Each day under Obama and his go along to get along Congress brings us closer and closer to the old USSR. A USSR that had Stalin destroying food so that people would starve to death and the population would be reduced. People stood in line for hours and sometimes days for a loaf of bread. A smaller population is easier to suppress. The Russian people were virtual prisoners within the USSR and completely at the mercy of the Communist rulers who lived large and well while the people starved or froze to death. An immobile population is easier to contain.

Read more here.

Gas Prices Top $1-a-Gallon Higher than Year Ago; Media Don’t Blame Obama

The average price for a gallon of unleaded gasoline hit $3.86 on April 25, more than $1-a-gallon higher than a year earlier and less than 25 cents away from the record high price of gasoline set in July 2008.

In fact, per gallon prices are more than $2 higher than when Obama took office Jan. 20, 2009. Yet the president has been nearly exempt from criticism on the issue of rising prices, despite a six-month drilling moratorium and more regulatory hurdles for industry.

The Business & Media Institute found that out of the 280 oil price stories the network evening shows have aired since the 2010 Deepwater Horizon oil spill, only 1 percent (3 stories) mentioned Obama’s drilling ban or other anti-oil actions in connection with gasoline prices.

Instead of asking whether Obama’s anti-oil policies could be increasing the cost of gas, the networks blamed other factors such as Mideast turmoil or the “money game” played by speculators. Certainly, the turmoil in Libya, Egypt and surrounding nations has increased worries about oil production and can influence the price. But the networks also should have looked for explanations much closer to home, like Obama’s many regulatory actions taken against the oil industry.

First there was the drilling ban, which was later overturned by federal courts as illegal. Seahawk Drilling, a Texas-based shallow-water drilling company cited that moratorium as the cause of its bankruptcy filing saying, they “have been adversely affected by the dramatic slowdown in the issuing of shallow-water permits in the U.S. Gulf of Mexico following the Macondo well blowout.”

Read more here.

EPA Rules Force Shell to Abandon Oil Drilling Plans

Shell Oil Company has announced it must scrap efforts to drill for oil this summer in the Arctic Ocean off the northern coast of Alaska. The decision comes following a ruling by the EPA’s Environmental Appeals Board to withhold critical air permits. The move has angered some in Congress and triggered a flurry of legislation aimed at stripping the EPA of its oil drilling oversight.

Shell has spent five years and nearly $4 billion dollars on plans to explore for oil in the Beaufort and Chukchi Seas. The leases alone cost $2.2 billion. Shell Vice President Pete Slaiby says obtaining similar air permits for a drilling operation in the Gulf of Mexico would take about 45 days. He’s especially frustrated over the appeal board’s suggestion that the Arctic drill would somehow be hazardous for the people who live in the area. “We think the issues were really not major,” Slaiby said, “and clearly not impactful for the communities we work in.”

The closest village to where Shell proposed to drill is Kaktovik, Alaska. It is one of the most remote places in the United States. According to the latest census, the population is 245 and nearly all of the residents are Alaska natives. The village, which is 1 square mile, sits right along the shores of the Beaufort Sea, 70 miles away from the proposed off-shore drill site.

The EPA’s appeals board ruled that Shell had not taken into consideration emissions from an ice-breaking vessel when calculating overall greenhouse gas emissions from the project. Environmental groups were thrilled by the ruling.

Read more here.