US gasoline prices hit $3 as refiners strain

[sabra]

Source: Reuters

NEW YORK, May 4 (Reuters) - U.S. gasoline prices shot above $3.00 per gallon on Friday, within striking distance of record highs, as the creaking domestic refinery system strained to keep up with rising demand.

Average retail gasoline prices in the world's top consumer reached $3.012 a gallon, the AAA travel group said, up more than 30 cents since early April and near the record of $3.057 hit after hurricanes slammed Gulf Coast oil installations in 2005.

This year, companies struggling to retool refineries to meet new environmental standards, have faced longer, more extensive maintenance and serious outages, draining gasoline inventories ahead of peak summer demand.

"The problem this year is our continuing and increasing inability to refine enough gasoline to meet growing demand," said Geoff Sundstrom of AAA. "I think it is very possible that we will set a new record high price this month."

Read more: http://www.alertnet.org/thenews/newsdesk/N04336635.htm

[driver8]

1. Shot above $3.00???

Where the hell is this? We have been at $3.29 - $3.45 forever. We were below $3.00 a gallon for about a month and then the prices went right back up.

I don't buy this "unable to refine enough gas to meet the demand" bullshit. Oil companies are posting record earnings. They have a monopoly on gas and can charge whatever the hell they want.

[central scrutinizer]

7. same here - Oregon

been going up 5-10 cents per day for a couple of weeks now.

[apnu]

11. This is why I bought a bike and ride to work

Give it a try and tell Chevron to fuck off.

[Igel]

29. Probably the average.

It's dropped a dime per gallon here in the last week or two. I saw it for 2.749/gal where I usually get gas. $2.859/gal last time I filled up.

[Nordic65]

34. Stop complaining sissies - $6,30...

Yes, you read correct. $6,30 in Oslo, Norway this afternoon.

Not fun at all...

[Nordic65]

36. That would be $83.2 - thank you!

..to fill up 13 gallons in my tiny Audi A3...

[PFunk]

38. Thats true europe wide-something that I say to anyone that's complaning about it at the gas station

But we yanks and our gas guzzling SUV's (that with my somewhat gas efficent 89 Cavalier now find myself laffing at them) are wimps about this anyway.

[happyslug]

41. But here is the States, our Society assumes CHEAP GASOLINE.

That is the problem, the US left its Urban Light Rail System be destroyed by the 1960s so that one MUST use a Car to get to Work. This was complicated by our land development policies which was to develop Suburban business that never had Mass Transit access and are set up on the assumption that people will travel by Car.

Yes the US is a Car centric Society, much more than Europe and Japan. In the US a Car is a NECESSITY not a Luxury. You need a car, not that a car makes life easier. Right now the price of Gasoline in the States is Exceeding the price (adjusted for inflation) it was in 1979, the previous record (Except for the Spike right after Hurricane Katrina). Americans are still buying gasoline and making little adjustments (Mostly because they can't). The price MUST get a lot higher before you see Americans make Adjustments, At least $5 a gallon.

[RUMMYisFROSTED]

44. Take a look at your "Oil Fund."

Looks like it's doing nicely. You'll have a nice fat pension. Cheer up!

[kestrel91316]

2. Funny, we've been paying $3.25+ for weeks now, and today it's up to

$3.33. That's the very cheapest around, too. You can easily pay over $3.50 if you're so inclined.

[jgundrey]

3. Santa Barbara County, CA...

$3.47 reg, $3.61 super; $3.77 super. Haven't seen it at or below $3.00 here since last year. We'll be at $4.00 waaaay before anyone else.

[brook]

16. I figure $4.00

by Memorial Day Weekend. Paid $35 yesterday for a tank of gas that not so long ago cost me about $19.
Of course, too many folks haven't received wage increases in that same time span.

Is there any level on which we haven't been 'screwn' by the Deciderer/Commanderer and his faithful toads?

[unkachuck]

39. I say, $4.879 by Labor Day....

....is everyone enjoying their Republican, corporate, privatized energy tax?....remember, what's good for corporate America, is good for you too....

....I wonder what our fearless congressional leaders plan to do about this?....hmmmm....

[TheTimmer]

4. I haven't paid less than $3 since March n/t

[tabasco]

5. What a bunch of bullshit.

Blaming it on the "creaky refinery system." LMAO.

I'm sure the environmentalists are behind it all.

Somehow those creaky refineries aren't stopping the oil companies from raking in the greatest corporate profits ever made on Earth.

[goddess40]

9. and who's fault would that be?

could it be the fault of a company making record profits that chooses to pocket the money instead of reinvesting some of it in their own company to make sure it stays up to date and operational. Next they will be screaming for more government handouts to fix the problem. First they take our money at the pumps and then they steal it out of our pockets through taxes.

[Donnachaidh]

6. Strained? Like this?

They are straining to keep replacement parts HIDDEN.

[Roland99]

8. "companies struggling to retool refineries" ... *cough*bullshit*cough*

[sybylla]

30. Yeah, bullshit is right.

After four years of record profits, there is no way in hell petroleum companies ought to get away with coughing up that loogy.

If it's not a flat out lie, it's strategic incompetence on a scale to threaten our economy. Sounds to me like our government ought to take control of our refineries.

[Rambis]

10. "1.88$ a gallon is not acceptable " GWB 1999

"I would release the stategic oil reserves to keep prices low and jawbone OPEC into producing more oil"

[mitchleary]

14. yeah 1.88 was waaaay too low

for GWB's buddies. The only kind of "jaw-boning" * did was on his knees.

[demosincebirth]

23. Good idea

[acmavm]

12. The 'creaky refinery system' is a scam perpetrated by the

oil companies.

the end.

[On the Road]

13. Are Any New Refineries Actually Being Built in This Country?

Or is importing gasoline rather than crude oil feasible? Just wondering if there's any end in sight.

[bullimiami]

15. theres an end in sight. get the fascist crooks out of the government and clamp down

on corporate monopolies, profiteering and collusion.

[Greyhound]

18. Gladly, whose going to do this? n/t

[Na Gael]

19. My Understanding is-

1. Many older refineries are "grandfathered" from some of the regulatory burden that would normally befall a newer refinery.
2. If "updated," these refineries could lose some of those exemptions.
3. It is cheaper to pay fines than update equipment.
4. As long as consumers continue to buy product regardless of price, there is no incentive to update production to meet demand.

I do not know if it is currently legal to import gasoline into the US, as there are some peculiarities with regard to production, storage, and transportation. Nonetheless even if it is legal, as outdated as our current regulations are, they are still better than other countries. By importing gasoline, we would simply drive pollution up in poorer, developing countries which would try to meet demand. Is that an acceptable tradeoff?

[Psephos]

20. self delete - dupe

[Psephos]

21. None have been built since 1976

No new refineries are being built, either. The combination of regulations, liability, and NIMBY have dealt the same fate to refineries that they dealt to nuclear plants.

The US makes up its gasoline shortfall by importing gasoline, much of it from Europe. European refineries are shifting more and more toward diesel, because of European demand. That diminishes capacity to produce export gasoline.

The US needs to build some more refineries now. They take a long time to construct; meanwhile, with nearly all available capacity in use, any disruption (fire, hurricane, maintenance issue, etc.) creates a price spike. Gasoline is priced on the margin (i.e., the price of the last available gallon of gas determines the price for all gallons of gas).

[Tekla West]

22. The real reason no new refineries have been built

is that it takes 30-40 years to pay them off. These people know they do not have enough oil for them to work that long. That's the deal.

[Psephos]

25. Interesting idea

I don't know the ROI figures for refineries...do you have a suggested link?

[NickB79]

26. Oil production may have peaked in 2005 already

Unless OPEC nations boost oil production greatly in the future, new multi-billion dollar refineries will sit idle the day construction is completed. Interestingly, new oil tanker construction has also been flat the past few years. If Saudi Arabia really was going to double oil output over the next two decades, you would expect they'd be ordering new oil tankers to actually get that oil to market.

[entanglement]

45. Massive refining projects are coming up elsewhere in the world

to meet our gasoline demand - One thing the new refineries have is the ability to refine sour (high sulfur) crude as opposed to sweet crude. Sour crude is much cheaper, and the profit per barrel refined is consequently much higher.

[Telly Savalas]

32. There probably isn't an end in sight.

Oil is a finite resource and burning it is extremely harmful to the environment, so the real solution is to expand public transportation, demand that new development be done on a scale to decrease the need for a car, and make a serious commitment to investing in clean renewable energy. But even at a liberal place like DU, support for this is microscopic compared to the whining for cheap gasoline, so it's hard to be optimistic that anything is going to get done.

[damntexdem]

17. Straining refiners? Oh, those poor babies! They must suffer to squeeze out every drop of gasoline.

At least they must suffer horribly to squeeze out every dollar from our wallets.

How can we possibly offer them just compensation for all that strain?

[AndyTiedye]

24. Medium and High Test is Already Over $4 at Some Stations Here

I guess it's still around $3 in the red states.

[dipsydoodle]

35. Hmmm..............

[guitar man]

27. Oh boo hoo!

Maybe if they had invested the $400 million into updating their "creaky refinery system" instead of shoveling it into Fat Bastard's retirement fund, they wouldn't have this problem.

[xchrom]

28. bullshit -- this is about the democratic party taking both houses and

probably the presidency in 08.

there is no way that refineries are suddenly struggling in a way they haven't in the very recent past considering katrina and the rest of what is going on.

this is politics.

[seasat]

31. Reagan caused the closing of most of the small refineries

I got in a debate at a nonpartisan site with a Repug who claimed that Clinton's environmental regulations were the reason that refineries closed. However, after searching the DOE site, I found out the real answer. Small refineries used to be subsidized by the US government. Reagan cut out those subsidies. This cut lead to about 100 smaller refineries closing during the late 80s.

There also was considerable consolidation among the big oil companies. They then closed refineries to cut costs since they could reach capacity using their existing refineries. A study by either the DOE or GAO showed that recent environmental regulations only added about 5% at most in reduction in profits to oil refineries.

So don't let the Repugs pull the story that environmental regulations killed US refinery operations. It was the Gimper and consolidation.

[BushOut06]

33. Perfect example of why capitalism is a crock of shit

Capitalism - helping the rich get richer, while the rest of us schmucks pay through the nose! The only real solution is what Venezuela is doing, and taking over the oil companies, forcing the rich fatcats to bring down prices and redistributing the profits.

[Nordic65]

37. Not!

That is a load of crap!

Nationalization is like pissing in your pants. Warm for a short period, but after a while - cold as hell. Then, water (urine) freezes faster than anything else. Two years down the line that IDIOT would pay anything to undo his stupid decision.

Multinationals in oil, hate them, but don't ever bet against them.


Don Quixote

[w4rma]

40. In other words big oil refuses to upgrade their refineries with their massive profits.

I think it's obvious to anybody, once they hear the excuses for gouging Americans, as to why they aren't.

[magellan]

42. No new refineries due to two little words: peak oil

There's no sense throwing money into building more refineries that will only run at capacity for a short time. They'll continue trying to hold the old ones together for a fraction of the cost while pocketing massive profits.

[Rene]

43. Why does there have to be 3 grades of gas. Why not make ONE that suits all engines?

and get rid of that .9 baloney.

[Odin2005]

46. The "refinery problems" are intentionally made by Big Oil.

They just don't fix refineries or build new ones even when they can, and then blame enviromentalists for it. Kind of sounds like what Enron did in California...

[killbotfactory]

47. They've been shutting down refineries for years

and then blame the lack of supply on environmental regulation.

nice.

[Strelnikov_]

48. A unregulated market approach to energy infrastructure does not promote redundancy

(excess capacity).

They have closed, what, 75% of their refineries over the last 30 years (which rules out the Nimby/ environmental excuses) and consolidated production at fewer, much larger, facilities for economies of scale. An accident takes Baytown off line and we lose ~ 4% of domestic refining capacity.

Maximize utilization, maximize profits.


The peak oil crisis: Week twelve

http://www.energybulletin.net/29256.html


As has been the case for many weeks, gasoline consumption continues to run above last year, a series of refining problems have kept gasoline output well below the utilization needed to build stockpiles, and the US seems to be unable to find enough refined gasoline on the world markets to make up the difference.

There are several underlying problems behind the growing shortfalls, none of which seem susceptible to immediate solution. The automobile is so deeply imbedded into our lifestyles that gasoline will have to go much higher some say $6+ a gallon - before there will be any significant slackening in demand. Sales of gas-guzzlers probably will continue to drop, but major changes in lifestyles will not come until actual gasoline shortages and gas lines develop. Here in America, there are simply too many other ways to save money before we cut back on driving.

The fundamental problem in keeping the refineries working is that they are simply being pushed too hard. Twenty years ago US refineries were run at an average 78 percent of rated capacity and all was well. Now they need to be operated at close to 95 percent of capacity to keep up with increased summer demand. Moreover, there is a growing shortage of the experienced personnel needed to overhaul our refineries and they are becoming more complex as a result of the need to process more of the heavy sour crude oil that is an increasing share of what is available for import.

. . .

All this leaves us in a basically unchanged situation. Although the rate of decline dropped last week, the decline continues at a pace that eventually will lead to much higher prices and shortages. A major point to keep in mind is that the geopolitical/weather situation is relatively calm at the minute. There are still at least half a dozen major threats to our oil imports out there, waiting to happen.