Wall Street Journal: If $4 Gas Is Bad, Just Wait

[marmar]

If $4 Gas Is Bad, Just Wait
Based on Oil Trades,
Pump Prices Have Room to Grow
By ANNA RAFF and JESSICA RESNICK-AULT
May 23, 2008



Judging from the futures markets, shock at the gas pump is bound to get worse. Maybe much worse.

Since the beginning of the year, benchmark oil and gasoline futures on the New York Mercantile Exchange both have increased by more than a third, but the average retail price of gasoline in the U.S. has risen by 22%. That bodes ill for consumers.

So far, oil refiners and petroleum-product distributors have absorbed much of the increase, but their ability to continue to swallow losses and operate at thin margins is limited.

Many analysts consider $4-a-gallon retail gasoline across the U.S. a foregone conclusion this summer driving season, a period of typically peak demand, but those estimates take only current record-high oil prices into account. Thursday, light, sweet crude futures breached $135 a barrel, more than double the price a year ago.

If oil hits $200 a barrel, which is the upper end of Goldman Sach's prediction for prices over the next six months to two years, the gasoline picture changes quite dramatically. At $200 a barrel, crude alone would cost $4.76 a gallon. Add on the costs of refining and distributing as well as taxes, and pump prices could rise to a range of $6 to $7 a gallon.

U.S. drivers haven't radically changed their behavior, and it is unclear at what price it becomes unprofitable for Americans to go about their usual day-to-day activities, said Eric DeGesero, executive vice president of the Fuel Merchants Association of New Jersey.

"Maybe at $6 or $7 a gallon, it becomes less attractive to go to work," Mr. DeGesero said. "We haven't hit that point yet, but we might soon."

Retail gasoline prices have topped $4 a gallon in Alaska, California, Connecticut, Illinois and New York ahead of the Memorial Day holiday weekend, according to the AAA Daily Fuel Gauge Report. Nationwide, gasoline averages $3.831 a gallon.

Consumers have already taken note, with U.S. gasoline demand down 0.6% this year compared with the same period in 2007, according to the Department of Energy. ......(more)

The complete piece is at: http://online.wsj.com/article/SB121150174129716005.html

[DJ13]

1. "Were getting wealthy, and we dont CARE what happens to the rest of you!"

Did I sum that article up in the right way?

[derby378]

3. Murphy's Golden Rule

He who has the gold makes the rules.

I suspect this is the endgame for the oil companies in case their puppet in the White House couldn't keep his shit together.

[Individualist]

4. You did sum it up correctly

The elitist plan to eliminate the poor is well underway.

[TransitJohn]

2. Mission Accomplished! n/t

n/t

[Glorfindel]

5. Well, there could be a bright side....

If higher gas prices FORCE this country, kicking and screaming, to return to the safe, inexpensive, reliable public transportation that was available in my long-ago youth, that would be a GOOD thing. I'd love to be able to take a clean, comfortable bus or train from downtown to downtown without having to fight horrendous traffic jams trying to get from one place to another or to be packed into a sardine-can airplane for an uncomfortable flight to an airport that's 75 miles from where I really want to go.

[DJ13]

6. How do prices so high it makes mass transit viable

....help in the rural regions where people (usually poorer people) live?

[cstanleytech]

8. If you are that rural then maybe its time to raise horses *grin*

Just a little joke to try and lighten up the mood, I agree though its a problem and offhand for that I dont think there is a perfect solution.
I think cities might wanna really take a hard look at coverting old inner city schools that have been abandoned into affordable apartments for the poor though, that and siezing any abandoned shopping centers, stores, warehouses and strip malls to convert to apartments as well.

[Glorfindel]

9. I lived in the tiny rural town of Ellijay, Georgia

and the twice-daily bus service to and from Atlanta (about 85 miles one way) was a great help. The bus stopped at Whitestone, Talking Rock, Jasper, Nelson, Tate, Ball Ground, and Woodstock, and the trip took around two hours. You could shop at the downtown Atlanta stores and then take the late-afternoon bus back home. Very pleasant and convenient. There's no reason such a service could not exist today.

[cstanleytech]

7. Only problem is that such an option as mass transportation is

nothing but a fantasy for alot of people depending where they live.
For example where I live which is a city with over 50,000+ people they have only a moderate bus service which has few stops and it only runs on very limited hours and there is no subway or rail system at all and it would take them years to build such a system.