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Detroit, 7:34 PM
Wed Nov 11
34 posts in the last 24 hours
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02/13/09
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However if I think I might know whats happening.
Look at usable refinery utilization. It is falling like a rock. Normally (during this time of the year) usable refinery utilization runs at 85-90% but right now we are at 81.55%. That's a pretty good hit.
Oil inventories are surging but gasoline reserves have been shrinking simply because the refiners are producing less.
It is easy to say that refiners are trying to manipulate the market but if you look at their earnings over the last year, you can see that they've taken it up the ass. Refinery profits have been not been there, even when gas prices were well north of $3.00. Also, many refiners are taking this time to do maintenance and prep for spring blends. They seem to be doing it a bit early but what choice do they have when they can't make money right now anyways.
The effect of speculators on the energy markets still has the whole thing in a mess. At least the oil traders are taking the hit now because they are running out of places to store oil. There are large numbers of loaded down super tankers in the Gulf of Mexico just waiting there eating up potential profits. The speculators are hoping that holding their oil off the spot market will bring oil prices back up but it isn't working because there is plenty of oil sitting in storage on the ground. We're pretty much out of storage and the oil markets are reflecting that..
Eventually it will even out again on the side for the refiners and we'll see prices drop at the pump again.
Frankly, Obama should have done something to limit all this speculation in energy but he has get to do a damn thing. He actually has the power to limit futures purchases but I haven't seen anything in the news that he has done that. Instead he is "staying the course" just like GWB did. I'm not blaming him for the mess, just pointing out that he can limit it if he really wanted to. Congress could have done something about it too but same ole same ole....
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*There is not a supply constraint on crude.
*No major refineries have been whacked by a hurricane in awhile.
*All the usual kooks worldwide are doing their typical kooky things. I mean, at least they're not acting excessively kooky which always spooks global markets.
*Israel and the PLO have stopped bombing the crap outta each other for now.
*China's economy is tanking much harder than ours and their consumption has dropped a good bit.
*India has reduced their subsidy of fuel recently; it's still subsidized but not by as much, so their consumption is down a bit as their retail price has risen.
So, what's causing it besides typical oil company greed?
*Potential of worker strikes at Valero, XOM and Chevron refineries.
*Typical BS reformulations of gas from "winter blend" to "summer blend".
*One massively dumb thing is allowing states to determine which blend of gas is sold instead of developing and accepting a "national blend" which can lower refining costs. States can set their own emissions standards if they want but they're screwing their own citizens by demanding specific blends to meet said standards.
*OPEC is cutting production.
02/13/09
Maybe, maybe, I could see a national blend changing with the seasons, but the by-region stuff totally kills economies of scale.
This is the kind of stuff that's obvious to those of us working in the real world and somehow lost on regulators.
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02/14/09
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We're bitching about the fact that oil companies continue to gouge consumers even when the economy is in the shitter.
02/14/09
02/13/09
From everything I've seen from "the Obamanator" so far, I'd expect nothing different.
02/13/09
That isn't necessarily a bad thing, though.
I am a California native, and we all like to bitch about the crappy state of affairs here. Part of it had to do with the loss of a lot of our aerospace industry, but another part of that was the energy crisis that hit about eight years ago thanks to the fuckers over at Enron.
California asked that Bush step in and set a temporary price cap on energy so that we could investigate and figure out what the hell was going on, but he didn't, citing "the free market". His decision fucked us over royally, and many people here (myself included) are still somewhat bitter about that.
Now Obama is facing the same situation, and I personally hope that he doesn't make the same mistake his predecessor did.
02/13/09
If you want to point fingers in Ca. over gasoline, try CARB. They are the ones demanding bizarre gasoline formulations unique to Ca. Not to mention a long history of misguided and completely awful legislation. Oh and you can also feel free to point fingers at the Ca. state legislature.
02/13/09
Yes, I meant use that example as a parallel, but now that I read my comment again, it is rather poorly written.
Bush, Jr. fucked us on the electricity, but now that we are under the threat of getting hosed over gas prices, it is Obama's chance to face down a parallel situation.
02/13/09
And how, exactly, do you believe he did that?
02/13/09
I think that I explained that part rather clearly.
We were getting irrationally and unreasonably gouged. We asked Bush to step in and mandate a temporary price cap so could figure out what the hell was going on. He refused. We continued to get screwed. We are now in a massive debt and a depressed economic situation as a result of all the taxes necessary in this state to pay down that debt, making it an unfriendly place for business.
Yes, Bush's failure to act had a pretty devastating effect on CA.
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Prices are also low because the declining economy reduced consumption. Less contractor trucks running around, less deliveries, less of everything means less fuel consumed, means lower prices.
02/13/09
People, in general, must buy gasoline, no matter what. For example, to drive to work. People might reduce consumption, but not eliminate it.
Gasoline pricing is not based on demand. If demand dropped to zero, pricing would not drop accordingly.
Put another way, demand is fairly constant. However, pricing is.
Prices did not drop because of reduced consumption. Prices dropped because the huge speculative bubble in oil commodities burst.
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Ethanol is a crock at the moment and will be until an infrastructure is built around it that doesn't involve food crops or petroleum products for refining.
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Sorry, after the comment I commenced to drinking lots of Miller Lite and BSing in the shop :)
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02/13/09
Thanks,
Actually the Camaro has 3:73 with a TH400 keeping pace and a 2500 stall. I wanted it ready to roar but still drivable. I am "estimating" from the build on the motor to have about 525hp and 600ftlbs at the wheels. I am hoping to dyno it this spring. I've run it two summers now and have a few thousand on it. I may step to 4:10's in the near future.
The 60' Apache was my first build back in 93' and it was a crazy throw together over a winter. My graduation present from Dad, after a few years I did a FI conversion with NOS and love it. I'm hoping to re-restore it soon. It has has had a rough life. :)
We just finished a FFR Cobra build for my brother and now are trying to find a British Sports Car for my other brother so he can join in the fun. He is sick of my 320i and wants a car of his own. Then there are more cars.
Ya, little crazy with the autos in our family.
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The problem is not the type of corns, since as you point out they are incompatible, but with the land used to grow ethanol corn vs. food stuffs (corn, wheat, barley, etc.). There is only so much arable land in the world and when farmers find that because of subsidies they can grow ethanol corn at a higher profit than food stuffs they switch. Germany almost had riots last year because the price of beer spiked because farmers had switched from barley to ethanol corn. The price of tortillas in Latin America has gone up several hundred percent because the price of food corn has gone up. And Egypt's government controlled bread prices have been put to the test because of scarcity of wheat.
02/13/09
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02/14/09
02/14/09
When we got married, I told my wife I wanted 14 children hoping to scare her out of children altogether. After OctaMom I keep telling her that it proves it can happen.
She still hasn't bought my logic and she still wants children.
Maybe I could distract her with a puppy.
02/14/09
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02/15/09
02/13/09
There's typically a 6-8 week lag between oil prices and gas prices on account of the fact that gas is priced largely based on the oil it's refined from.
02/13/09
I don't live in the US so I don't know.
Other factors are the removal of sulfur from gasoline and increased ethanol content requirements. Not sure what the actual impact that would be per gallon... but I'm sure about one thing... it doesn't make gasoline cheaper.
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I agree that Bush, Jr. is responsible for much of the shit that we are in, but I think that it would be foolish to presuppose that he is to blame for absolutely everything. There were other factors involved. He just made it all worse than it might have been.
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No thanks to Bush, though...he hosed us pretty bad on electricity when the whole Enron thing hit.
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02/14/09
Perhaps there will be T-shirts...
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The point is the relationship is off.
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I just realized that I had a typo that completely changed the meaning of what I was saying. I said these prices are completely unreasonable when I meant to say the prices are not completely unreasonable. I am partially retarded in the left ear.
Yes, gasoline prices are "sticky". The commodities markets which set the wholesale price tend to keep the price of gasoline higher while oil is on the way down. The reason for this is obvious.
There are also seasonal affects. While oil may drop at the end of summer, gasoline tends to stay higher while refineries shut down to switch over to winter formulations.
And, finally, there are geographic affects. These are somewhat linked to the seasonal affects. However, there is also an issue with how much refinery capacity is available to make the blends for particular regions.
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