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The One Chart That Will Infuriate Drivers (If Not Big Oil)

Tyler Durden's picture




 

We have all said it. Anecdotally, it feels like when oil prices rise, gas prices at the pump rise; but when turmoil pauses in global geo-politics - or some entity decides that high oil prices just will not do for the world's economy - gas prices at the pump seem not to drop so quickly. Yes there are pipeline, inventory (and even tax) issues but the following chart suggests 'gouging' on a national level...

 

 

Chart: UBS

 

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Tue, 12/04/2012 - 10:33 | 3032279 FubarNation
FubarNation's picture

The US election is over fools.  Your petrol price will now be increased.  Taxes you know - to help the distribution :).

Tue, 12/04/2012 - 10:37 | 3032295 MagicHandPuppet
Tue, 12/04/2012 - 10:48 | 3032339 TruthInSunshine
TruthInSunshine's picture

Obamney Administration is probably readying a massive "gasoline tax" hike as we speak, coupled with a mandate that refineries immediately move to E20 (because ethanol @ 15% concentration doesn't destroy vehicle motors fast enough-- despite the fact that automakers unaminously have said that 15% ethanol fuel will crush them as it will necessitate massive warranty repair/replacement of motors costs-- for one illustrious Paul "I Won A Nobel Laureate In Economics & Will Use That As License To Go Literally Insane While Denying It" Krugman, Ph.D.).

In New Amerikan Normal of KomradeKronyKapitalism, additional taxation owns you.

Tue, 12/04/2012 - 10:51 | 3032346 JPM Hater001
JPM Hater001's picture

Sorry to break in but we're coming up on 13k.  Shotglasses at the ready.

Tue, 12/04/2012 - 11:09 | 3032382 idea_hamster
idea_hamster's picture

That's a great chart to get the peasants riled up -- everyone grab your pitchforks and torches!

A better chart would be the Brent v. Gas Price spread since we all know that Brent and WTI have long been dislocated and the f'd up area has been the Northeast, which feeds on Brent.

Not hatin'; just sayin'.

Tue, 12/04/2012 - 11:26 | 3032440 Caviar Emptor
Caviar Emptor's picture

Love it when the peasants act up.

Exxon reported earlier that oil and gas output fell 7.5%. So they made the profit on the refining side. Hey, a Rockefeller's gotta live somehow, no??

 

Tue, 12/04/2012 - 11:50 | 3032507 bobola
bobola's picture

That chart means nothing to me.

I commute to work via bicycle 4-5 days every week.

I use a tiny bit of oil to keep the chain and shifting cables happy.

Tue, 12/04/2012 - 11:56 | 3032528 Hugh_Jorgan
Hugh_Jorgan's picture

My name is Barack Obama. I think you make too much money, prepare to be taxed!

Tue, 12/04/2012 - 12:40 | 3032647 hedgeless_horseman
hedgeless_horseman's picture

 

 

That chart means nothing to me.

Good stuff!  So your farmer's combine and grocer's truck are also pedal powered?

"...fruits and vegetables can travel, on average, more than 1,200 miles before reaching the final consumer."

Tue, 12/04/2012 - 14:28 | 3033046 Tijuana Donkey Show
Tijuana Donkey Show's picture

All of my veggies and fruits are powered by illegal, undocumented, exploited foriegn labor, delivered to a local Sprawl-Mart in a SNAP. Mexicans run on beans, not oil, so we're good right? /sarc if people might think I'm serious.

Tue, 12/04/2012 - 13:05 | 3032723 Bawneee Fwank
Bawneee Fwank's picture

why is it that you motherfuckers that ride bicycles feel the need to constantly let everyone know...we dont fucking care that you ride a bicycle. 

 

I drive a 2011 F150 4x4...I have put bigger mud grip tires on it and it drinks the shit out of gas and I dont even take it off road nor do I need a truck because I do everything over the web, it just looks bad ass!  It drinks the shit out of gas because I have a lead foot...fuck you greenie bitchez!

Tue, 12/04/2012 - 13:10 | 3032747 Flakmeister
Flakmeister's picture

We ave a winner....

I would go for the exacta and on Earth Day burn a ton of sulphurous coal in the same pit that you burn your garbage in...

Tue, 12/04/2012 - 16:33 | 3033426 AlamoJack
AlamoJack's picture

@ Bawnee Frank:  You da' bull, hot dog!  Pack your saddlebags and move on down here to Texas.  I'm cookin' down that black crude just as fast as the pipeline blows it out the south end.  Hey, all you HEDGERS, tell these gubmint dingleberries to STOP PUTTIN' ALKYHALL IN OUR GAZZMOLEEN.  It de-energizes our road (and off-road AND on-water) MACHINES.  Destructive gubmint twits.  They know nothin' about engineering.

Tue, 12/04/2012 - 13:21 | 3032786 DFCtomm
DFCtomm's picture

Don't worry they will eventually find something that's important to you, and when they do all of us "normal" people will rejoice. Your wailing and gnashing of teeth will be like the chirping of birds on a pleasant spring day.

Tue, 12/04/2012 - 15:51 | 3033313 mind_imminst
mind_imminst's picture

Me too. Congrats bobola.

For people who don't like the high price of gas, there is a solution...don't buy it. Or start your own refinery.

Tue, 12/04/2012 - 10:55 | 3032354 Dr. Richard Head
Dr. Richard Head's picture

There will be an executive edict that will nullify ALL warranty repair and replacement contracts in order to empty the channel-stuffed lots.  Welkom to Amerika bitchez!

Tue, 12/04/2012 - 11:06 | 3032372 TruthInSunshine
TruthInSunshine's picture

But such an order would nullify the accretive, beneficial, stimulative effect of the need to repair/replace millions of additional "broken motors" that could have been entirely avoided by merely not actively mandating that a higher amount of expensive food-turned-to-ethanol be blended into gasoline.

Tue, 12/04/2012 - 11:08 | 3032386 Dr. Engali
Dr. Engali's picture

That's what we need ,burn more food in our fuel tanks. We live in a nation of retards.

Tue, 12/04/2012 - 11:50 | 3032504 mess nonster
mess nonster's picture

I say bring on the Greed and Stupidity! Now is the time for orgies of nihilistic self-destruction caused by the greediest and stupidest 1%! Choke on your own excess, you greedy, stupid mutherfuckers.

I'm transitioning to a food-fuelled transport system of my own- horses and mules. Do the math. A horse burns 700 calories an hour, on the high end of the scale. A fuel-efficient hybrid car, like a Prius, burns 100,000 calories an hour, on the low end of the scale. That makes a horse 142 times more efficicent than a car in crude thermodynamic terms. The Prius can travel 60 miles per hour, and the horse 4 miles an hour, so that makes the Prius 15 times faster.

The Prius burns 1666 calories per mile, and the horse burns 175 calories per mile, so even in relative terms, the horse is still more efficient by a factor of  roughly 10.

If that's not fast enough for you, try this calculation: A human can travel between 35 and 100 miles per day on a bicycle. Let's split it down the middle and say 50 miles per day at a heat energy cost of 4500 calories. (On horseback total daily travel is between 20 and 35 miles) That's 90 calories per mile, as compared to the Prius' 1666. And the only one you have to feed is yourself.

The solution to the evil, greedy, stupid bullshit is this: Stop participating. Don't bitch about it if you still want to use your i-phone and your SUV. Bitching while participating is paradigm slavery. They have us by the balls because we LET THEM.

 

 

Tue, 12/04/2012 - 12:07 | 3032560 LFMayor
LFMayor's picture

yeah, but on a side benefit, you don't have to wipe the smegma off of your Prius's crank to keep it from getting infected, do you?

And it doesn't spook when your little kid walks behind it and kick them to death.

all said, I admire your hobbies, wish I had the land/resources to own a couple horses or mules.

Tue, 12/04/2012 - 11:09 | 3032392 Joe Davola
Joe Davola's picture

Read that PA's gov is thinking of raising the gas tax, but mandating that it can't be passed on to the consumer.  Oh yeah, that'll work.

Politicians can go on about the tax rates all they want, it's the fees, excise taxes and all the happy horseshit that makes any utility bill take up 5 pages is where they'll fist us yet again.

Tue, 12/04/2012 - 10:40 | 3032306 Mike in GA
Mike in GA's picture

Isn't that REdistribution?

Tue, 12/04/2012 - 10:51 | 3032330 Urban Redneck
Urban Redneck's picture

Yes, but redistribution to whom?

If there isn't a corresponding increase in the margins of the refiners, transporters, or resellers, then one has to look to the OpEx components for those participants - where the most likely culprits are INFLATION, SOURCING, or  REGULATORY BURDEN...

Tue, 12/04/2012 - 11:24 | 3032434 Bollixed
Bollixed's picture

One of the driving forces for expensive gas is that years ago there were only 3 different mixes of gas being pumped through the system. That distribution system, btw, allows any company to put their gas into the pipeline at one end and pull that amount out at another location. Once the gas enters the system it becomes anybody's/everybody's gas.

There is an apparatus called a 'pig' that separates one type of gas, say high test, from regular, as an example. The pigs travel along inside the pipeline as a barrier between the different types of gas keeping them separate.

But it's not a perfect system, and some mixture occurs around the pig. So roughly 20% of all the gas put into the pipeline needs to be rerefined once taken out. This was not so much a problem when there was only three grades of gas.

Now there's something like 64 grades of gas due to laws enacted to help control emmissions. You can thank California for the added costs you pay at the pump as those folks started the mess.

Yes, the same State that gave us Nancy Pelosi also gave us permanently high gas prices thanks to taking us off the 'only 3 grades' paradigm. Remember that the next time you're at the pump filling up your SUV...

Tue, 12/04/2012 - 11:36 | 3032464 Flakmeister
Flakmeister's picture

The best way to lie is to clothe your misstatements with a gossamer fabric of truth so as to cover up the their implausability....

Tue, 12/04/2012 - 11:54 | 3032519 Inthemix96
Inthemix96's picture

Flakmeister.

What a condecending knob you are.  Read the comments here and had to admire you're vast supperior knowledge of all things above all others.

Fuck off you daft twat, you think your clever?  Stop being such a prick then, being so modest becomes you, stupid cunt.

Tue, 12/04/2012 - 12:04 | 3032553 Flakmeister
Flakmeister's picture

Sorry, would you rather listen to shit simply made up? Or maybe some circle jerk pity party on how filling the SUV is so expensive..

I have been dealing with the endless parade of idiots on oil matters for nigh on 3 years here. Early on I found that playing the nice guy was a fools errand and this is fight club after all...

So, unless you can add something of substance to the conversation, why don't you run along and STFU and leave the heavy lifting to those people that are capable...

Tue, 12/04/2012 - 12:56 | 3032707 Bollixed
Bollixed's picture

"Sorry, would you rather listen to shit simply made up?"

If you're referring to my post, I'll let you in on a little secret...

That was told to me by a guy who was my roommate in school back in the '60s. He runs the fuel division for one of the top 4 oil companies. I tend to believe what he says as he no reason to bullshit me. Could I have misunderstood him?

Possible, but we were both speaking English...

 

Tue, 12/04/2012 - 13:12 | 3032757 Flakmeister
Flakmeister's picture

As I said, a gossamer of truth to cover up the otherwise complete and utter bullshit...

Tue, 12/04/2012 - 13:23 | 3032790 Arnold
Arnold's picture

Keep repeating your tripe, maybe those of us who knew this will beleive you so that you can display your three years of knowledge elsewhere.

Tue, 12/04/2012 - 13:28 | 3032806 Flakmeister
Flakmeister's picture

Do you always have issues dealing reality and facts? Or are you channeling Karl Rove, you know, the guy that tried to live in is own reality until he couldn't....

Oh BTW, do you have anything of substance to add, or do you also just fling your own shit from the cheap seats?

 

Tue, 12/04/2012 - 18:35 | 3033721 Arnold
Arnold's picture

Really your insight is spot on.

I don't know how I could have been so wrong.

Tue, 12/04/2012 - 19:23 | 3033824 Flakmeister
Flakmeister's picture

I see that sarcasm ain't your strong suit either....

Tue, 12/04/2012 - 10:43 | 3032323 insanelysane
insanelysane's picture

5 yrs ago it was all about GW and Big Oil.

Tue, 12/04/2012 - 11:09 | 3032394 Stoploss
Stoploss's picture

Im sighting in 2 new AR-15's today, i will use this chart for the first one.

Wed, 12/05/2012 - 07:28 | 3034985 Stonepark
Stonepark's picture

I really hate poor graphs, this one needs to be a percentage change in price, not a best fit graph with differing scales and should also include adjustments for wti to brent, introduction of ethanol component, costs of trnasport and refining etc etc etc

Tue, 12/04/2012 - 10:34 | 3032280 GetZeeGold
GetZeeGold's picture

 

 

We've got lot's of oil......but very little gas.

 

Tue, 12/04/2012 - 10:38 | 3032302 markettime
markettime's picture

I knew some people who owned a gas station. They said they really only made money when the price of gas came down because they SLOWLY lower thier prices to take advantage of the difference. 

Tue, 12/04/2012 - 10:45 | 3032331 Flakmeister
Flakmeister's picture

There is a reason why the integrateds have been ditching their retail assets for some years now....

Tue, 12/04/2012 - 11:23 | 3032432 mayhem_korner
mayhem_korner's picture

 

 

No gasoline retailers make money off of gasoline sales.  That's why they have food marts and/or auto-repair shops attached.

Tue, 12/04/2012 - 11:33 | 3032460 Zymurguy
Zymurguy's picture

Correct, they're lucky to make 1-3% on each gallon... if they're lucky.  Depending on whether they own their land/building or are an operating lessee - the fuel sales pays for the rent only.  Can't make a living on that so the food, beverages and car washes are the gravy train.

That $8 car wash???  Costs the gas station about $0.75 to run your car through it :)

 

Tue, 12/04/2012 - 13:02 | 3032728 Coast Watcher
Coast Watcher's picture

Yep. They make more profit on a cup of coffee than on a gallon of gas.

Tue, 12/04/2012 - 10:35 | 3032283 buzzsaw99
buzzsaw99's picture

the guy driving the monster truck 100 mph down my street would be totally pissed off about this but i doubt he can read

Tue, 12/04/2012 - 10:42 | 3032320 JPM Hater001
JPM Hater001's picture

He'll make you read it to him...

Don't you remember, that's how it works.

oh, and you'll like it.

Tue, 12/04/2012 - 11:28 | 3032446 Caviar Emptor
Caviar Emptor's picture

Yes. And he might be the one collecting those taxes next year.

Tue, 12/04/2012 - 10:35 | 3032284 LawsofPhysics
LawsofPhysics's picture

Blame it on Sandy in 3...2...1...

Tue, 12/04/2012 - 10:35 | 3032285 Sunshine n Lollipops
Sunshine n Lollipops's picture

The herd will be milked at every opportunity.

Tue, 12/04/2012 - 10:48 | 3032333 resurger
resurger's picture

Amen!

Rgds,

Your Broke Government

Tue, 12/04/2012 - 10:59 | 3032362 Cognitive Dissonance
Cognitive Dissonance's picture

The good news is that we have all been acclimated to $3+ gas.

<Time to work on the $4+ level so we can breathe a sigh of relief when it goes back to $3+.>

Tue, 12/04/2012 - 10:37 | 3032287 Dr. Engali
Dr. Engali's picture

That's why it is absolutely necessary to thorw out food and energy when figuring inflation. It's just too darn volatile, besides it's not like people need it anyway.

Tue, 12/04/2012 - 11:01 | 3032368 Cognitive Dissonance
Cognitive Dissonance's picture

Food and energy consumption is completely voluntary.....just like our tax system.

Tue, 12/04/2012 - 11:29 | 3032453 Caviar Emptor
Caviar Emptor's picture

As they say at the Fed : if it weren't for necessities, there'd be no inflation

Tue, 12/04/2012 - 10:38 | 3032288 FunkyOldGeezer
FunkyOldGeezer's picture

Oil companies have to make a profit somehow. Don'cha know, they're ever so poor.

I thought it was only articulated joints that became dislocated.

Tue, 12/04/2012 - 10:38 | 3032298 GetZeeGold
GetZeeGold's picture

 

 

Not if they're anywhere close to the Gulf of Mexico.

Tue, 12/04/2012 - 11:24 | 3032437 mayhem_korner
mayhem_korner's picture

@FOG

 

Maybe just shut down all the profitable oil production companies.  Y'know, just to see what happens.

you can't fix stupid

Tue, 12/04/2012 - 10:38 | 3032300 Flakmeister
Flakmeister's picture

Why don't you plot it against Brent...

WTI don't mean diddly shit, except to analysts computing margins for mid-continent refiners....

Tue, 12/04/2012 - 11:15 | 3032412 mayhem_korner
mayhem_korner's picture

 

 

...also refinery capacity is the bottleneck between crude and refined products.  Crack spreads and premiums for refined gasoline can vary based on which refineries are on-line and what season it is.  Demand for distillate (#2 home heating oil) and winter-grade gasoline changeovers can elevate premiums.

There's a lot of distance between the lip of gasoline and the cup of crude...

Tue, 12/04/2012 - 10:39 | 3032301 adr
adr's picture

Considering gasoline futures contracts set the price of wholesale gas, and are open to algo driven speculation. It is perfectly concievable that gasoline could stay above $3.00 a gallon even if oil dropped to $60 a barrel.

Silly rabbit thinking demand and fundamentals mean anything anymore. There is no true price discovery.

Tue, 12/04/2012 - 13:13 | 3032325 Flakmeister
Flakmeister's picture

Silly Rabbit don't know SFA about how oil and refined products move about.... Gasoline stocks are at historic lows in PADD 1 because, drum roll, European refiners are shutting down (~2 mmbpd of capacity shuttered in the past 4 years)....

Edit: given all the junks, it is pretty clear that this one went over alot of heads here...

Tue, 12/04/2012 - 11:18 | 3032420 mayhem_korner
mayhem_korner's picture

There is no true price discovery.

 

Name a product that has better price discovery than retail gasoline.  It is distributed by local franchisees who post the price in large numbers that can be seen from 1/4 mile away.  Apart from cigarettes (sold at gas stations) and a few other items, what other products can you discover the price without actually going into the store?

Tue, 12/04/2012 - 11:26 | 3032442 Dr. Engali
Dr. Engali's picture

You're kidding right? Around here they are all priced the same up and down the streetsI have had owners tell me that they just look down the streeta t such and such station to see what they are charging then they will throw up the same price.

Tue, 12/04/2012 - 11:32 | 3032456 mayhem_korner
mayhem_korner's picture

 

 

Not kidding.  When you see the same price at 8 different gas stations in a 1/2 mile stretch, you are really looking at one station/micro-market.  Drive 5 miles away and you will see another cluster.  Where I live, I see gasoline price variances of $0.40/gallon within a 15-mile radius.  No one is forcing you to choose to buy gas at the cluster of stations closest to you.

Remember that markets require buyers as well as sellers.  Everyone buying at your cluster is a willing participant in that cluster's price.

Tue, 12/04/2012 - 12:23 | 3032620 mess nonster
mess nonster's picture

Where I live the same distributor provides gas for a Philips sation, a Sinclair station, and an off-brand station. It's all the same damn gasoilne, from the same truck. The marketing agreements vary, and the sign merely indicates which retailer gets screwed how much by the sign provider for having the sign. Where does the distributor get his gas? He's locked in to one of three bigger ditribution systems as permanently as if he was a serf bound to the land on a Russian estate.

It's a truly fucked-up system. Opt out.

Tue, 12/04/2012 - 12:09 | 3032575 machinegear
machinegear's picture

Prostitutes.

 

They don't let you in the "store" until price is discovered.

Tue, 12/04/2012 - 10:39 | 3032304 SelfGov
SelfGov's picture

Or could it be the quality of crude on the market? The easy stuff is gone, after all.

Tue, 12/04/2012 - 10:41 | 3032315 GetZeeGold
GetZeeGold's picture

 

 

The easy stuff is gone

 

....and cheap stuff is banned.

 

Tue, 12/04/2012 - 10:44 | 3032328 Flakmeister
Flakmeister's picture

Beg pardon??

Tue, 12/04/2012 - 11:08 | 3032359 GetZeeGold
GetZeeGold's picture

 

 

All our off shore oil rigs have moved to Brazil.......not sure why. Canada has to sell their oil to China....I guess we don't want it.

Tue, 12/04/2012 - 11:10 | 3032398 Spastica Rex
Spastica Rex's picture

I have a new carburetor design that allows high power American v8 engines to get 60mpg highway while pulling a full size SUV at 80mph.I have the plans hidden in a Brazilian vault because the oil industry paid me off a few years ago.

Tue, 12/04/2012 - 11:12 | 3032402 GetZeeGold
GetZeeGold's picture

 

 

They've got 60mpg cars in Euroland......but we can't buy them in America.

Tue, 12/04/2012 - 11:54 | 3032520 Flakmeister
Flakmeister's picture

Not that most americans would drive a turbo-diesel econobox....

Also, there is a hidden factor, imperial vs. US gallons....

Tue, 12/04/2012 - 12:08 | 3032564 GetZeeGold
GetZeeGold's picture

 

 

Be nice to have the option......just sayin.

Tue, 12/04/2012 - 12:10 | 3032579 Flakmeister
Flakmeister's picture

Agreed...

Oh yeah, you gotta to be able to drive stick as well...

Tue, 12/04/2012 - 22:01 | 3034315 GetZeeGold
GetZeeGold's picture

 

 

You don't know how to drive a stick?

Tue, 12/04/2012 - 22:09 | 3034335 akak
akak's picture

I doubt more than one American in eight knows how to drive a vehicle with manual transmission.

 

PS: My pickup doesn't even have power windows or locks.

Tue, 12/04/2012 - 22:43 | 3034447 Flakmeister
Flakmeister's picture

Every car I have owned since '94 has been a 5-speed....

Tue, 12/04/2012 - 23:07 | 3034534 akak
akak's picture

It always cracks me up (and makes me shake my head) here in Alaska to see drivers, particularly in the winter, slam on and ride their brakes all the way down a mountain road, frequently losing control in the process, rather than just downshift and coast.  I think the majority of idiots behind the wheel here firmly believe that a driver simply MUST have their foot on one or the other of the floor pedals at ALL times.

Tue, 12/04/2012 - 11:39 | 3032478 Flakmeister
Flakmeister's picture

Look GZG... You are not allowed to make shit up because you want it to be true..,

Could you remind us of how much oil the Canadians export to China and how much they export to the US?

Can you provide any shred of evidence that the DW rigs are heading to Brazil?

Tue, 12/04/2012 - 11:57 | 3032532 Spastica Rex
Spastica Rex's picture

Coins to a cat.

Tue, 12/04/2012 - 11:58 | 3032538 GetZeeGold
GetZeeGold's picture

 

 

I see you know a little about Saul Alinsky.

Tue, 12/04/2012 - 12:07 | 3032563 Flakmeister
Flakmeister's picture

Nope, never heard of the guy (aside from refrences from fucking whackadoos here that I would not trust with a burnt out match)

But it is clear that you know almost nothing about oil and its flows....

Tue, 12/04/2012 - 12:09 | 3032570 GetZeeGold
GetZeeGold's picture

 

 

Ever heard of Google?

Tue, 12/04/2012 - 12:16 | 3032595 Flakmeister
Flakmeister's picture

Why the fuck would I care about someone that only the whackadoos seem to care about...

Hell, why not look at the Koch Bros. daddy Fred to find someone that had actual influence....

Tue, 12/04/2012 - 13:35 | 3032827 Arnold
Arnold's picture

Really If we agree with you will you leave?

Tue, 12/04/2012 - 10:41 | 3032311 Paper CRUSHer
Paper CRUSHer's picture

............time for a SPR release......lol.

Tue, 12/04/2012 - 10:40 | 3032312 firstdivision
firstdivision's picture

You can thank BP and the blow-out for the disconnect.  All was well until the Gulf-spill.  Now there's a premium ontop of the price for risk of future disaster.

Tue, 12/04/2012 - 13:20 | 3032780 Vendetta
Vendetta's picture

pricing in the stupidity and negligence?

Tue, 12/04/2012 - 10:41 | 3032313 goldenbuddha454
goldenbuddha454's picture

Charts are completely irrelevant given the amount of money printing between the Fed and the Treasury.  Yes, there is a lack of demand for oil and will continue to be, but as the U.S. and Japan continue to deflate the value of our currencies, the less product we can buy so what we have is an artificial price level for gasoline that one day will explode when they decide to reveal that, yes, there is really inflation globally and its not just "transitory".

Tue, 12/04/2012 - 10:57 | 3032360 moonman
moonman's picture

Isnt oil priced in dollars?

 

Tue, 12/04/2012 - 11:03 | 3032373 Glass Seagull
Glass Seagull's picture

No...priced in dollhairs.

Tue, 12/04/2012 - 11:52 | 3032513 goldenbuddha454
goldenbuddha454's picture

A few possible scenarios concerning oil and the price of gas: 1)  Oil will plummet to 65 a barrel and stay there til demand increases in the summer vacation season.  2) Oil will maintain its current level for the next few months, then rise,  regardless of demand due to the printing of money or some other x factor in the near future ie... threat of Israel taking out Iranian nuke plants  in the future. 3) Oil will rise from its current level due to an overreaction of oil producers to cut back production to the impending recession and a softening in China. 4) Oil will go hyperbolic in the new year due an inclusion of food and gasoline in the Fed's report on the economy.  5) oil will rise sharply due to new EPA regs curtailing refinery production in the U.S.  Pick one, which will it be or none of the above? 

Tue, 12/04/2012 - 12:09 | 3032568 Flakmeister
Flakmeister's picture

EPA regs curtailing refining... more people making shit up...

Is that why we recently had record refining capacity in the US?

Tue, 12/04/2012 - 13:08 | 3032744 paulbain
paulbain's picture

 

 

goldenbuddha454 wrote:

A few possible scenarios concerning oil and the price of gas: 1)  Oil will plummet to 65 a barrel and stay there til demand increases in the summer vacation season.  2) Oil will maintain its current level for the next few months,

[snip, snip]

GoldenBuddha, your analysis is good as far as it goes, but it neglects the strong liklihood that, when the price of gasoline breaches $6 per gallon, the Federal government will impose price controls on fuel.

-- Paul D. Bain

PaulBain@PObox.com

 

 

 

 

Tue, 12/04/2012 - 10:41 | 3032314 Flakmeister
Flakmeister's picture

BTW, Keystone XL will fix it, by dragging the bottom curve up (~95% of the spread) while pushing down the gas curve down (~5% of the spread)... 

Tue, 12/04/2012 - 10:43 | 3032316 rzero
rzero's picture

This is solely from the disconnect that has emerged between WTI and Brent, due to a shipping bottleneck for WTI.

US gasoline has been tracking Brent, which is now the best indicator for the true price of oil. WTI is now basically meaningless.

Tue, 12/04/2012 - 10:43 | 3032322 strangeglove
strangeglove's picture

Same as with Coffee! Drops like a rock but the price rise sticks.

Tue, 12/04/2012 - 11:08 | 3032388 tnquake
tnquake's picture

But the bag keeps getting smaller! For the $$$$$ brew, just go one cup...

Tue, 12/04/2012 - 11:12 | 3032407 toomanyfakecons...
toomanyfakeconservatives's picture

Kona... not the blended shit. Real Kona.

Tue, 12/04/2012 - 13:44 | 3032863 BeerBrewer09
BeerBrewer09's picture

mom just sent 3 pounds from Hawaii. nice stuff.

Tue, 12/04/2012 - 10:52 | 3032342 lance_manion
lance_manion's picture

 

This has alot more to do with the wide $20-30 spread opened up between WTI and offshore/light crudes such as Brent/ANS/LLS since 2010.  Many coastal refineries are not running or set up to run on WTI, hence the disconnect between WTI and average gasoline price.

Tue, 12/04/2012 - 10:55 | 3032353 Flakmeister
Flakmeister's picture

Most of the Gulf Coast guys want the heavy sour shit, the problem for the light crudes is the crack spreads are lousy. Hence many older refiners are going tits up....

Tue, 12/04/2012 - 10:50 | 3032343 Jason T
Jason T's picture

Refineries were closed up all over Northest and in the Carribean.  

Tue, 12/04/2012 - 10:52 | 3032350 Hohum
Hohum's picture

Oil inventories quite high; gasoline not so much.  That is another explanation.  Check out the weekly petroleum status report from EIA on Wednesdays instead of speculating about "gouging."  Mr. Durden, you have better things to do.

Tue, 12/04/2012 - 11:54 | 3032357 Flakmeister
Flakmeister's picture

Yeah, this article is not up to the usual ZH standards....

I see it as throwing raw meat to the know nothings that are starting to dominate the boards...

Tue, 12/04/2012 - 11:02 | 3032375 LongSoupLine
LongSoupLine's picture

Fuck you you troll cunt. The chart shows years of this fucking shit.

It's just another fucking way the corporate elite rape the middle class knowing all along Bernanke wont include it in CPI. Out of fucking sight, out of fucking mind.

Take your EIA piece of shit fucking data and shove it up your well oiled fucking ass.

Tue, 12/04/2012 - 11:26 | 3032435 Monedas
Monedas's picture

Obama's libs get giddy about high gasoline prices .... your own people love it, LongSoupSlime ? You're off the Liberal Plantation on this one !

Tue, 12/04/2012 - 11:42 | 3032485 Flakmeister
Flakmeister's picture

Go fuck yourself and don't forget to give yourself a reach around while you are at it....

You are an idiot and every post you make only reinforces it....

Tue, 12/04/2012 - 11:53 | 3032516 LongSoupLine
LongSoupLine's picture

Nah, not liberal, nor conservative...just a hard working educated middle class guy who's angry we're getting fucked up the ass at every turn and by every entity from wall street, regulators to the politically corrupt.

If being completely pissed off for all us makes me an idiot, then I'll wear the badge with pride. With that, I admit my anger was a bit misdirected in my last post, and am man enough to say sorry.

Tue, 12/04/2012 - 12:29 | 3032632 mess nonster
mess nonster's picture

If you're tired of getting fucked, then leave the orgy.

Tue, 12/04/2012 - 14:23 | 3033025 LongSoupLine
LongSoupLine's picture

orgy??

Those are reciprocal events...retarded fucking analogy.

Tue, 12/04/2012 - 14:31 | 3033059 Flakmeister
Flakmeister's picture

Not if you are the towel boy....

Tue, 12/04/2012 - 16:04 | 3033346 LongSoupLine
LongSoupLine's picture

good point.

Tue, 12/04/2012 - 11:01 | 3032369 Moric
Moric's picture

This is an absolutely retarded article and point to make. WTI isn't even a relevant number when it comes to gasoline. I might concede the point if this was a Brent VS Gasoline chart. The only reason this phenomenon exists is entirely a transportation issue. Ever heard of Keystone XL?

Tue, 12/04/2012 - 11:27 | 3032444 Eally Ucked
Eally Ucked's picture

I'm not an oil expert but why graph was so correlated up until 2011 if WTI isn't relevant?

According to Canadian oil sources Canada sell oil to US for prices discounted to WTI by around 30$, so XL pipeline would really help to get more cheap oil to US.

Maybe that graph partially answers our question:http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MGFEXUS2&f=M

Tue, 12/04/2012 - 13:58 | 3032509 Flakmeister
Flakmeister's picture

Look closely, it started in late 09, and there was a brief period when the WTI-Brent spread tightened...

The putative Keystone  oil is going to the Gulf coast, read the Valero 10-Q and all about tax-free export zones...

Yes, your graph does explain some of it, as the US consumer must now compete on the world market for gasoline. Hint, he is losing the bidding war....

Oh, there is another reason why WCS trades at big discount, it is crappy "oil"

http://www.cenovus.com/operations/doing-business-with-us/marketing/western-canadian-select-fact-sheet.html

Edit: another issue that I should have mentioned that the only significant increse in OECD production has been the Tar Sands and Bakken which are land-locked. This leads to a depressed price at Cushing... FWIW, the increase in the Bakken has basically offset the decline in North Slope production....

 

Tue, 12/04/2012 - 11:11 | 3032399 Uncle Remus
Uncle Remus's picture

Can I use my EBT at the pump?

Tue, 12/04/2012 - 11:11 | 3032401 Downtoolong
Downtoolong's picture

I think there could be a micro explanation too. Most gas stations and retail outlets are mom and pop ops who don’t hedge their inventory. Their margins are typically so thin they simply won’t (can’t) sell their inventory at a loss when prices drop. Of course, they are quick to jack prices up when they rise quickly. When they get stuck with high priced inventory, they just keep offering it at a higher price until it’s gone. Sales volume may fall off a bit, but, eventually they liquidate and start over. It’s amazing how many people don’t even look or compare gas prices when they pull in to a station to fill up. I’ve seen spreads of $0.20 per gallon between stations across the street from each other when wholesale prices are moving up and down quickly. It’s another example of how volatility (risk) in wholesale fuel prices gets passed on to the consumer in the form of higher costs. One more thing we can thank Wall Street and their paper markets for.

Tue, 12/04/2012 - 11:11 | 3032405 yrbmegr
yrbmegr's picture

Capacity utilization is quite high in PADD 3 (Gulf Coast).  Part of the disconnect could be a capacity issue.

Tue, 12/04/2012 - 11:14 | 3032411 Byte Me
Byte Me's picture

suggests 'gouging' on a national level...

 

More like INTERnational

Tue, 12/04/2012 - 11:20 | 3032426 Monedas
Monedas's picture

The Obama administration has been quite open about how it admires high European style gasoline prices .... listen to what they say !  

Tue, 12/04/2012 - 13:13 | 3032763 Coast Watcher
Coast Watcher's picture

Not this year, but in O's second or third year he'll propose "fixing" the Obamacare clusterf*ck with single payer national health care financed by -- ta-daaa -- a whopping increase in the fuel tax, just like all those admirable Euriopean countries do. (Canada, too, IIRC.)

Tue, 12/04/2012 - 11:29 | 3032454 Zymurguy
Zymurguy's picture

Yeah, it's bullshit that the fuel in the tank that is in the ground and has been there for a couple days all of a sudden goes up in price because oil rose today.

I know of no other product that alters the live price on the shelf based upon instantaneous changes in the market.

It's total bullshit.

Tue, 12/04/2012 - 11:43 | 3032484 Monedas
Monedas's picture

They have to charge more to prepare for that next shipment which will cost more ?  Anyone here ever run a business ?

Tue, 12/04/2012 - 12:33 | 3032644 mess nonster
mess nonster's picture

Everybody who deals in volatile commodities on a retail level does this. When I go to buy steel, the guy pulls it off the rack where it has sat for 10 years, covered in a thick greasy crust of rusty oxidation, and then he charges me the going spot rate for new steel. I can't do anything about it because that's what everyone does. All I can do is pass the cost along. The price just goes up, and the guy I buy from is happy to move old stock for a profit.

Tue, 12/04/2012 - 11:36 | 3032465 Monedas
Monedas's picture

When there is high price volatility in any commodity .... are retailers obligated to lose money to prove their street creds .... if I have to jump through hoops .... I want to be compensated for the trouble .... and a little price cushion is helpful .... sometimes people get burned with volatile prices .... and inventory they paid too much for !  PPP .... Puritanical Price Police !

Tue, 12/04/2012 - 11:47 | 3032495 wagthetails
wagthetails's picture

With so much competition in the gas station industry, i don't really see it as gouging.  I see it more as a function of high gas prices reducing the preceived pain of a 20 cent swing.  I'd when gas is a $1, people think a 20 cent swing is huge, but not so much when gas is $4/gallon.  unfortunately, most people are morons. 

Tue, 12/04/2012 - 14:06 | 3032953 FrankDrakman
FrankDrakman's picture

Up here in the Great White North, the great socialist Trudeau imposed metric measurement on Canada. When you go from a 4.55 litre imperial gallon, gas that was $0.80/gal suddenly started selling for $0.20/l. Everybody thought it was a great deal, because they can't do simple arithmetic.

But the worst was the spread between regular and premium. It used to be about $0.05/gal (I'm talking the 70's, before unleaded). When they went metric, they get the same spread of $0.05, but now it was per litre.

But I don't blame the gas station retailers. I worked pumping gas in high school, and my owner was decent, gave us raises without us having to ask for them, let us work on our cars in his shop. Some people have enough money not to care about the price of gas, some people figure the time and extra gas burned to drive five miles in city traffic isn't worth the savings of $1. And finally, some people are so stupid they won't drive across the street when the gas is $0.04/l cheaper. That's what free markets are all about.

Tue, 12/04/2012 - 11:55 | 3032523 Disenchanted
Disenchanted's picture

 

 

 

"Ol' man river,

Dat ol' man river,

He mus' know sumpin'

But don't say nuthin'

He jes' keeps rollin'

He keeps on rollin' along."

 

 

 

As Mississippi River level drops, prices could rise

 

? Cost $545 million to import foreign oil because 5 million barrels of domestically produced crude oil would not be able to be transported on the river.

Tue, 12/04/2012 - 11:57 | 3032534 Flakmeister
Flakmeister's picture

Sandy gets all the headlines, but the pricetag for the ongoing AGW fueled drought is going to dwarf that for Sandy....

Tue, 12/04/2012 - 15:53 | 3033322 Cerin
Cerin's picture

If you think the WTI spread is bad now, just wait until the river gets shut down here in STL (or further south near PAH). Corps already had to restrict flow in the upper Missouri basin last week due to ag concerns. Another 2-3 feet and we're screwed down here-- 1988 style, maybe worse if we continue this through mid-month. All of those petrol barges are going to have to truck or train it in to the refineries and they will have to sell at a discount to offset the increased transport cost borne by the refineries.

I recommend that folks use Louisana Light Sweet or barring that, Brent for a more realistic picture of what refiners are having to pay (and thus what the fair value of said gas should be).

Tue, 12/04/2012 - 12:04 | 3032550 goldenbuddha454
goldenbuddha454's picture

If the price of oil was related to demand then we would be at $70/barrel or less and I wouldn't have just received an email from Airtran showing me a list of places I can fly to for $69 during the peak holiday season, Christmas!

Tue, 12/04/2012 - 13:42 | 3032855 Vendetta
Vendetta's picture

on a per person basis, aircraft have great mpg.

 

(Aircraft range (miles) divided by fuel capacicty) * number of passengers on board

 

737-800 = range ~6300 miles, fuel capacity: 6800 us gallons, passengers 130 to 215 lets pick 180

6300 mi/6800 gallons * 180 = 166 mi/gal per passenger

Irregardless of the impressive numbers, I don't really know how they make a profit given overhead

Tue, 12/04/2012 - 12:10 | 3032578 ItsDanger
ItsDanger's picture

The price at the pump actually does correlate to the futures price. You're right that the pump price doesnt go down nearly as fast but the futures dont either.  It has to do with less than 100% of the volume on the down move  (and slower drop) vs the spike.

Tue, 12/04/2012 - 12:14 | 3032597 orangedrinkandchips
orangedrinkandchips's picture

Which is the real deal????? WTF, er, WTI or Brent????

 

seriously...Brent is what to follow, no?

 

thnx in adv.

Tue, 12/04/2012 - 12:42 | 3032672 mess nonster
mess nonster's picture

Yeah you were right the first time. Definitely follow WTF. All the rest is smoke and mirrors.

 

Tue, 12/04/2012 - 12:41 | 3032670 ableman28
ableman28's picture

Oil to gas pricing is intentionally opaque and all pretroleum producers/processors simply like it that way.  The simplest way to recognize the intentional illogic of the market is to note this.

In 1999 oil was at $10.00 per barrel and gas at the pump was about $2.00 per gallon.  When oil costs 9 TIMES as much gas at the pump is about $4.00 per barrel.  Why doesn't gas cost a lot more now or a lot less then?

Oil is still, on a per barrel/per gallon basis a cheap commodity.  But tranport, refinining, taxes contribute to make it more expensive to the end user of one of its fractions.

But, and this is the key thing, the majority of the price of a gallon of gasoline is manipulated profit generating machine that makes it a phenomenally lucrative enterprise for everyone involved.

 

Tue, 12/04/2012 - 15:37 | 3033269 lostcause
lostcause's picture

 Also, don't forget we have so many additives added to our gasoline. We have a summer blend and a winter blend. I live in California where we have so many additives I wouldn't have time to name them all. We use 40% of our corn (food supply) for ethanol which is such a waste! The EPA and the federal government is making it much more expensive with all the taxes and mandates. We also haven't built any new refineries in over 30 years! What happens when these start to break down. Look what happened in California a few months back. One refinery went down and the price shot up over 20% in just a couple of weeks!

Tue, 12/04/2012 - 15:58 | 3033296 Flakmeister
Flakmeister's picture

Care to reconcile what you said with this?

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MOCLEUS2&f=M

The 30 year mantra about refineries is a well crafted talking point, strictly true but constructed to deliberately mislead. It is a favorite of the EPA bashers....

Tue, 12/04/2012 - 16:44 | 3033462 snblitz
snblitz's picture

One has to keep on eye on the word "additives".  Something things like ethonal are a "subtractive".

Tue, 12/04/2012 - 16:01 | 3033338 Cerin
Cerin's picture

There's little incentive to build a new refinery with flat demand (and after the 10-15% slump during the recession). Most refineries are investing in add-on infrastructure to process heavier grades of crude. For instance, the Wood River, IL refinery that I live near just dumped $3.5 billion to expand their capability to handle bitumen/heavy oil from the tar sands.

Tue, 12/04/2012 - 16:29 | 3033411 AlamoJack
AlamoJack's picture

@ Bawnee Frank:  You da' bull, hot dog!  Pack your saddlebags and move on down here to Texas.  I'm cookin' down that black crude just as fast as the pipeline blows it out the south end.  Hey, all you HEDGERS, tell these gubmint dingleberries to STOP PUTTIN' ALKYHALL IN OUR GAZZMOLEEN.  It de-energizes our road (and off-road AND on-water) MACHINES.  Destructive gubmint twits.  They know nothin' about engineering.

Tue, 12/04/2012 - 21:21 | 3034186 roadhazard
roadhazard's picture

Butt, butt, PEAK OIL, BITCHES !!! 911 !

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