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EU Gas Now Over $10: Charting The Global Gas Pump Price Shock

Tyler Durden's picture





 

For the first time since June 2011, the average price for Gas across the 27 European nations just broke above USD10/gallon. With the US on average above USD4/gallon (at its highest since May), it is perhaps worth looking under the covers at just what nations have been hurt the most in the last year by the money-printing-insanity-experiment rising price of crude. Italy has been hit the hardest with Fiat Uno drivers paying 18% more this year than last for a litre of petrol. As The Economist points out, only the Dutch and Norwegians pay more than the Vespa riders but perhaps it is worthwhile noting just how low (on average) the US price is compared to its global peers (for now) and the fact that only the French are paying less this year than last.

 

And from The Economist, Gas Price rises over the past 12 months have been considerable...

 


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Mon, 03/26/2012 - 12:31 | Link to Comment brewing
brewing's picture

transitory inflation...

Mon, 03/26/2012 - 12:40 | Link to Comment TruthInSunshine
TruthInSunshine's picture

<-- People start breaking shit @ gasoline $5/U.S  $11/EU

<-- People start breaking shit @ gasoline $6/U.S.  $13/EU

Mon, 03/26/2012 - 12:41 | Link to Comment derek_vineyard
derek_vineyard's picture

UNG printed fresh all time low today

 

Mon, 03/26/2012 - 12:54 | Link to Comment Ahmeexnal
Ahmeexnal's picture

What's the price of a gallon of gas in Venezuela?

Mon, 03/26/2012 - 12:55 | Link to Comment Eclipse89
Eclipse89's picture

0.12$

Mon, 03/26/2012 - 14:16 | Link to Comment UP Forester
UP Forester's picture

How come Libya isn't listed?  They must have had a helluva jump once the evil dictator was deposed, and got a central bank.  What was is a year ago, 16c/gal?

Mon, 03/26/2012 - 12:56 | Link to Comment Sudden Debt
Sudden Debt's picture

Two kidney's and your liver.

Mon, 03/26/2012 - 13:05 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Bernanke's monetary policies have nothing to do with increasing oil or commodity costs.

 

 

 

/s

Mon, 03/26/2012 - 13:06 | Link to Comment brewing
brewing's picture

no /s needed...

Mon, 03/26/2012 - 13:34 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Another consequence related to high price of gasoline will be the high price of aviation fuel.  Fewer people will fly.  

Not good for airlines or the tourism industries.  Business class Miami - Lima - Miami was quoted to me at a majestic $4000 round trip a month ago (less than six hours one way). I took economy at $1100...

Mon, 03/26/2012 - 14:19 | Link to Comment NOTfromSanFrancisco
NOTfromSanFrancisco's picture

 

 

DoChen...

Large hotels and restaurants get clobbered too. In So. Calif. we got beat up pretty good when fuel prices rose a little higher than where they they are now a couple of years ago. The top management at our hotel tries to keep the associates who work there pumped with good news about future business expectations, but the proof is in the scheduling, both with the number of associates working on the schedule full time and the number of hours the full timers are actually getting scheduled to work. Those numbers do not lie...

Mon, 03/26/2012 - 22:28 | Link to Comment Freddie
Freddie's picture

Who wants to get scanned, frisked and groped by TSA?  Who wants to go to CA anymore?  Used to be a nice place.

Mon, 03/26/2012 - 13:10 | Link to Comment Sudden Debt
Sudden Debt's picture

http://www.garynorth.com/public/9263.cfm

All you need to know about how QE works.

Mon, 03/26/2012 - 13:33 | Link to Comment t_kAyk
t_kAyk's picture

hilarious

Mon, 03/26/2012 - 14:12 | Link to Comment NOTfromSanFrancisco
NOTfromSanFrancisco's picture

 

 

Sudden Debt:

I believe that is what China's death row inmates pay... For now...

Mon, 03/26/2012 - 13:05 | Link to Comment Gene Parmesan
Gene Parmesan's picture

Not worth it.

Mon, 03/26/2012 - 13:27 | Link to Comment Floordawg
Floordawg's picture

Cheap gas is a "birthright" to Venezuelans... like obesity is to Americans

Mon, 03/26/2012 - 12:42 | Link to Comment Eclipse89
Eclipse89's picture

I am Inflation.

I will not forgive, I will not forget, expect me.

Got gold, bitchez?

Mon, 03/26/2012 - 13:09 | Link to Comment Henry Chinaski
Henry Chinaski's picture

TPTB can grow debt and print money like gangbusters, engage in wars and try to command the economy.  What a waste.

Things people need get more expensive, as things people don't need get cheaper.

Got what you need, bitchez?

Mon, 03/26/2012 - 12:43 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Alternate Option: 

 

Obama orders opening of SPR 4 weeks before November election causing oil to plunge to $40/barrel. </sarc>

Mon, 03/26/2012 - 12:44 | Link to Comment Bazinga
Bazinga's picture

I guess up until $5/$6 US people are merely passing gas? At $6 US I say the shit hits the fan...

 

Mon, 03/26/2012 - 14:45 | Link to Comment paulbain
paulbain's picture

Bazinga wrote:

I guess up until $5/$6 US people are merely passing gas? At $6 US I say the shit hits the fan...

Well, perhaps. Actually, it is more likely that the Federal government will impose fuel price controls before the gas price breaches $6 per gallon. The crap will not hit the fan until a few months after that imposition, when there will be profound shortages of gas at the legal price.

-- Paul D. Bain

paulbain@pobox.com

 

 

 

 

 

Mon, 03/26/2012 - 22:32 | Link to Comment Freddie
Freddie's picture

Price controls will only make it worse and it will happen very fast.   Libtards with horrible oil, etc. and phony environmentalism is payoff to their Saudi pals.  

When gas starts getting really high it will filter into everything.  Food prices, electricity, water bills, shipping costs, anything you pay for.  The pain will go up fast because you will have food shortages.

 

Mon, 03/26/2012 - 12:49 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

@ Truth

Maybe at $6.00, but I would think no violence here until $7.00.  Certainly more destruction of the economy starts at $5.00, but things don´t BREAK at $5, they would break about $7.00, when those who commute to lower paying jobs cannot make it.

$6.00 destroys the economy.

$7.00 people start breaking shit.

And Obama looks pretty stupid with his no drilling / no pipelines policies.

Mon, 03/26/2012 - 12:58 | Link to Comment TruthInSunshine
TruthInSunshine's picture

This is just a guess on my part, but at the current levels, the economy has been breaking down faster than it formerly was (even if masses haven't begun breaking shit, yet).

Gasoline. You can't eat it.

Mon, 03/26/2012 - 13:35 | Link to Comment MachoMan
MachoMan's picture

This.  As time progresses, we're less and less resilient.  An equal oil shock in the future will cause more damage than today... 

No one need determine some $ amount where the economy breaks down when the present price levels of gas are killing the economy (or what was left of the ghost of its inertia).   

Mon, 03/26/2012 - 17:08 | Link to Comment DaveyJones
DaveyJones's picture

well said

Mon, 03/26/2012 - 12:58 | Link to Comment Sudden Debt
Sudden Debt's picture

Funny thing with people... They'll just say "what can you do about it?" and they'll pay the price.

Mon, 03/26/2012 - 13:34 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

@ Sudden

+ 1

Yes, I overlooked that in my comment to Truth.  I think that you are right until things get REALLY BAD, and my guess it is $6.00 - $7.00 here in the USA.  If we get there, then maybe they WON´T pay the price.

And I will be real glad that we don´t sell bearings here (cars not running much)...

Mon, 03/26/2012 - 14:11 | Link to Comment Sudden Debt
Sudden Debt's picture

We'll see my friend, I to remember the time when it costed 25€ to fill up my car in the not so far past and now its 115€ to fill it up. And no riots over here. Aso remember that european food prices doubled and trippled these last 5 years, and no riots here.

Mon, 03/26/2012 - 17:35 | Link to Comment TruthInSunshine
TruthInSunshine's picture

They have no choice until they have no credit. And if you think that they're not digging deeper into the credit well and/or savings to pay the bills, I do not believe you know modern day Americans.

My very humble opinion is that economic contraction of the kind that can't even be hidden by inflationary scheming (we've been contracting in real terms for more than a decade) can't be avoided once a % of the population that was deemed middle class circa-1968ish (in U.S. terms) shrinks by half. We're probably 80% of the way there.

Where did that half go? Did they move in equal parts up and down on the income ladder? Did they appear to stay put on consumption based on credit? Two incomes instead of one?

If a far larger portion moves downwards, essentially fueling their consumption on credit (and I'd argue we've been in a credit based consumption cycle just like this since 1977), and then you have a blowoff move in credit/debt consumption in the last decade, the top 10% won't be able to support the economic structure no matter how much they spend (versus save, which they do in larger amounts, especially those in the 3%+ income and wealth brackets).

And this is why the bubbles must be blown, as a can-kicking, delay exercise. After all, who wants to be in the hot seat and have to get everyone to take the medicine with wicked side effects, but that's the only thing that can arrest the disease?

The fact that an institution is bankrupt can be hidden for some time given the correct mark-to-fairy tale metrics.

Mon, 03/26/2012 - 12:58 | Link to Comment Quinvarius
Quinvarius's picture

People making 7.50 an hour, before taxes, don't have room to spend $14 a day on gas.

Mon, 03/26/2012 - 13:03 | Link to Comment Sudden Debt
Sudden Debt's picture

People who make 7.50 an hour love to walk.

Mon, 03/26/2012 - 22:35 | Link to Comment Freddie
Freddie's picture

Hilarious seeing you getting junked by Obama voters who post or lurk here.

The $7.00 and even $6.00 level will see higher food prices and food shortages.  The parasites will still have their Food Stamp Diner's Club credit cards.

Tue, 03/27/2012 - 01:58 | Link to Comment PrintPressPimpin
PrintPressPimpin's picture

yo do you tripping dog...I heard obummer was all about that pipeline where you been

/s

 

Mon, 03/26/2012 - 12:52 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

dupe, server burp, sorry

Mon, 03/26/2012 - 14:34 | Link to Comment bobola
bobola's picture

Bike Club rule #1 - you talk about riding a bike while the car stays at home.

Bike Club rule#2 - YOU TALK ABOUT RIDING A BIKE......

Tue, 03/27/2012 - 12:08 | Link to Comment lenitivelea
lenitivelea's picture

<--  People never start breaking shit and adjust to "new normal" at every price level

Mon, 03/26/2012 - 12:45 | Link to Comment Stoploss
Stoploss's picture

Holy shit, we're going to need a LOT more cops for this one.

Mon, 03/26/2012 - 12:47 | Link to Comment Stoploss
Stoploss's picture

Now you know how they are making up for the lost tax revs.

Mon, 03/26/2012 - 13:13 | Link to Comment Stoploss
Stoploss's picture

Start with this.

http://en.wikipedia.org/wiki/Jobber_%28fuel%29

To find out WHY gas is high, these are the people to talk to.

There are only three entities involved in bringing gas from the refiner to the pump.

One of them (retailer) has the least price control, ( he buy's from the jobber, and the jobber sets the price ).

One of them ( the jobber ) drives their truck onto the refiners property to fill the tanker. He receives a jobber's Discount...

One of these two, ( the jobber, and the refiner ) are making what appears to be a killing.

IF the jobber discount is in line, which was as much as 25% at one time, then that means the refiners are making the killing right? But how can that be, if their margins are collapsing??

Surely the refiners wouldn't be engaged in some kind of hidden governmental give back to offset the exponetial decline in tax revenues due to the simple fact that you cannot have a "jobless" recovery if you can't create enough jobs to overcome the initial job drop in the first fucking place!!

 

GODDAMNNFUCK!!!!!!!!!!!!

Mon, 03/26/2012 - 12:59 | Link to Comment Sudden Debt
Sudden Debt's picture

Drones.... They'll need more drones. With rockets.... Lots of them...

Mon, 03/26/2012 - 13:06 | Link to Comment Silver Bug
Silver Bug's picture

Look the other way. No inflation to see here ladies and gentlemen.

 

http://ericsprott.blogspot.ca/

Mon, 03/26/2012 - 12:33 | Link to Comment Widowmaker
Widowmaker's picture

America to Europe - Close your eyes and inflation goes away!

Change the model, print more fraud.

Mon, 03/26/2012 - 12:35 | Link to Comment q99x2
q99x2's picture

The US appears once again listed closest the PIIGS

Mon, 03/26/2012 - 12:35 | Link to Comment ACP
ACP's picture

The Fed will have to release some oil suppression funds from its Strategic Manipulation Reserves.

Mon, 03/26/2012 - 12:35 | Link to Comment LawsofPhysics
LawsofPhysics's picture

Why such a small change in France?  Subsidies?

Mon, 03/26/2012 - 12:41 | Link to Comment Cast Iron Skillet
Cast Iron Skillet's picture

the French have an election coming up ...

Mon, 03/26/2012 - 12:43 | Link to Comment rwe2late
rwe2late's picture

 Plunder, err, I mean "subsidies" from Libyan resource management?

Mon, 03/26/2012 - 13:00 | Link to Comment Sudden Debt
Sudden Debt's picture

Small president, low inflation
America... Well.... Big president, high inflation and the fact that his name rhimes with Dumbo doesn't bode well either...

Mon, 03/26/2012 - 12:36 | Link to Comment Walt D.
Walt D.'s picture

EU prices are high because of high taxes, not because of the cost of crude.

Mon, 03/26/2012 - 12:44 | Link to Comment Dr. Engali
Dr. Engali's picture

I am sure the fiat printing has nothing to do with it as well.

Mon, 03/26/2012 - 12:51 | Link to Comment Global Hunter
Global Hunter's picture

so the price increases can be attributed solely to increases in taxes on petrol?  Riiiiiiight

Mon, 03/26/2012 - 17:11 | Link to Comment DaveyJones
DaveyJones's picture

true....it's not the cost of crude

it's the cost of finding enough crude

Mon, 03/26/2012 - 12:37 | Link to Comment DutchRollMode
DutchRollMode's picture

1. Install gassifier on car.

2. Fuel with fiat currency (come hyperinflation).

3. Voila: Abundant, cheap fuel.

Mon, 03/26/2012 - 12:39 | Link to Comment Dick Darlington
Dick Darlington's picture

Thank god for the fake CPI-figures!

Mon, 03/26/2012 - 12:39 | Link to Comment AN0NYM0US
AN0NYM0US's picture

rising crude+

 the multiplier effect of VAT and other taxes 

Mon, 03/26/2012 - 12:45 | Link to Comment NFisher
Mon, 03/26/2012 - 12:44 | Link to Comment yogibear
yogibear's picture

No problem with gas aroun $4.50/gallon.  Consumer business is still great, the sports stores, resturants and shops are still crowded. People are used to $4.50/gal around the big cities.  People are convinced the recovery is on and it's an election year.

Mon, 03/26/2012 - 12:45 | Link to Comment centerline
centerline's picture

What is really scary is the 0.93 on the US due to military/reserve currency. Imagine the effects of the playing field being leveled.

Mon, 03/26/2012 - 12:46 | Link to Comment YesWeKahn
YesWeKahn's picture

I am Bernank, I will print regardless the gas price. When I print enough, the gas price will logically fall.

Mon, 03/26/2012 - 12:47 | Link to Comment lolmao500
lolmao500's picture

2.58$ a liter in Norway... DAMN... 9.75$ a gallon in the US...

Mon, 03/26/2012 - 12:51 | Link to Comment Squid Vicious
Squid Vicious's picture

bullish! especially for discretionary stocks... everyone's rushing to the malls and restaurants! and don't hold off on that F-150 or bass boat purchase either!

Mon, 03/26/2012 - 12:53 | Link to Comment Flakmeister
Flakmeister's picture

Top shelf article at the Drum....

Must read for any serious student of the energy situation

Global Oil Risks in the Early 21st Century

----

Very good aside from the standard conflation of all liquids and oil...

Here is a breakdown of what "All Liquids" are

http://www.theoildrum.com/files/Screen%20shot%202012-02-13%20at%209.03.40%20AM.png 

Mon, 03/26/2012 - 17:29 | Link to Comment DaveyJones
DaveyJones's picture

well written, easy to understand.

Mon, 03/26/2012 - 12:52 | Link to Comment Quinvarius
Quinvarius's picture

We have ethanol keeping a competitive lid on things.

Mon, 03/26/2012 - 12:55 | Link to Comment LawsofPhysics
LawsofPhysics's picture

For now, but right now our silos are empty (great prices last year and some flooding).  Mother nature better deliver or that "lid" you are refering to is going to blow right off as the cost will show up in both fuel and food in the fall.

Mon, 03/26/2012 - 13:08 | Link to Comment Dr. Engali
Dr. Engali's picture

Ethanol is a joke and a crime against humanity. It takes more energy to make a gallon of ethenal than said gallon produces, Take away the subsidies and watch what happens to ethenal.

Mon, 03/26/2012 - 15:01 | Link to Comment Quinvarius
Quinvarius's picture

It is kind of funny when people parrot that subsidy stuff.  Ethanol producers get no Federal subsidies.  Oil companies get Federal subsidies.  I don't know why people keep claiming there is a federal ethanol subsidy to produce ethanol.  It doesn't exist.  You will go find something and claim it is a subsidy to ethanol producers.  Then I will point out that none of it goes to ethanol producers and it all goes to oil companies.

It does not take more energy to produce a gallon of ethanol it puts out.  That idea is absurd.  You are talking about taking an existing product (cattle feed) and fermenting it to make two products (cattle feed and ethanol).  You don't lose the nutritional value from the cattle feed by removing the starches, and it still gets fed to cattle.

There is nothing wrong with ethanol.  There are just a lot of weak minded victims of oil company PR.  I have no personal interest in ethanol.  I am just not stupid enough to listen to a guest on CNBC parroting discredited lies without verifying them.  I like ethanol.  It makes money.  It helps out.  I am not jealous of farmers for finding a way to be more efficient and make extra bucks.

Mon, 03/26/2012 - 17:23 | Link to Comment malek
malek's picture

Cattle get fed corn only for the nutrients, not for the calories? You really have to improve your logic twisting to become convincing.

Mon, 03/26/2012 - 19:14 | Link to Comment smiler03
smiler03's picture

Facts about Corn Ethanol Production

  On Sunday January 8th, the 30-year old ethanol subsidy will expire.

http://zfacts.com/p/60.html

Mon, 03/26/2012 - 15:06 | Link to Comment Matt
Matt's picture

This is true, when referring to Ethanol derived directly from Corn kernels. Other methods not used in America, such as Ethanol from sugar cane, are competitve on EROEI with unconventional oil. However, if you count the energy used from Bagasse that could have been used for other purposes such as electricity generation, the EROEI for sugar cane is onloy 3:1.

Corn Ethanol:

http://netenergy.theoildrum.com/node/6760

Tar Sands:

http://www.theoildrum.com/node/3839

Sugar Cane Ethanol:

http://www.theoildrum.com/node/3707

 

 

Mon, 03/26/2012 - 15:16 | Link to Comment Quinvarius
Quinvarius's picture

Actually, it isn't true for corn ethanol either.  It might be if we grew the corn and only made ethanol from it.  But that is not how the process works.  It is just an extra step in refining existing cattle feed into cattle feed plus ethanol.

Mon, 03/26/2012 - 17:53 | Link to Comment Matt
Matt's picture

Please provide a source for your claim. From my link above from theoildrum.com they show sure you can have an EROI of 6.25 in Minnesota, at the Farm Gate. Once it goes to the Refinery and becomes Ethanol, the EROI at Refinery Gate is down to 1.14; still more than consumed, but barely a positive return, and that is in the State with highest EROI on Corn Ethanol.

Mon, 03/26/2012 - 12:53 | Link to Comment OpenEyes
OpenEyes's picture

If you price your gasoline in pre-1964 dimes it's still cheap.  In fact, priced in those assets, it's actually a bit cheaper now than it was in 1964.  The problem is not the oil, or the taxes but, rather, the problem is the dollar!  The race to debase currencies didn't start with the economic crisis of 2007/2008.  No, the issue of debasing currencies is as old as history.  If I can pay you back tomorrow with a currency that is worth 50% less than it is today, well, you get the picture...  

"high gas prices" are a symptom of currency debasement more than any other factor.  in my opinion

Mon, 03/26/2012 - 13:25 | Link to Comment Flakmeister
Flakmeister's picture

If your hypothesis is correct, then the Majors could take the "free money" afforded by ZIRP, and turn it into additiional production and reap a huge ROI by selling into these high prices....They can't...and therein lies the real probiem....

A working definition of Peak oil is when no amount of printed money can increase supply...

The dollar is declining relative to oil and gold... Silver is merely a proxy for gold....(the value to your 1964 dime relative to gold was fixed by fiat)

Mon, 03/26/2012 - 13:31 | Link to Comment malikai
malikai's picture

And let us not forget that it takes oil to get gold, silver, food, whatever.

Mon, 03/26/2012 - 13:39 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Yes, + 1

With both Peak Oil and Peak Gold, we may be setting up for a BIG rise in PM prices.

Gold is still very cheap at under $1700.  Get it while it´s cheap.

Mon, 03/26/2012 - 13:54 | Link to Comment OpenEyes
OpenEyes's picture

I am not disputing peak oil.  (as an aside, I read The Long Emergency twice and bought 5 copies for family and friends).  

But, I don't believe that Peak Oil is what's driving prices up currently.  I think that the price increase from Peak Oil will be parabolic and will occur at some point in the near/mid future.  I also think that there will be other commodities with parabolic price increases as a result of demand and dwindling supply (e.g. water, gold, silver among others) if they can be obtained at any price.

But, today with respect to $5 gas US / $10 gas Eur, I believe that currency debasement via central bank printing is what is driving prices up. Look at the gradual step increases in price.  Those look to me more like adjustments to currency supply ( central bank printing) rather than adjustments to lack of oil.

 

Mon, 03/26/2012 - 15:23 | Link to Comment Flakmeister
Flakmeister's picture

The spike in oil prices in 2008 above ~$100 was a PO induced spike (my take, based on the Au-oil ratio) and I agree that the recent run up in price is primarily liquidity driven with a major caveat...The global economy, despite being weaker after having visited deaths doorstep, is still strong enough to demand more oil than the market can provide... Look at the demand destruction over the past 5 years in the US, that oil is now being consumed in Asia...

But there is more to the story, the infusion of liquidity, e.g. LTRO, QEn and what not, has staved off a deflationary collapse. In such a  collapse the dollar price of *all* assets would be affected...Therefore, the one ratio to look at is the Au-Oil (Brent, not WTI) one. And that has been fairly steady of late... Your predicted parabolic rise in the price of oil will occur when the petro-dollar collapses and that is a few years off IMHO...

If it was purely liquidity, the East Coast refiners would not be closing down, we both know that their supply of light sweet crude is slowly vanishing and they can no longer be competitive...

It is too simplistic to see the price of oil as either peak driven or a response to printing, it is a combination of both....

Finally I would argue that gradual movements in the price of oil are driven by real and percieved disruptions in supply.... From historical data, a 1% change in supply moves prices by 16%...

Mon, 03/26/2012 - 16:17 | Link to Comment r101958
r101958's picture

Thank you Flakmeister. You are correct. There will always be some around that insist that the supply of oil is infinite; that we can keep finding and producing more and more. They blame it all on speculators or inflation or something else. I guess thinking that way is easier for them. 

Mon, 03/26/2012 - 18:16 | Link to Comment DaveyJones
DaveyJones's picture

"currently" is a difficult term to define. It's so dependent on the past (and the future) It is ultimately the increasing cost of this vital energy that is driving the people that use that energy and an economy built on it to drive money / credit up as a failed solution for the supply going the other direction.

Mon, 03/26/2012 - 13:01 | Link to Comment sudzee
sudzee's picture

On average 70% of the price per litre is tax. This tax is the only rising revenue steam for Gov'ts. Gov'ts want higher prices. $50.00 per gal coming soon to a re-fill staion near you.

Mon, 03/26/2012 - 13:03 | Link to Comment djsmps
djsmps's picture

Retail sales are the highest ever. It's obvious that this is having no effect on the economy. This time it's different.

Mon, 03/26/2012 - 13:42 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

If retail sales are so high (and I accept your comment as true), that would buttress my case to TruthInSunshine above, that the really bad stuff does not start to happen until gasoline is at $6.00 - $7.00 per gallon.

Mon, 03/26/2012 - 13:07 | Link to Comment niktamere
niktamere's picture

Blodget and co need to suck on this one for a while

Mon, 03/26/2012 - 13:10 | Link to Comment Amish Hacker
Amish Hacker's picture

The real shock will come when people realize that higher prices are not leading to greater production and supply. With something that's hoarded, like gold, higher prices will always bring additional supply out of the woodwork. But with a product that has reached/is reaching peak production, like oil, demand can overpower supply, in spite of high price.   Even the Saudis, in spite of claims that they can ramp up output any time they want, are up against real limits.

The only option for the consumer is to cut back on consumption, as we're already seeing in the US.

Mon, 03/26/2012 - 13:45 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

While I agree that higher prices usually DO lead to higher production, and I accept your case re oil, but I would extend that to gold as well.  It will cost MORE to mine and process it, and we may be at Peak Gold as well.

Mon, 03/26/2012 - 13:10 | Link to Comment unionbroker
unionbroker's picture

an associate of mine used to own a chain of gas stations but has divested because the margins are too small to make it worth while. Too many hours too little profit.

Mon, 03/26/2012 - 13:11 | Link to Comment niktamere
niktamere's picture

What is France doing that is so good?

Mon, 03/26/2012 - 13:13 | Link to Comment Vince Clortho
Vince Clortho's picture

Tyler, let me see if I got this right:  You are suggesting there is a relationship between unrestricted printing and rising gas prices?

Mon, 03/26/2012 - 13:17 | Link to Comment manhunter
manhunter's picture

Freegold makes the euro strong in oil. Push the button ECB.

Mon, 03/26/2012 - 13:27 | Link to Comment WTF_247
WTF_247's picture

I used to have the opinion that if the US was able to drill a lot more, the price of gas/oil would come down.  This is always argued, but I have come to the realization it will not matter unless the US can supply so much oil that they materially affect the world supply of oil (aka we become another Saudi Arabia).

That is not possible to happen - we simply do not have the resources/deposits to pull that off.

Oil is a global commodity - it trades off global prices.  If we drill more here it will not matter - the price of such drilled oil depends on global oil prices.  We are not like many other countries (such as Venezuela, China etc) that have nationalized all oil production.  This enables the government to sell oil at whatever price they want - even at a loss to global prices.

We cannot force Chevron for intstance, to sell oil at 50% below spot price per barrel just so Americans can have cheaper gas price - it will never happen.  They would instead sell it globally for the higher price and just not sell anything in the US.  Or if thier hand was forced they could opt to just shut down and stop production.  Sure, the government could "subsidize" the difference but there is not enough money to do that long term and it would be very politically unpopular for them to do so.  This does not save anything as it merely shifts the cost to the govt rather than the consumer.

This issue is rarely talked about by either side, D or R.  

No matter how much we drill, whether we get the Keystone pipeline, drill in Anwar etc - it is unlikely to have much of any impact on prices.  No matter what kind of green bullshit we try, that is unlikely to affect it either.  The cost of such projects are often so high it is cheaper to not do them - the technology is simply not there (read efficiency) and doing them does not in effect save any money at all.  You shift money from buying oil to buying and supporting your green dream.  You are only shifting the money from A to B, not reducing the money spent.  Just as you reach the cost savings part of that curve, replacement/repair costs kick in so net it is not a winner.

Oil prices might come down some through psychological supression of speculation, but longer term unless we either massively cut our consumption or massively increase our output, nothing is likely to change.  Neither of those is ever likely to happen, so there will be no change really.  Until then it is up to the global economy to set prices for which we have very little chance of affecting.

Mon, 03/26/2012 - 13:51 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ 1  Nice analysis

But, I think that doing a lot of the incremental things ARE worth doing (the ones that do not need subsidies).  Drill more.  Use less.  Look at alternative energies.  Design better (energy efficient) buildings.  Natural gas.  In the end, all of that will lessen the blow.

Too bad nuclear power appears to be too dangerous.  A couple of years ago, that looked like it would help.  Now, no.

Mon, 03/26/2012 - 16:38 | Link to Comment DCFusor
DCFusor's picture

Yep pretty much spot on.  My personal price for oil just went to nearly zero, since I got that electric car everyone here likes to hate on, and enough solar panels to keep it charged up.  Yeah, it was expensive - once.  Now "gas" is free until I need to run my truck or my tractor, which is not much at all.

If I charged it off the grid, it'd cost me about $1.50/45 miles.  Off the solar, well....time value of the money in the panels, I guess.  When the car is charged, I have a ton of spare power to do new things with instead.  Works for me.

Of course, that doesn't get me off the fact that everything oil dependent, which is...everything....else is going up in price.  Time to do more garden work to cut my costs further.

Since there's no real prospect for increasing supply (rate) worldwide - new fields coming online will just about replace the reductions in existing fields it seems, the only thing that seems sensible is to cut demand.  Might not be able to cut it to the point that prices actually go down, but you'll personally spend less on it.  Might be the best you can do.

 

Mon, 03/26/2012 - 19:32 | Link to Comment smiler03
smiler03's picture

DCF, +1 and all credit to you for buying that Volt while it's so "cheap". For the future though I wonder how much oil it will take to build one and what the true cost of building one really is? Is it oil intensive to build? BTW, these are questions I don't know the answer to.

http://www.insideline.com/chevrolet/volt/2012/2012-chevrolet-volt-gets-price-cut.html

This one's a bit over the top I suspect..

http://www.carnewser.com/news/1071037_the-real-cost-to-build-a-volt-today-is-a-staggering-250000-do-diesels-still-look-expensive

Mon, 03/26/2012 - 13:37 | Link to Comment MieleBauknecht
MieleBauknecht's picture

The US had peak oil already in the 70's. US drilling is too expensive and volumes are too low to make a huge impact.  

Mon, 03/26/2012 - 13:40 | Link to Comment Dull Which
Dull Which's picture

Wait til next month: Here in the UK, the union representing the drivers of the delivery trucks (deliveries TO the pump) have decided to strike over pay, conditions and safety. They did this in 2000 and the place was chaos for a few days. Already there's a suggestion that the Army will be moved in to keep the tanks (ahem) full, especially if the drivers decided to strike over Easter.

 

Which is nice

Mon, 03/26/2012 - 20:44 | Link to Comment Sandmann
Sandmann's picture

Army drivers will avoid regions of the UK with IEDs - we know which they are !

Mon, 03/26/2012 - 13:46 | Link to Comment Stock Tips Inve...
Stock Tips Investment's picture

The price of commodities has risen in recent years due to two factors. The increased demand generated by the explosive growth of China (and 20 other middle-incomecountries) and the loss of value of the dollar. If the world economy is not paralyzed ... wecommodity prices even higher.

Mon, 03/26/2012 - 20:43 | Link to Comment Sandmann
Sandmann's picture

China SUBSIDISES petroleum products which apparently increases Demand as taxation apparently reduces it

Mon, 03/26/2012 - 13:47 | Link to Comment earleflorida
earleflorida's picture

"Ockham's razor", via a 'Tabula Rasa Moment' - not a moment to soon? Why create made-up-conflicts over false dichotomy,... whilst the middle-east truncates south Asia in what is an impassable 'Morton's fork?

Fuck globalization when it clearly dictates that europe and america will be first to the trash-bin?

Time to think outside the box, but at the corners where reality can actually bite. Feel the tangible asset of change by the cutting-edge - the periphery of vast resources, held within our grasp but plagued by a bureaucratic-socialist state of malfeasance-gone-wild regulations!

"BLUE Gold" is where it's at, period! http://en.wikipedia.org/wiki/Natural_gas_vehicle 

jmo

Mon, 03/26/2012 - 13:54 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

Here in Lima, Peru a large part of the small vehicle fleet runs on NatGas.  One of our employees owns a Nat Gas powered car.  He tells me that it is cheaper than running it on gasoline.

If Peru (a poor country) can run a large percentage of its fleet on Nat Gas, why can´t we?

Mon, 03/26/2012 - 16:40 | Link to Comment DCFusor
DCFusor's picture

Too dangerous for our nanny-government bubble-wrap reality up here in our "developed" country, DoChen?

Mon, 03/26/2012 - 13:54 | Link to Comment Sandmann
Sandmann's picture

See how successfully Britain manages to minimise the % increase in petrol prices.......if only the US imposed 80% Tax on gasoline the underlying movement of oil prices would not have a major impact. The simple truth is that the Federal Government could impose say $6/gallon tax on gasoline and that would reduce volatility of price and it could spend the revenue on gold-plating 85 Broad Street

Mon, 03/26/2012 - 14:03 | Link to Comment THE DORK OF CORK
THE DORK OF CORK's picture

Only the Skoda Fabia Greenline can save them now..................

www.youtube.com/watch?v=OSOlqDTY_EQ

Mon, 03/26/2012 - 15:14 | Link to Comment EmileLargo
EmileLargo's picture

SKODA make amazing cars. They have utterly destroyed the competition. 

Mon, 03/26/2012 - 17:31 | Link to Comment malek
malek's picture

powered by Volkswagen

Mon, 03/26/2012 - 14:06 | Link to Comment bidaskspread
bidaskspread's picture

People wonder why US refiners are exporting gasoline, I think this couldn't explain it better.

Mon, 03/26/2012 - 14:40 | Link to Comment DutchR
DutchR's picture

Regular €1.75 per liter today  (about $8.82 per gallon).

 

Used 6 liter to drive 112km to get to a coinshop and buy more gold, good EROI, no :)

Mon, 03/26/2012 - 14:46 | Link to Comment zerohedgeJUNKIE
zerohedgeJUNKIE's picture

Oil is peg in gold at 0.07 gold oz per barrel approx so if u want stable oil we need to have stable sound monetray system. The price per barrel is not changing, the usd is continously being debased. Unless Oil producing nations can double up their production capacity to flood the market w cheap oil prices will remain high and continue to remain high. EU is following the monetray easing style of the FED exporting usd to EU still keeps the oil fairly cheap but this will not hold in a long time. Sooner or later high inflation will kick in and then we'll go HYPERINFLATION ala zimbabwe or weimar in no time.

Mon, 03/26/2012 - 15:32 | Link to Comment bloostar
bloostar's picture

I think the UK figures are a bit wrong.. $2.12 is 'only' £1.33 or so.. It's £1.48 here and I can almost see the refinery! $2.33 would be more accurate, give or take!

Mon, 03/26/2012 - 15:52 | Link to Comment CuriousPasserby
CuriousPasserby's picture

When gas is $6 a gallon, even the Black folks won't be voting for Obama.

Mon, 03/26/2012 - 15:56 | Link to Comment flyingpigg
flyingpigg's picture

Not all ze German carz like ethanol:

http://www.adac.de/infotestrat/adac-im-einsatz/motorwelt/E10-Falschtank-Dauertest.aspx?ComponentId=85981&SourcePageId=6729

During an E10 test performed by the German car association ADAC ze car broke down after 27k. Kaputt!

Mon, 03/26/2012 - 17:34 | Link to Comment malek
malek's picture

Oh my god, all that happened according to the article is that car's fuel pump started leaking - a repair cost of $150 by a versed mechanic.

Mon, 03/26/2012 - 19:23 | Link to Comment Dr. Crime
Dr. Crime's picture

I am not believing those French numbers at all. The price for gazole and SP95 has gone up 40 centimes in the Pay de Gex in the last three months.

Mon, 03/26/2012 - 19:46 | Link to Comment Dingleberry
Dingleberry's picture

Silly me....I thought that gas skyrocketing was due to growth. At least that's what I was told....

Mon, 03/26/2012 - 21:01 | Link to Comment Teutonic Pied Piper
Teutonic Pied Piper's picture

Uhh, France?  How'd they pull that one off

 

Tue, 03/27/2012 - 06:14 | Link to Comment blueridgeviews
blueridgeviews's picture

Don't worry about the reduction in cunsumer discretionary cash.  The US gov't will print more to make up for the reduction in GDP.

Tue, 03/27/2012 - 13:02 | Link to Comment Mahowny
Mahowny's picture

Why ruin an otherwise good post with an exaggeration?  US average gasoline is between $3.89 gal. (per AAA) and $3.92 (DOE).  Ex-tax, gasoline and diesel remain a great bargain in Europe and in the U.S.  Priced in gold, gasoline still extremely cheap historically.  It's a miracle that with all the $ dilution we don't have $10 gasoline by now.

Tue, 03/27/2012 - 19:00 | Link to Comment March Hare
March Hare's picture

Any idea how one can access live gas price data in the UK? Wanted to see the effect of the Elgin platform leak at Total.

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