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Guess what? Gas is going up, Again! Woo Hoo
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| 72hrpartyanimal |
http://money.cnn.com/2008/03/10/new...dex.htm?cnn=yes
Gasoline price spike has only just begun
Motorists should expect to pay upwards of $3.75 a gallon in the coming weeks as prices at the pump catch up with record crude, but relief may arrive by summer.
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By Steve Hargreaves, CNNMoney.com staff writer
Last Updated: March 19, 2008: 11:35 AM EDT
Issue #1
* Cash strapped, and driving less
* A slice of pizza gets pricier
* $200B added to mortgage pipeline
* Fed cuts rates by 3/4 of a point
* Inflation is Americans' top economic concern
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NEW YORK (CNNMoney.com) -- Gasoline has hit record levels - and experts say it will likely continue to soar in tandem with the skyrocketing price of crude.
The national average retail price for gas has risen about 30 cents in the past month to $3.279 a gallon, exceeding the all-time high set last year, according to the motorist organization AAA.
And experts say motorists should prepare to pay nearly $4 a gallon - and in some places even more than that - before the price of gas finally comes down in the late spring as high prices crimp demand.
The price of gasoline usually increases this time of year. Several factors contribute to the runup: Low refinery output due to maintenance, a switch from winter to pricier summer blends, and the looming high-demand summer driving season.
Experts say this time around the spike will be more pronounced, mostly due to the surging price of oil and, to a lesser extent, refiner's attempts to grow their profit margins.
"It's all crude," said Tom Kloza, chief oil analyst at Oil Price Information Service. "The crude market is morbidly obese."
Oil prices - which account for 80% of the price of a gallon of gas - have jumped 20% in just over a month as investors pour money into commodities of all types.
Commodities like oil are seen as a hedge against inflation and the falling dollar - which has been trading at record lows - triggered by economic woes and interest rate cuts from the Federal Reserve.
Oil, already trading near $90 a barrel on the back of strong global demand, took off in February as the economy worsened and the Federal Reserve cut interest rates with crude now spiking to record highs on a near-daily basis - settling at a record $109.85 on March 13th.
But as oil prices rose gasoline prices stayed stagnant and profit margins enjoyed by refiners shrank. Now those profit margins have become so small refiners have little incentive to make gasoline.
"The refiners are saying, 'Hey we're not making any money,'" said Tim Statts, vice president of risk management for Summit Energy, a firm that buys energy for big users. "The gasoline price almost has to come up to continue bringing the product to market."
According to John Kilduff, an energy analyst at the trading firm MF Global in New York, refiners are making about $6 off of every barrel of oil they turn into gasoline. That's down from over $38 a barrel last spring.
Refiners are operating at just 85% capacity, down from a normal rate of around 90%, according to figures from the Energy Information Administration.
Killduff said the low operating rate is partly due to refiners being shut down for maintenance but also due to the small profits they're getting on gasoline.
"There's no market incentive to rush your unit back into production," he said. "[Gas prices] can't go any lower in relation to crude."
So how high will gas prices go?
While several areas will see prices over $4 a gallon, Kloza said he expects the nationwide average to peak somewhere between $3.50 and $3.75. Kilduff is calling for a high of $3.50, and Statts thinks we'll see the $3.30s.
All three analysts think prices will peak early, in April or May, then decline as the economy worsens and demand for gas - already flat or falling - continues to deteriorate.
"[The falloff in demand] that occurs around $3.25 a gallon takes a lot of the mojo out of gasoline," said Kloza. "These prices are real speed bumps for the economy."
By July 4, when many Americans pack up the sedan and head for the mountains or beach, prices could be back around $3. If anyone can still afford a vacation. |
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| idoru |
| quote: | | By July 4, when many Americans pack up the sedan and head for the mountains or beach, prices could be back around $3. If anyone can still afford a vacation. |
Oh please. :stongue: |
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| Rukes |
How will we cope with STILL having the cheapest gas in the world outside of the middle east with prices rising! Oh the horror! :P
I seriously think people would commit suicide if they lived in the UK or Canada over gas prices, haha |
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| 72hrpartyanimal |
| quote: | Originally posted by Rukes
How will we cope with STILL having the cheapest gas in the world outside of the middle east with prices rising! Oh the horror! :P
I seriously think people would commit suicide if they lived in the UK or Canada over gas prices, haha |
I admit, I'm spoiled!
But also broke. |
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| Clovis |
| I think gas should be 8-10$ a gallon in the US |
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| groovedaddy21 |
| quote: | Originally posted by Clovis
I think gas should be 8-10$ a gallon in the US |
UK pays around that much in USD.
The surge in gas prices is a direct correlation to the devaluing of the US Dollar, which makes all imports more costly.
Expect to pay $6 per gallon within 2 years time, still a bargain compared to other countries.
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| Clovis |
No problem. I take the bus to work everyday and get 80$ a month from my company for doing so. I spend about 25$ on gas a month to take the Civic to clubs or any other places.
People need to start realizing that gasoline costs us, not just in price but in what it leaves behind. |
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| L.E.N. |
| quote: | Originally posted by Rukes
How will we cope with STILL having the cheapest gas in the world outside of the middle east with prices rising! Oh the horror! :P
I seriously think people would commit suicide if they lived in the UK or Canada over gas prices, haha |
Seriously...Im not complaining and I have to buy premium too. $20 still lasts me a week so I really dont care. |
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| HotDogWater |
| quote: | Originally posted by Clovis
No problem. I take the bus to work everyday and get 80$ a month from my company for doing so. I spend about 25$ on gas a month to take the Civic to clubs or any other places.
People need to start realizing that gasoline costs us, not just in price but in what it leaves behind. |
my company offers that, but there are no stops close to work :mad:
agreed with your other point
my next car will (hopefully) be a plug-in hybrid |
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| R!CH |
| quote: | Originally posted by Rukes
How will we cope with STILL having the cheapest gas in the world outside of the middle east with prices rising! Oh the horror! :P
I seriously think people would commit suicide if they lived in the UK or Canada over gas prices, haha |
fuel tax abroad is ing brilliant. it pays for the roads and things like universal health care, incentivizes fuel economy and drives down fuel demand all at once! until assclowns around here stop commuting to work in empty suvs, the price of gas in america is not high enough! people in this country use gasoline like it's an unlimited resource, like it can be regenerated quickly, like we won't see peak oil output within our lifetimes... i'm with clovis: $8/gal :toocool: |
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| 72hrpartyanimal |
| quote: | Originally posted by Clovis
No problem. I take the bus to work everyday and get 80$ a month from my company for doing so. I spend about 25$ on gas a month to take the Civic to clubs or any other places.
People need to start realizing that gasoline costs us, not just in price but in what it leaves behind. |
'n hippy!;) |
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| |Thrax| |
Id buy the "supposed" 70mpg VW Golf Hybrid/Diesel. convert to Bio or WVO, that is cheap driving.
Plug-in is a nice idea as well. But, somewhere.. isn't there still a company developing batteries and pumping into the air from manufacturing? Might not be in our country though.
Rich: You're completely on point about people driving empty SUV's and using it like its unlimited, my mom totaled her SUV, so she got a fit for around town driving; it's a wonderful auto.
If I didn't have to Commute from Westwood to Culver city whenever someones blackberry/computer/whatever blows up I would do the same. But, I cannot schedule these things, I am on-call.. everything is an emergency.. also meetings... |
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