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Is Gasoline Going to Reach $4 a Gallon in the US This Summer?

Agent009 submitted on 04/05/2007 Official AutoSpies Timestamp: 10:32 AM
from: abcnews.go.com

[41] user comments | category: Spy Shots

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Is Gasoline Going to Reach $4 a Gallon in the US This Summer?

For the past two weeks, Iran has not just been holding 15 British soldiers captive; it's been holding the world's oil markets hostage, too.

"There's been a $5 or $6 premium that's been built into the price of oil over this," said Phil Flynn, vice president and energy analyst at Alaron Trading. "Even though this crisis has ended, the oil market is still on guard that the tensions in the Middle East are going to continue."

"Things are looking pretty bad for the upcoming summer driving season," said Flynn, citing a new government report showing that the U.S. stockpiles of gasoline fell by 5 million barrels in the past week, much more than analysts were expecting.

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mmmpowr - 4/5/2007 12:09:08 PM

+2 Boost

while you're still paying $10 per gallon for gas for your hybrid, BMW's will be filling up with hydrogen instead.

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BimmerFan - 4/5/2007 12:10:35 PM

-3 Boost

I can afford the gas even if it goes to $10 a gallon.

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thole - 4/5/2007 12:16:11 PM

+5 Boost

the pricier the car is it , the less mile it drives ,
% wise they r least affected.

BMW and Mercedes fanboys who have big engines only worry if ur hybrid hogs the lane and tries so hard to get into Electric only mode to save another buck =p

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chuck717 - 4/5/2007 11:32:09 AM

0 Boost

Why not? nobody in this country is willing to do a one or two day boycott so they suffer at the pumps?

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nvme - 4/5/2007 11:44:56 AM

+3 Boost

about your boycott idea, it's not bad but petrol companies will not even care coz they know people will eventually come back, and the demand, or lack there of, in the days after a boycott will compensate because people will still need their cars no matter what!
one other way to fight petrol companies is to find alternative ways to commute, and for that matter i recommend this site:
http://www.cahighspeedrail.ca.gov/
then try to find out what the petrol lobby is trying or willing to do to stop this project, and you'll know how important and effective it is!

thole - 4/6/2007 10:23:59 AM

+1 Boost

I saw gas station owners boycott first...
they feel more offensed than car owners
bcoz they have been forced to pay more $ for the same amount of gas , it hurts they cash flow and profit margins %.

thole - 4/6/2007 10:24:10 AM

+1 Boost

I saw gas station owners boycott first...
they feel more offensed than car owners
bcoz they have been forced to pay more $ for the same amount of gas , it hurts their cash flow and profit margins %.

1995e34 - 4/9/2007 2:35:32 AM

+1 Boost

then what happens when the oil companies strike? nobody has much power over oil companies. they own us

nvme - 4/5/2007 11:38:41 AM

-1 Boost

Just wondering, what are you going to fill up your hybrid with?
remember there are cars running on fossil fuel that have mileage at least as good as any hybrid, among which the very economical diesel...
besides remember that Toyota/Lexus still sell a huge majority of "traditional" cars.
buying a care by necessity does not necessarily make it great, nor does it make people see it that way..
i know ur brain couldn't have taken the reflection as far as this, but think about the disaster it would be if gas prizes rose that high!

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MBKing - 4/5/2007 11:41:48 AM

+4 Boost

LexusKing I guarantee that if gas hits $10/gal you'll shit your pants

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Neverfollow - 4/5/2007 12:23:02 PM

+1 Boost

He'll be walking to pre school when that short bus no longer can afford to take him.

Designer1 - 4/5/2007 11:50:45 AM

0 Boost

Well in some parts its already $4 in California. I hate it that NO ONE is doing ANYTHING about it. I hate it when American companies screw the Americans up, left and right and we sit and do nothing about it. Will this ever change?

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Neverfollow - 4/5/2007 12:24:27 PM

-1 Boost

Yeah,

When the current regime is gone in a few more years.

dusty - 4/5/2007 1:32:57 PM

+1 Boost

And what do you suggest we do?

cktoo - 4/5/2007 2:54:01 PM

+2 Boost

And what should someone do about it Desingner? If you or anyone else has a better solution (most preferably, non-governmental) go for it. American companies aren't screwing anyone on this front...and if you seriously read about the energy subject, you would know.

And give me a break with "this regime". Half the cost of gasoline in many States has nothing to do with Bush...you can thank the liberal weenies for that. Tax or sue the hell outta anything so they can claim they will use it for you. Worked out real well with that Tobacco settlement, huh? Heck, or anything else for that matter....Social Sec, Medicare...doing real well. You pay out the ass for it and have NO Legal claim to any of it. Sounds like theft to me.

This has nothing to do with a left or right issue. Get both of them out of this issue (especially lobbyists)and let the market take over. You will likely see a much more stable market or a much better alternative. Washington (no matter who is there) just "F's" things up.

EL34 - 4/5/2007 12:24:52 PM

-1 Boost

"Is Gasoline Going to Reach $4 a Gallon in the US This Summer?"

No, the British hostages are home with their cheap and no tie Iranian suits so the price of gas will ease back down.

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NARunner - 4/5/2007 12:26:58 PMView My AgentSpace

+5 Boost

more importantly, are Bud 12 pks. going to reach $7.99 this year?

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sold2early - 4/5/2007 3:35:21 PM

+2 Boost

Good comment. It's nice to have some humor here once in a while instead of the usual dim-witted Lexus vs BMW vs Mercedes comments. Lighten up guys.

Oops...I accidently posted this to the comment below too

supermoto - 4/5/2007 12:45:47 PM

+4 Boost

I hope the price of gas goes to $20 a gallon so I can have the roads to myself! My own autobahn.....ahhhh....

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sold2early - 4/5/2007 3:31:59 PM

+1 Boost

Good comment. It's nice to have some humor here once in a while instead of the usual dim-witted Lexus vs BMW vs Mercedes comments. Lighten up guys.

stone - 4/5/2007 12:49:14 PM

+1 Boost

There are literally hundreds of energy funds and stocks that will profit from an increase in the prices of oil. Instead of being a victim of big oil, why not try to profit from it?

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chewy - 4/5/2007 3:19:16 PMView My AgentSpace

-1 Boost

CA

Regular: 3.35
Premium: 3.65
Diesel: 3.20 tada

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PropellerHead - 4/5/2007 4:10:29 PM

0 Boost

Yes.

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neutral - 4/6/2007 12:07:28 AM

0 Boost

The taxes don't bother me at all, especially in this country. Those are what fix the roads. Not to mention, its not the taxes that make the price of oil ridiculous. I never heard anyone complaining about gas taxes when gas was 1.50 a gallon. The taxes were always there.

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no1listensanyway - 4/5/2007 4:56:57 PMView My AgentSpace

0 Boost

Yeah 4 dollar gas is on its way. Thats why I stocked up on energy stocks during the last couple of months.

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TauronB2G - 4/5/2007 5:05:21 PM

0 Boost

Gas will definitely get that high. I will definitely drive less and it will definitely hurt my pockets. The reality is we are all still gonna drive and pay it. Don't get mad about it thats what gonna happen.
T

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t_bone - 4/6/2007 12:59:21 AM

+2 Boost

Absolutely. And I do think when things were at their worst last year that I saw less trucks and SUV's on the road. My blood pressure went way down, that's worth an extra $25 or so a week.

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spiceace - 4/5/2007 10:31:18 PM

0 Boost

Already there in Cali.

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cdoke - 4/5/2007 10:55:10 PMView My AgentSpace

+3 Boost

Well said, cktoo.

It is an all too easy thing to blame oil companies for problems, but the frank matter of the situation is that oil companies attempt to provide the world with the energy needed for civilization to continue. This is truly a difficult battle for petroleum companies.

Were demand for oil to stop increasing and remain flat, we would have to continue to find new reserves of oil to even meet static demand. Why? The answer is simple, when we begin to produce a reservoir, the production [flow rate] decreases as a function of time. Unfortunately, the physics dictate that the decline is not a simple linear function; it is either exponential or hyperbolic in nature. This means that oil companies must continually find new reserves in order to even maintain their production. In other words they must continually invest large sums of money.

It is true the industry is probably the only one where someone who may not even have a high school education can make $260,000 a year as a directional driller. The value that person adds however, by being a good directional driller can be astronomical, and there are few people who could even do it. Unlike many industries that get Sundays off and whatnot, the oil industry does not stop on Sundays; they don’t even stop at night. It is literally a 24-hour per day 7 days a week business.

Producing oil is not easy. We don’t produce it from big caverns underground: we produce it from rocks: Porous and permeable rocks. It isn’t trivial either. The exact solutions for transient flow in porous media not only involves Bessel functions, they involve the roots of Bessel functions themselves embedded inside of other Bessel functions, embedded within infinite series, in addition involving the exponential integral function and that is just for an open-hole completion. Unfortunatly the Ei function cannot be described by the Puiseux series at much of a distance from the wellbore. This sort of problem cannot be solved with a calculator: a computer has to be programmed to solve it.

Anyway, enough of that. It seems that demand for gasoline is increasing and stores are decreasing significantly, but not yet outside of the average band for the year. In addition, there is a rather significant excess of crude at the moment, so there should be a bottleneck in refining.

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cdoke - 4/5/2007 11:24:56 PMView My AgentSpace

0 Boost

...that should read "the dual natural logarithm expression of the Puiseux series."

neutral - 4/6/2007 12:04:55 AM

+1 Boost

My solution:

The Big3 and the Germans should team up and turn vast areas of America's deset southwest into algae/carbon to biodiesel plants. This biodiesel is

A) Cheap to produce (once all the setup is done)
B) Clean to produce (it feeds off of coal power plant emissions)
C) Clean to burn (engineers control what the chemical makeup is)
D) Nearly as powerful as petro-diesel (90% as powerful, ie you will get 10% worse mileage, something we can live with)

We should do this for a number of reasons.
A) Good for the environment
B) Help US and European auto industry
C) Cheaper than petroleum (not in the short term)
D) Stabilizes energy prices
E) Energy dollars stay in the US (sorry Al-Qaeda)
F) OPEC and the Arabs no longer have a F***ing stranglehold on our economies. F*** them. I'd like to see those cocksuckers once their oil is gone or worthless.

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cdoke - 4/6/2007 12:41:46 AMView My AgentSpace

+1 Boost

Believe it or not, most reports about the influence of OPEC in the US oil industry are exaggerated. We get most of our oil from Canada. Now that isn’t to say that they have no effect on prices. Most of what you hear when the say prices have gone up is the futures price, not the spot price, which of course has little to do with the actual economics and more to do with some reactionaries. But if you perform on interesting little exercise you find something very interesting. If you graph OPEC quotas and oil price as a function of time you find one interesting little fact: the quotas follow the price: they do not precede it. OPEC does not define oil price, they attempt to exploit the oil price to their maximum financial gain.
In addition, this is not a one way street: many OPEC countries NEED the United States if not directly, the demand generated by the US keeps the prices higher. The Saudis understand this. When the day comes, and it will, when the oil shale may be classified as reserves, and the United States overnight becomes the country with the largest oil reserves by a factor of five: you will see the end of many an OPEC regime. The Kingdom of the House of Saud will be overthrown, this I can guarantee.

cdoke - 4/6/2007 12:44:13 AMView My AgentSpace

+1 Boost

"But if you perform on interesting little exercise you find something very interesting."

...Well, my erudite and flawless writing suggests to me that I should start that book anytime now...

Meh..

tincanman99 - 4/6/2007 11:57:54 AM

0 Boost

I guess everyone is forgetting about the record profits that Exxon-Mobil made last year. Think about this: if demand is constant and the profit margin is constant than if the price goes up and they simply pass on the added cost to the customer they should make the same profit +/- increased usage.

But thats not what is happening. You dont get record profits by NOT ripping off the public. Almost the entire administration at the executive level has ties to the oil industry.

Did you honestly think they were not going to ream you when they got the chance? Grow up.

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cdoke - 4/7/2007 2:07:35 PMView My AgentSpace

+1 Boost

Don’t take this the wrong way, tin man, but I suggest you reexamine your post a bit. I am not in the mood to go through it. Realize however, that the laws of economics do still exist in the oil industry. If demand is static and supply is static then prices are static. Oil companies do make more money with higher prices. So what? It is a continually declining asset: massive investment is required to keep production static. Therefore, if no money is made or invested, the natural tendency is for prices to increase as supply decreases.

Not only that, but much of what you would consider to be profit is not, that money must be used to pull the company out of the hole it put itself in when investing in a new project and creating infrastructure. Oil and Gas projects are very front end capital intensive. Not only that, the life of the projects is long, so the payout is very sensitive to time value of money. The reason Exxon managed to make record profits is simple: that money comes from projects which are probably 30 years old where the NPV calculations, which are highly sensitive to price, were generated with $30-$35/bbl. So they do benefit from higher oil prices, however, the higher prices are actually an indication of the immediate cost to find and develop resources. This cost is increasing as oil companies must go to more remote places to find new reserves.

“But thats not what is happening. You dont get record profits by NOT ripping off the public.”
That does not happen to follow, dear. Read above.

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