Wednesday, May 16, 2007

Congress urged to "ease" gas prices

Ya know, as much as I'd like to believe that it's possible to do so, I know that it's simply the stupidity of the garden-variety dolt on the street that leads to the kinds of things that actually make gas more expensive.

The following story, to wit, with attached commentary by yours truly, Via Yahoo!:

NEW YORK - The average U.S. household is already spending $1,000 more per year on gasoline than it did five years ago, two consumer groups say in testimony they planned to present to a House Judiciary Committee task force Wednesday. That's an increase of 85 percent, and rural households have been hardest hit because they spend about 20 percent more on gas than urban residents, the Consumer Federation of America and Consumers Union said, citing Labor Department figures. (Eh boy!, this can't be good.)

"It is time for Congress and the administration to do their part to help alleviate the pain consumers are feeling at the pump," said Mark Cooper, director of research for the federation. At Wednesday's hearing, he plans to call on the federal government to provide greater oversight over oil industry market practices, create strategic refinery and product reserves, and enact policies that promote reduced oil consumption. (Just what we need, more regulation and bureaucracy.)

The rising price of gasoline has certainly increased the amount of complaining from drivers paying $3 a gallon or more to fill up their cars, but it so far has done little to curtail how much people are driving. (No shit.)

That's the message from government statistics showing that demand for gasoline is only just starting to level off even as refinery outages and tight supplies have sent pump prices soaring by 43 percent since the end of January. (Ya think that refinery output, that being the supply, has anything to do with the price of gas? Who thought up that? Oh, that's right, the whole Keynes VS. Say thing, gotcha!)

And brace yourself: experts say with gas already closing in on $4 a gallon in Chicago and San Francisco ahead of the peak summer driving season, higher prices could be in the cards.

Most Americans are locked into their driving habits and can do little to alter their fuel-buying patterns when prices rise, experts say. For example, the number of workers with commutes lasting longer than 60 minutes grew by almost 50 percent between 1990 and 2000, according to Census Bureau data. (Tell me something I don't know.)

"I drive 55 miles each way to work every day," Sandy Colden, of Medford, N.J., said one recent morning while loading groceries into her Honda Pilot SUV. "So I really don't have a choice, unfortunately." (I drive about 63, round trip, each day to the office, alone, and it ain't gonna change either. Cry me an effing river!)

But that usually means people have to cut back elsewhere, as Wal-Mart Stores Inc. is finding, to its distress. The world's largest retailer said Tuesday that earnings in the current quarter will fall short of Wall Street expectations, in part because of higher gas prices.

Weekly gasoline demand in April increased as much as 1.9 percent over the same weeks in 2006, even as the average national price of a gallon of gasoline grew from $2.71 to $2.97 by the end of the month, according to Energy Information Administration data.

Only during the first week of May, when prices jumped to $3.05 a gallon, did demand for gasoline abate slightly — by about two-hundredths of a percent, EIA figures showed.
Experts disagree over how high prices have to rise before consumers are shocked into driving less — at least temporarily.

"We might actually see some reaction at $3.50 (a gallon)" nationally, said Larry Compeau, executive officer of the Society for Consumer Psychology and professor of marketing and consumer psychology at Clarkson University in Potsdam, N.Y. (Gee, ya think you might see some?)

Lars Perner, assistant professor of clinical marketing at the University of Southern California's business school, disagrees, saying the tipping point is more likely $4 a gallon. (Again, this is NOT all that shocking.)

Try telling that to Jennifer Hoover, 32, a graphic designer who lives in the San Francisco area. She said she was startled by her bill — $58.69 to fill up her silver Audi sedan with $4.09 a gallon premium gasoline Tuesday — but was late for an appointment and had no other choice. (OK, Jennifer, you live in 'Frisco, and you drive an Audi, with a premium gas engine to boot. I drive an 11 year-old Nissan pickup with 150K miles, so go complain to someone who cares, will ya?)

"I was just thinking when I drove up — 'Why am I stopping here when it's $4.09?'" she said. "But it's on my way and I'm late and I have to do what I have to do." (Boo Hoo, Jennifer.)

Eddie Engles, 37, didn't blink twice after he filled up his GMC Yukon at a gas station near downtown Chicago on Tuesday. At $3.71 a gallon, the fill-up cost the clothing distributor $83.89. "That's a new record. Every time I pump up, it's a new record," he said.

Engles, who uses his sport utility vehicle to haul his wares, said he has few options when it comes to cutting down on travel and gas expenses. "I just need it," he said. "What am I going to do? Not fill up?" (Try a diesel, dude, or a different method of marketing.)

There was a definite consumer reaction in September 2005 after Hurricane Katrina outages pushed prices above $3 gasoline for the first time. Demand dropped as much as 6.5 percent. "There was ... something significant psychologically about the $3 barrier," Perner said. (Again, this is something that Adam Smith explained long ago, folks.)

Since then, however, consumers seem to have adapted, with demand rising throughout a brief period of prices above $3 a gallon last summer.

"People complain about higher oil prices ... but they still drive their cars, they still buy their SUVs, they don't want to carpool," said Fadel Gheit, an energy analyst at Oppenheimer & Co. (You think that mentality will change, Mr. Gheit?)

"It's a little inconvenient for me to take the bus," said David Harris, 31, a film school marketing manager in Los Angeles who commutes 40 miles a day for work.

Consumers may suspect that oil refiners are colluding in the recent price spike, but analysts say the real culprit is an unprecedented number of refinery accidents and maintenance outages this spring — combined with drivers' rising demand for fuel. Most prominent of the outages was a February fire that shut down Valero Energy Corp.'s 170,000 barrel-per-day McKee refinery in Sunray, Texas, for months. (And that could be attributed to the 100% operating capacity that every refinery has been at for over 20 years. Clue for the ill-informed: The last new U.S. refinery that was built around 1977. Why so long since, you ask? Think about who hands out those permits to do such things.)

"If you just count incidents, there are more this year than there have been in previous years," said Mike Conner, a specialist on refinery operations at the EIA.

As a result, gasoline inventories fell by more than half, to 93.5 million barrels in the week ended May 4, from 205.1 million barrels in the same week in 2006 and 214.7 million barrels in 2005, according to government figures.

Charles Drevna, executive vice president of the National Petrochemical and Refiners' Association, said many refineries shut down for maintenance for the first time since their operations were kicked into overdrive by Hurricane Katrina. When the 2005 storm knocked out gas and oil facilities along the Gulf Coast, refineries in other parts of the country had to step in and pick up the slack, Drevna said. In many cases, that meant putting off regular maintenance for years. (Shocker here. An expert in the field of such things agrees with me. I'm astonished!)

"There's still a lasting effect from that," Drevna said.

Also, he said, the process of turning crude oil into gasoline has become more complicated over the years, particularly as different governmental entities have mandated changes to the chemical makeup of gasoline for environmental reasons. It takes more equipment, more complicated processes and more oil to make gasoline now than it used to, Drevna said. (Gee, ya think that the whole MTBE fiasco, to name but one, could have anything to do with production volumes? Surely not. The Gummint can fix it all, right?)

Drevna said refiners have been steadily expanding their existing facilities, adding the equivalent of one new refinery a year, on average, every year for more than a decade. That's a cheaper and faster way to expand refinery capacity than going through the multiyear process of trying to win a permit to build new plants, he said. (What was I saying earlier?)

While higher gas prices haven't done much to cut demand, they also don't appear to have had much effect on consumers' car-buying behavior, according to Autodata Corp. Sales of lights trucks and SUVs declined 3 percent in April, less than the 12 percent slump in car sales. Light trucks and SUVs continue to make up the majority of vehicle sales in the U.S., or about 53 percent. (Again, I don't think this is ever going to change. Get used to it.)

At a Chevron station in San Francisco that was charging $3.95 for a gallon of regular gasoline, Nathan Sullins, 31, a computer programmer, gloated as he filled up his Toyota Prius hybrid for a fraction of what other drivers were paying. (Gloat if you want pal. I'd only do it that way 'cuz I'm a cheap bastard, and for no other reason.)

"High gas prices are a bummer, but you reap what you sow," he said. "If we had started making fuel-efficient cars 10 years ago, we wouldn't be in this situation." (You sound so certain. How can you be sure? Do you actually know what has caused the price of both crude and refined gas to soar in the last ten years? If you've been paying attention (cough, laugh), you'd know what you just said is BOLLOCKS!)

William Hill, of Pittsburgh, said he'd consider downsizing from his minivan to a hybrid sedan if hybrids weren't more expensive. (Why? Oh, it's those batteries again. Rare(r) earth elements that need to be mined, and all that jive, I forgot.)

"They charge you more for a hybrid to compensate for what you would pay for gas," Hill said while gassing his minivan along the Pennsylvania Turnpike one day last week. "So either way, you lose." (Not exactly, but you aren't any further off the mark than anyone else in this story, so I'll cut you some slack.)

This is the world, and people, I am forced to live with.

Where's the whiskey and my .45?

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Anonymous Anonymous said...

also making oil more expensive?

invading and occupying the nation with the world's second largest oil reserves.

good luck with that

8:13 PM  
Blogger theirritablearchitect said...

Bitch, since when have I said anything about the morality of invading Iraq?

When Bitch?

I'm fairly certain that based on some of my opinions, you've "labeled" me as some sort of "neo-con" or "conservative" or "Bush shill" or some other pejorative term, in an effort to more easily define me as your enemy or the enemy of you "cause" or whatever. You are wrong.

Next time you want to take a shot like that, make sure you can back it up with something other than personal, snide remarks, 'kay?

That said, I have no problem with the idea of someone ripping Saddam's head off, good and proper. I just wish it would have been the Iraqis who'd mustered the initiative from the start. It would have meant more.

almostinfamous, you are a dolt of the first order. You are traveled, yet completely unworldly for the experience. You can write, but you have nothing to say, other than to spout that drivel out of the little red book, and that is about the extent of it.

Fuck off and die, willya? You'd be doing the rest of us a favor.

10:18 PM  
Anonymous Anonymous said...

Oh I don't know, last time around I remember the barber-shop philosophers all saying "we oughta just go over there and TAKE that oil." Now it's (Nixon inflection) 'wrong.' I wonder at the validity of MidEast proven reserves, anyway. At least with our own patch we KNOW what we're not drilling for...

I live in the town that Used To Be the biggest refining center between the east coast and Chicago (I haven't checked Chicago lately, but ten years ago their biggest refinery was a vast wasteland). We have three brownfielded yard sites that can't be used for anything else, but no one will roll in a turnkey unit lest they be EPA'd for what might be in there from 1905-1965. And of course, the govt. promises that any capacity built now will be redundant by 2012, or else. Mr. Wyatt, your torch is ready...

6:27 PM  
Blogger theirritablearchitect said...


Interesting that you should mention that bit; our own reserves, that is.

I just know it's politics and environmentalism on this one. Not ONE of our esteemed Senators (cough), wants any drilling done anywher close to their precious coastal waters, since it would piss off ther constituents, and bring the wrath of the EPA down on them, as you suggest in your comment. NO WAY anyone is going to take a bullet in this battle at trying to get old refineries going again, even if they'd be allowed back onto the same damned piece of turf as before. The inheritance of the possible contamination caused in earlier spills or seepage is just too great of an obstacle, financially, for anyone to risk it.

No drilling, no new refineries and China and India now figuring out how to use resources, and largely they don't care about anything called Kyoto, and they are the owns who are specifically exempt from it anyway. Almost HALF of the world's population lives in that corner of Asia, and they have us WAY outnumbered. Guess what is going to happen?

I know you know.

Few others are even thinking about it.

Scary stuff.

10:43 PM  
Blogger NotClauswitz said...

Any which way you wanna look at it, blame California: for the enviro whackos, the dreamland legislation, and the rest.

6:10 PM  

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