Can someone explain this to me?

Wednesday, April 05, 2006
I saw this and had to ask, if the stores are high why is the price going up?

Oil prices rose Wednesday after a government report revealed a bigger-than-expected increase in crude stockpiles but a bigger-than-expected drop in inventories of gasoline and distillates used for heating oil.

U.S. light sweet crude for May delivery gained 84 cents to $67.07 a barrel after the Energy Information Administration (EIA) released its report.

Crude oil inventories rose by 2.1 million barrels for the week ended March 31, the government said, versus forecasts for a rise of 1.1 million barrels, according to a survey of analysts conducted by Reuters.

Crude oil inventories remain well above the upper end of the average range for this time of year, and are at the highest level since the week ending April 9, 1999.

"Refinery utilization was lower than everyone expected, which caused (gas and distillate) inventories to drop," Brian Kuzma, energy analyst at RBC told CNNMoney.com.

But Kuzma said he didn't expect the report to "have much impact on the future impact on crude or related products."

Several oil refineries are still not fully operational due to damage from last year's hurricanes, but other refineries are expected to be down for maintenance in April after running full throttle longer than normal to make up for petroleum product output disrupted by hurricanes Katrina and Rita.

10 comments:

MeaninglessHotAir said...

That's easy Terrye.

Prices are a function of two variables, supply and demand. Supply has recently gone up, but demand has gone up even faster.

Anything you buy you are buying in competition with other people. If they're trying to buy it faster than you then the price will rise. It will continue to rise till it reaches the point that new suppliers come on board to push the price back down.

terrye said...

mha:

I understand that there is less gas coming from refineries, but oil stocks are at their highest level since 1999 when oil prices were about half what they are.

I think these prices are being fueled by speculation more than supply and demand and it is borderline thievery. I live in the country and I have to drive for my job, right not it is costing me about $70 a week. That is absurd.

MeaninglessHotAir said...

Terrye,

People don't want refineries in their back yards. They don't like the smells. They don't like the way they look. They're ugly.

So, refineries haven't been built in the US for 30 years, ever since the Green movement found its legs.

That means that, no matter what the level of oil stocks, the level of gasoline stocks is limited. It's just like pouring water through a funnel. No matter how much you pour in, there is no way that the water can go through that little hole.

If you want to lash out at somebody over the high prices, lash out at all those environmentalists who blocked the construction of oil refineries. This is the logical place where your needs have been diverted.

In my town, there are lots and lots of SUVs driving around with "Save the Earth" bumper stickers. These people are your enemies. They have a) increased demand by driving SUVs and thus pulled the price up b) blocked oil refineries because they want to "save the Earth" and thus constrained supply, pushing the price up.

These people are all Democrats to a person.

Someday, probably not too far distant, the supplies of oil will become tighter as supplies start to run out globally. At that point the price will get much much higher. In my humble opinion, it would be wise to plan for that day today.

Rick Ballard said...

MHA,

Perhaps Greens could be converted to a fuel source? I mean, they're carbon, right? A little work on the conversion process and Terrye could just look for one just the right size to fill the tank.

Then she could put on an "I saved a tree!" bumpersticker AND spend less money on gas. I don't see any downside in this idea.

Skookumchuk said...

Hmmmmm. Soylent Green, except to feed our cars . . .

One national trump card is that we have tons of coal - about 250 years worth at current consumption levels. Of course, the fact that we are sitting on this drives the enviros absolutely around the bend.

But strategically, the US plus Canada, especially Alberta, plus Australia have a couple of aces up their collective sleeves. A potential Anglospheric energy powerhouse. We'll develop it someday - the question is, when?

flenser said...

There is a gasoline additive called MTBE, which makes up a significant percentage of each gallon of gas.

This is being phased out, and replaced by ethanol I believe. Reason for the phase out is that the MBTE is leaking into underground water.

This is what is behind the recent spike in prices. I had a quick look but could not track down the article I read. Search on "MBTE, gasoline, Congress" and you should get the idea.

It's expected that the MBTE replacement will not be avaiable in sufficient quantities at first. Worst case scenario was gas hitting $3/gallon.

flenser said...

Here you go.

Interestingly, the same basic story can be found for several prior years. Either the problem is persistent or the story is bogus.

David Thomson said...

“These people are all Democrats to a person.”

The Democrats are the number one reason why Terrye spends $70 a week on gas. Never forgot that these people, along with the liberal Republicans, are the true enemies of the working class.

“I think these prices are being fueled by speculation more than supply and demand and it is borderline thievery.”

Speculators are among your best friends. You literally should get on your knees and thank God for their existence. And no, I’m not even slightly exaggerating. They serve an invaluable purpose in providing economic transparency. These are folks who try to figure out what is happening to our energy supplies. In the short run---they may admittedly drive up prices. However, we would be enduring awful shortages without their assistance in the long run.

terrye said...

None of which explains why the price of a barrel of oil keeps going up. If those prices were not so high, the increase in the price of gas would not be so high.

markg8 said...

Why is the price of oil going up? Int'l. demand, instability in the Middle East, Nigeria and the fact that peak production is imminent if not here already. One key is how many barrels are still in the ground. Anybody know? Nope. OPEC nations have lied for decades about new finds in order to up their quotas. It really, really, really isn't time to buy a new SUV.