OPEC upset over low gas prices -

The cost of high gas to the economy...

Pricey gasoline costs consumers extra $20 billion
Tue May 22, 2007 - The jump in U.S. gasoline prices this year has so far drained consumers of an extra $20 billion, or about $146 for each passenger car in the country, the Government Accountability Office told Congress on Tuesday.

The national price for regular unleaded gasoline hit a record $3.22 a gallon this week, and is up $1.05 since the beginning of February, according to the Energy Department. The added expense is taking money away from consumers to spend on other goods and services.

"Spending billions more on gasoline constrains consumers' budgets, leaving less money available for other purchases," GAO's Thomas McCool said in written testimony to a House Oversight and Investigations Subcommittee hearing on the cause of record prices. Like many other energy experts, McCool said the GAO has found that current high pump costs are the result of a large amount of oil refining capacity being offline, strong gasoline demand and lower fuel inventories.

Many lawmakers blame the lack of competition in the oil industry from mega oil company mergers for the run-up in gasoline prices. McCool said company mergers in the 1990s caused wholesale gasoline prices to rise during that period, but the agency has not performed modeling on mergers that occurred since 2000 and therefore could not say what the effect has been on current fuel prices.

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Just as the beginning of peak driving season is about to hit looks more than a little suspicious...

Partial shut down at BP oil field
May 22, 2007 -- BP officials said it was too early to determine what caused a water-pipe leak that led to the second partial shutdown in 10 months of the nation's largest producing oil field.

"The best estimate is that it's going to be a few days where we are going through a repair plan," BP spokesman Daren Beaudo said Tuesday. "We will work as quickly and as safely as we can." Production at Alaska's Prudhoe Bay was cut by one fourth after the company discovered the leak early Monday morning, company officials said. Some 400,000 barrels a day of oil are pumped at Prudhoe Bay, about half of the total North Slope production.

Beaudo said the company discovered a hole about the size of a pencil's diameter to a water line in a facility used to separate oil, water and natural gas. BP discovered the leak around 1:45 a.m. Tuesday, Beaudo said. By the time work crews diverted the leak to proper drainage and placed a patch over the leak, about 20 barrels of water had escaped from the pipe. BP is Prudhoe Bay's operator, and it has a 25 percent stake in the field it shares largely with ConocoPhillips and Exxon Mobil, which hold 36 percent interest each.

The British company said its production loss would be 25,000 barrels per day; losses for the two majority owners would be about 36,000 barrels a day each. Light sweet crude for June delivery fell $1.36 to $64.91 a barrel in electronic trading on the New York Mercantile Exchange. The facility where the water leak occurred is the same one where the largest-ever oil leak on the North Slope occurred, last year.

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[Martin]

Originally Posted by Unregistered

Just as the beginning of peak driving season is about to hit looks more than a little suspicious...

Partial shut down at BP oil field

This always happens right before the holidays.. Its such a bunch of bull.

How bout this one :

JS Online: Running on empty

Hit by high prices and fees, some gas station owners stop selling fuel

Posted: May 23, 2007

As gas prices hit another record last Friday, Jeff Curro couldn't take it anymore.

He wasn't a motorist at the pump fed up by the blur of numbers spinning higher as he filled his tank.

Curro is a gas station owner who has stopped selling gas to his own customers.

After selling gas at N. 124th and W. Burleigh streets for 20 years, Curro turned off his pumps at his Shell station in Brookfield when the price he was being asked to pay was just too much.

Including the wholesale cost of gas and other taxes and charges, he was being asked to pay $3.44 a gallon Friday, a day when the competing stations down the street were selling gasoline for $3.47.

"Three cents a gallon doesn't cut it," Curro said. "It doesn't pay the bills."

Add to that the money he loses every time a motorist uses a credit card at the pump, and there was no reason to keep selling gas, Curro said.

Credit card companies and banks get an average of 2.75% on every gallon of gas sold, and credit card processing fees now rank as the second-biggest expense for gas station operators, according to the National Association of Convenience Stores.

"The way I see it is, I'm doing all the work of providing the labor, the wages, the electricity, the lighting, the maintenance of the pumps, the repairs and the insurance, which is quite substantial," Curro said. "I'm doing all the work, and somebody else is getting fat on me."

Curro isn't alone in deciding to not sell gas anymore. Casey O'Gorman did the same thing. In business for 25 years near State Fair Park, his West Allis service station is now doing business exclusively as Auto Analyzers. The Shell name came down a few months back.

"I finally had to just pull the plug on it and say, 'I can't afford to do it anymore,' " O'Gorman said.
High wholesale prices

Curro and O'Gorman are leaving a relatively small and disappearing group of service station owners who both sell gas and repair cars.

Independent auto-repair shops face competition from car dealerships and quick-lube repair shops, and in the sale of gasoline, they compete against full-line convenience stores.

Most gas stations today double as convenience stores, and although they generate more than two-thirds of sales from gas, two-thirds of profit comes from in-store sales of cigarettes, drinks and food, according to the convenience store association.

When drivers are paying more, they think that means higher profits for the filling station, said Bob Bartlett, executive vice president of the Wisconsin Petroleum Marketers & Convenience Stores Association.

The case of the two Shell stations stopping sales of gas illustrates the challenges faced by independent station owners across the state, Bartlett said. Nine of 10 stations in the state are independently owned and run, he said.

Between Feb. 1 and Monday, Bartlett said, the average wholesale price paid by service stations in Milwaukee to buy gasoline rose from $1.66 to $2.94. Add in taxes paid to the federal and state governments, as well as transportation costs, and the average service station had to cover $3.47 on Monday, without charging any profit. On that day, stations were charging their customers $3.47 on average in Milwaukee, according to AAA's Daily Fuel Gauge Report.

"People are upset about oil and gas prices, but it's not this guy right here," Bartlett said of the independent gas station owner. "He's not OPEC. He's not refining it. He's buying it kind of like I am, right at the end of the line here."
Sales up, profit down

Curro has been thinking about shutting down his gas pumps for about a year, and he has complained to his supplier about prices.

When he shut down his pumps, he was charging $3.59 a gallon, 12 cents higher than the competing stations nearby.

"Even at $3.59, I was making 15 cents, but I was still giving 10 of those cents to MasterCard," he said.

Nationally, the Association of Convenience Stores estimates that sales rose 12% but profit fell 23% industrywide last year, and for the first time, credit card fees were higher than the industry's profit.

Lower margins on the sale of fuel and credit card fees were the two main factors behind the drop in profit, the association said, as profit margins on the sale of fuel dipped to their lowest point since 1983.

Until January, O'Gorman and the predecessors at S. 84th St. and W. Greenfield Ave. sold gasoline on that corner since 1938.

He says he never made much money selling gas but started seeing margins nosedive last year when gas prices rose.

"More and more, it was crowding out my real form of income," O'Gorman said, referring to car repairs.

"Then you listen to the public, and they say we're gouging them. Who needs to listen to that? I'd need to have my head examined."

Looks like a mutiny is beginning to take shape in the lower ranks. A dealer on the other side of town here in Louisville has done the same. Here's another story of one in Wisc.

Retail gas dealers startin' to mutiny...

Gas Station Shuts Pumps Over Prices
May 24, 2007 - Motorists pulled in to Harvey Pollack's gas station Thursday, honked and gave him a thumbs-up - because he wasn't selling any fuel.

The owner of Towne Market Mobil in this suburb north of Milwaukee shut down his pumps for 24 hours, hoping to start a movement aimed at persuading oil companies to lower their prices. "Somebody out there is making money at these prices, but not me," said Pollack, 57. "So I just thought: What can I do to help the consumer?"

Yellow caution tape surrounded Pollack's six idle pumps for his protest, which drew dozens of drivers. One in a green minivan rolled down her window and shouted "Thank you!" Maria McClory, 38, drove 10 miles out of her way to buy a diet soda from Pollack's station after seeing local television coverage of the protest.

"I just wanted to support them and thank them for making a statement," said McClory, who drives about 100 miles a day for work in her sport utility vehicle.

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Analysis: High gas is here to stay
Gas prices likely to stay high for driving season; Refiners say supplies are below normal, lawmakers feel the heat
May 24, 2007

With the summer driving season just getting under way, gasoline stockpiles are running well below normal for this time of year and prices are setting new records weekly. And until supplies catch up with demand, it's looking like a long, hot summer of high gas prices — well above $3 a gallon in most parts of the country. The latest numbers from the Energy Department pegged the average price of a gallon of regular gasoline at $3.218 — up 11.5 cents in a week and 32.6 cents higher than a year ago. Even adjusted for inflation, the highest price ever reached for gas was $3.22 a gallon in March 1981, just after the outbreak of the war between Iran and Iraq.

Those persistently high prices have sparked outrage among consumers, who have generated enough heat among lawmakers to win backing for a first-ever bill that would ban price gouging nationwide. The bill passed the House Wednesday, although it still has to pass the Senate, and the White House is threatening a veto. Despite the record-high gas prices and the rhetoric on Capitol Hill, it's far from clear whether any price-gouging is happening, because supplies are unusually tight.

Refiners normally try to stockpile gasoline in the spring to get ready for the peak in demand as drivers hit the road for summer vacations and warm-weather industries like construction pick up steam. But this year, with the summer driving season just getting under way, gasoline inventories are well below their five-year averages for the end of May. Inventories fell 15 percent between the beginning of February and the end of April — their biggest three-month drop on record, according to the Department of Energy.

More Gas likely to stay high for driving season - Oil & Energy - MSNBC.com

[waltky]

Big oil not gonna like this...

House puts $16 billion in taxes on oil firms
Aug 4, 2007 - Lawmakers also pass broad incentives for renewable energy, conservation

WASHINGTON - Declaring a new direction in energy policy, the House on Saturday approved $16 billion in taxes on oil companies, while providing billions of dollars in tax breaks and incentives for renewable energy and conservation efforts. Republican opponents said the legislation ignored the need to produce more domestic oil, natural gas and coal. One GOP lawmaker bemoaned "the pure venom ... against the oil and gas industry."

The House passed the tax provisions by a vote of 221-189. Earlier it had approved, 241-172, a companion energy package aimed at boosting energy efficiency and expanding use of biofuels, wind power and other renewable energy sources. We are turning to the future," said House Speaker Nancy Pelosi. The two bills, passed at an unusual Saturday session as lawmakers prepared to leave town for their monthlong summer recess, will be merged with legislation passed by the Senate in June.

On one of the most contentious and heavily lobbied issues, the House voted to require investor-owned electric utilities nationwide to generate at least 15 percent of their electricity from renewable energy sources such as wind or biofuels. The utilities and business interests had argued aggressively against the federal renewables mandate, saying it would raise electricity prices in regions of the country that do not have abundant wind energy. But environmentalists said the requirement will spur investments in renewable fuels and help address global warming as utilities use less coal.

More House puts $16 billion in taxes on oil firms - Oil & Energy - MSNBC.com

[waltky]

I'll believe it when I see it...

Gasoline could drop 50 cents/gallon by spring
Wed Feb 6, 2008 - U.S. drivers could enjoy a drop of up to 50 cents per gallon in gasoline prices by this spring as high fuel prices and the threat of a recession force them to conserve, experts said on Wednesday.

U.S. gasoline supplies hit a near-14-year high of 227.5 million barrels last week, helped by falling demand for the fuel, the U.S. Energy Information Administration said on Wednesday. "Gasoline stocks are continuing to increase and it implies that people are probably cutting down on gasoline consumption -- a result of the weakening economy," said Phil Flynn, an analyst at Alaron Trading in Chicago.

U.S. gasoline demand over the last four weeks only averaged about 1 percent more than the same period last year, the EIA said. Demand growth for the fuel has typically averaged about 1.5 to 2 percent a year and has been one of the major drivers of global oil markets.

"Something dramatic is occurring with consumer driving habits," Geoff Sundstrom, a spokesman for AAA motor club, said in a telephone interview. "These numbers, if sustained over next couple of weeks, should set the stage for a reversal of price forecasts." He said U.S. gasoline prices in the spring could fall 50 cents a gallon from Wednesday's $2.98.

More Gasoline could drop 50 cents/gallon by spring | Reuters

[waltky]

OPEC singin' I'm in the Money...

Gas and oil prices hit record highs
Thurs., May. 8, 2008 - Crude oil prices rise slightly to a new settlement record

Gasoline and crude oil jumped to new records Thursday, with gas rising 3 cents to an average national price of nearly $3.65 a gallon and oil crossing $124 a barrel for the first time. At the pump, the average price of a gallon of regular gas nationwide rose 2.7 cents to a record $3.645, according to a survey of stations by AAA and the Oil Price Information Service. Diesel prices also rose, adding 0.9 cent to match a record national average of $4.251 a gallon.

Gas prices tend to lag oil futures, and with crude rising to a new record near $124 a barrel Wednesday and likely headed higher, it’s widely expected the average price of gas will soon rise as high as $4. Motorists in many areas, including parts of California and Hawaii, are already paying that much, or more. “If oil prices go the way that pundits are expecting, there’s no way we’ll stay under $4 a gallon,” said Fadel Gheit, an analyst at Oppenheimer & Co. in New York.

Meanwhile, light, sweet crude for June delivery rose 16 cents to reach a settlement record of $123.69 a barrel on the New York Mercantile Exchange Thursday after spending much of the day in negative territory. But in after-market electronic trading, prices shot to a new trading record of $124.57. Analysts said volume was quite low, making it easy for oil to keep pushing higher.

“This appears to me to be computer-generated buying,” said Linda Rafield, senior oil analyst at Platts, the energy research arm of McGraw-Hill Cos. Some investors use software that buys automatically when prices rise to certain levels; Thursday’s record settlement may have triggered a flurry of electronic buy orders. “There is no fundamental news out to cause this market to move like this,” Rafield said.

More Gas and oil prices hit record highs - Oil & energy - MSNBC.com

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No shortage of oil in the market: OPEC
Friday 9th May, 2008 - The Organisation of Petroleum Exporting Countries (OPEC) has said that there was no shortage of oil in the world market and the organisation would act if the market shows need for any measures, WAM news agency reported Friday.

'The organisation will continue to strive for a stable and balanced market, with prices that reflect fundamentals, and are favourable to both producers and consumers,' OPEC Secretary General Abdalla Salem El-Badri said Thursday. He added that the petroleum prices had become increasingly volatile in recent months, mainly because of financial market developments and the increased flow of speculative funds into oil futures.

'The turmoil in some global equity markets and the considerable depreciation in the US dollar have encouraged investors to seek better returns in commodities, particularly in the crude oil futures market. This has driven prices higher,' El-Badri said. He added that there was clearly no shortage of oil in the market and the Organisation for Economic Co-operation and Development (OECD) commercial oil stocks remained above the five-year average, with days of forward cover at a comfortable level of more than 53 days.

El-Badri said that US crude inventories rose by almost six million barrels in the last week and that was further indication of oil supplies being plentiful. The secretary general added that OPEC member countries continued to produce more than 32 million barrels a day (mb/d) and a number of new oil projects have started to come on-stream and the spare capacity continues to increase, with the figure currently standing above 3 mb/d. El-Badri said that crude oil movements indicated that some OPEC countries were unable to find buyers for their additional supply.

No shortage of oil in the market: OPEC

[waltky]

Granny says, "Don't hold yer breath"...

OPEC hints at output increase
WASHINGTON, May 9,`08 -- The top Libyan oil official said Friday OPEC might hold an early meeting, a signal the group might increase output to bring prices down.

Shukri Ghanem said he would agree to a meeting before September, when the group had scheduled its next gathering, The New York Times reports. When the Organization of Petroleum Exporting Countries held its last meeting in March, leaders blamed the sharp increase in price on speculation. They said supplies were adequate.

But prices have continued to rise. Crude oil for June delivery closed at almost $126 a barrel Friday. The high prices for crude oil have filtered through the world economy, contributing to high prices for food and plane tickets as well as expensive gasoline and heating oil. That puts more political pressure on OPEC, the newspaper said.

U.S. Sen. Frank Lautenberg, D-N.J., introduced a bill in Congress last week that would require the U.S. government to take action against anti-competitive OPEC practices.

Source

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Shell loses money from Nigerian operation
Sunday 11th May, 2008 - Royal Dutch Shell says it is losing the equivalent of 30,000 barrels of crude oil per day because of recent attacks against its installations in Nigeria.

The unrest in Nigeria, Africa's biggest oil producer, helped drive oil prices to a record high above 126 dollars on Friday.

Anglo-Dutch oil group Shell, Nigeria's largest oil operator, accounts for around half of the country's 2.1 million barrels per day output. An upsurge in attacks on its facilities has forced it to cut back on production.

Niger Delta militant groups have sabotaged several supply pipelines owned by Shell and other oil operators in the restive region. Overall, violence in the Niger Delta has reduced Nigeria's total production by a quarter in the past two years.

Shell loses money from Nigerian operation

[waltky]

What we really need is more refineries...

President Bush Calls for More Oil Exploration at Home
May 18, 2008 — President Bush said Saturday that Saudi Arabia’s decision to boost oil production by 300,000 barrels a day is “something, but it doesn’t solve our problem,” and he called again on Congress to approve legislation allowing more oil exploration at home.

Mr. Bush, who is in Egypt to meet with regional leaders, spoke the day after he raised the issue of oil production and high gas prices in a private meeting with King Abdullah of Saudi Arabia at the king’s horse farm outside Riyadh. The White House said the president had hoped to persuade the king to release enough oil to drive down prices and give American consumers some relief at the pump. But Mr. Bush was largely unsuccessful — the 300,000 barrels a day will not drive down prices, both the White House and analysts said. Back in Washington, Democrats are criticizing Mr. Bush, saying he made only a half-hearted appeal.

On Saturday, here in Sharm el-Sheikh, Mr. Bush pushed back at that criticism, saying he made his message clear to both the king and his oil minister, Ali al-Naimi, who Mr. Bush said had flown home from Korea to meet with him at the king’s request. “I said very plainly, I said, ‘You’ve got to be concerned about the effects of high oil prices on some of the biggest customers in the world,” Mr. Bush said. “And not only that, of course, high energy prices is going to cause countries like mine to accelerate our move toward alternative energy.”

It was the second time in five months that Mr. Bush had raised the issue of oil prices with the king; the first was in January, during another visit to the ranch. Then, as now, the Saudis rebuffed Mr. Bush’s request, although the government’s decision to increase production — made a week ago — softened the blow this time. The Saudis’ long standing position is that they are willing to pump more oil — but only if their customers, the refineries, demand it. The oil minister, Mr. Naimi, told reporters in Riyadh on Friday that the government had decided on May 10 to boost production by 300,000 barrels a day in response to requests from customers, mostly in the United States.

“Our response is positive,” Mr. Naimi said, adding, “What we have said is, ‘Let the buyer come and we will satisfy his request. Very simple business: If you want more oil, who’s going to buy the oil?” Some analysts believe the Saudis were responding as much to pressure from Democrats in Congress as Mr. Bush. Congress passed legislation this week ordering the Bush administration to suspend shipments to the strategic petroleum reserve, and the administration said Friday it would comply. And some Democrats are calling for sanctions on the Saudis, such as refusing to sell them arms, if they do not open the oil spigots.

More http://www.nytimes.com/2008/05/18/wo...8prexyweb.html

[waltky]

Price of oil stranglin' the economy...

Oil price spike has wide economic impact
Thurs., May. 22, 2008 - Continued surge could spark 'something worse than a mild recession'; If runaway oil prices go much higher, the damage to the U.S. economy will be deeper and wider than the fallout from the run-up so far.

As dire forecasts about runaway oil prices become reality, it’s impossible to know how much higher they’ll go. But the impact of the price surge already is being widely felt. And if prices go much higher, the damage to the U.S. economy will be deeper and wider than the fallout from the run-up so far. Oil prices have doubled in the past year and have shot up nearly 50 percent since January to a record $135 a barrel. Much of the rise appears to be driven by speculators betting that tight supplies — or outright shortages — will push prices even higher.

Consumers — already hit with rising prices and flat wages — are being stretched further. As the Memorial Day weekend kicks off the summer driving season, gasoline prices are at record levels, reaching a national average above $3.83 a gallon. Some analysts predict the average will break past $4 as early as next week. In some parts of the country, prices are already closing in on $5. “We're already in a mild recession,” said Lakshman Achuthan, an economist at the Economic Cycle Research Institute. “I think if we go towards $150 (a barrel), we start talking about something worse than a mild recession.”

The surge in oil prices is hitting some parts of the economy harder than others. Companies that use lots of oil have already been hurt; the recent surge will only make matters worse. Airlines have been struggling to make a profit, even as they cut jobs and flights. American Airlines became the latest to announce it was tightening its belt another notch, saying Thursday that it plans to shrink capacity by as much as 12 percent and cut thousands of jobs. To offset the rapid rise in jet fuel prices, the airline also said it plans to start charging passengers $15 to check the first bag of luggage for each passenger. United Airlines said it’s considering a similar move. The carriers already charge $25 for a second bag.

More Oil price spike has wide economic impact - Eye on the Economy - MSNBC.com

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Experts Say High Prices of Oil Are Here to Stay
22 May 2008 - The continuing rise of oil prices on the world market is affecting everything from transportation to agriculture and manufacturing.

Demand for oil is being primarily driven by expanding economies in China, India and other developing countries where fuel is needed for factories and transport. At the same time, a growing middle class in those nations is increasing the demand for automobiles, which, in turn, use more fuel. But a study released this week by Rice University's Baker Institute for Public Policy in Houston shows that demand is also increasing in the United States, which already accounts for a third of the transportation fuel used worldwide and imports more than half of the petroleum it consumes.

One of the authors of the study, Kenneth Medlock, speaking to VOA, says talk of US energy independence is unrealistic, given the current level of demand. "We have to rely on imports because the oil that is available at lower cost is not domestic. Trying to move to a world in which we import absolutely no oil in a very short amount of time is going to cause the price of fuel to rise dramatically and that is certainly not the outcome that people want," he said.

The study on US Energy Policy and Transportation co-authored by Medlock and his colleague Amy Myers Jaffe calls for efforts to curb demand as well as increases in energy production, not just from oil, but from other sources, including wind, solar and biofuels. Medlock disputes the idea that the world is running out of oil, but he says the increasing cost of producing oil will make alternative energy more attractive in the years to come. "We'll get there eventually because without a doubt oil is a finite resource and we will eventually get to a point where we choose not to consume it, but that will not necessarily be because we run out, but because the incremental barrel is going to be increasingly expensive to produce and other things will just look better," he said.

More VOA News - Experts Say High Prices of Oil Are Here to Stay