Well, Mr Hofmeister, There It Is: $5.00 Gasoline

It only took a year.

CBS is reporting: $5.00 gasoline "returns" to the Southland. Predictable.

CNS reports: price of gasoline doubles under President Obama.

President Obama to Canadian oil for $60/bbl: NO. -- ABC NEWS

President Obama to Venezuela oil for $120/bbl: YES. -- Bloomberg

Hofmeister on Bloomberg

Link here.

1. No proof that Saudi can increase production quickly. Saudi has not produced to stated potential. Brent has been at $125 for quite some time; why is Saudi saying they are acting now.

2. No major oil company actually increased production year-over-year in 2011.

3. China with increasing oil demands.

Hofmeister: "I'm not saying Saudi doesn't have the ability to increase production quickly; I'm just saying I don't believe they can."

My sentiments exactly.

EIA Sees More Price Pressure in the Northeast if Another Refinery Shuts Down -- February 28, 2012

Updates

March 26, 2017: WTI at $48.

December 9, 2015: WTI at $37. 

November 27, 2012: well, oil prices haven't gone much higher ... yet. 

Later, later: oil prices could go much higher -- senior energy analyst at Oppenheimer. The video is actually pretty good.

Later: Long Island, New York,  gas station -- $5/gallon; new worry -- $6/gallon (reference to Hofmeister)

 Original Post

Link here here to Oil & Gas Journal.

If another refinery in the northeast shuts down, one can expect an increase in the price of gasoline. Well, duh.

PBF Energy Co. LLC’s October 2011 startup of a previously idled Delaware City, Del., refinery has helped the New England oil products market respond to closures of ConocoPhillips’s Trainer refinery in September and Sunoco Inc.’s Marcus Hook facility in December, the US Energy Information Administration said. But Sunoco’s plans to close its remaining Philadelphia refinery in July could change the situation, EIA warned has warned.

The 335,000-b/d facility accounts for nearly a quarter of the East Coast’s total refining capacity, EIA said. “If the Sunoco Philadelphia refinery shuts down in July 2012, suppliers may need to find 240,000 b/d of gasoline and 180,000 b/d of [ultra-low sulfur diesel fuel] by 2013 in addition to the amounts that have been supplied historically,” it said.

The ULSD gap won’t simply result from lost refining capacity, EIA added. It said New York State plans to require that heating oil meet the same low-sulfur rules as ULSD starting in July, effectively increasing ULSD demand by 70,000 b/d and annual ULSD demand in the Northeast by 20% on average, although the heaviest pressure will occur during the winter heating season.

The entire article is worth reading in its entirety.

Two comments: if this happens it will come in the middle of the driving season AND the national presidential campaign.

Second comment: a phenomenon that I've observed over the years that makes no sense will probably follow if another refinery in the northeast shuts down. This is the phenomenon: if there is a shortage of gasoline, regardless of the reason, the price of oil generally goes up. This, of course, makes no sense, if all things being equal, the reason for the shortage of gasoline has to do with refinery under-utilization, then oil is not the problem. In fact, there would be a relative excess of oil. But still, if there's a shortage of gasoline, generally oil rises in price, regardless of the reason for the shortage of gasoline.

So, if another refinery shuts down in the northeast look for the price of gasoline to go up AND the price of oil to go up.

$6 Gasoline Will Hurt Florida Tourism More Than Off-Shore Drilling

Link here for article on $6 gasoline in Florida.

Talk about pain at the pump! Some Florida drivers are spending nearly $6 a gallon to fill up their gas tanks.

According to GasBuddy.com, motorists are shelling out $5.89 for a gallon of regular gas at a Shell station in Lake Buena Vista, topping out at $5.99 a gallon for premium. It doesn’t get better at a Suncoast Energy station in Orlando, where drivers are paying $5.79 for a gallon of regular.

“Prices over in the Disney World area are much higher than any other place in Florida,” Jessica Brady, AAA spokeswoman, told CBS Tampa, adding that people regularly complain about gas prices in that area.

I guess the writer is trying to say that the price of gasoline is no big deal, people complain about it all the time.

Hofmeister's $5 Gasoline

It looks like $5 gasoline is in the can, as they say in the movie industry, in Los Angeles.

Link here.

CBS2’s Kara Finnstrom reports that a gallon of self-serve regular unleaded gasoline is $4.93 a gallon at a Shell station in the Miracle Mile district.

It’s not unusual to have price jumps in February, but AAA and the Oil Price Information Service say gas prices were already at record highs.

No comment.

Well, Well, Well, Isn't This Interesting? Saudi Cuts Output Even As Prince Assures Us Saudi Won't Let Oil Go Over $100; Iran Cuts Exports To Europe; Germany Ready to Cut Ties With Greece

Oil Up Over $105 On News That Saudi Cut Production, Exports
Iran Cuts Exports to Britain, France
Meanwhile, Germany Ready to Cut Greece Loose?

Link to CNBC: Saudi cuts production.


Pretty impressive chart -- this is a dynamic link and I don't know how long the link will work.

And, the link regarding Iran cutting exports to Britain and France.

Very, very interesting; from the first link:

The world’s top oil exporter, Saudi Arabia, appears to have cut both its oil production and export in December, according to the latest update by the Joint Organizations Data Initiative (JODI), an official source of oil production, consumption and export data.

The OPEC heavyweight saw production decline by 237,000 barrels per day (bpd) from three-decade highs of 10.047 million bpd in November, the JODI data showed on Sunday.

The draw-down was sharper for the actual amount exported, declining by 440,000 bpd, or 5.6 percent, to come in at 7.364 million bpd, the data also showed. The level would still be similar to exports after a steep ramp-up last June.  

Three things jump out at me:

• first, this occurred even as the prince said Saudi would not let the price of gas go over $100
• second, unlike the usual announcements by Saudi when it decreases/increases production/exports, or when OPEC meets, this decrease seems to have been done quietly without telling "the world"
• third, this occurred even when tensions were increasing again in the Mideast (Iran nuclear program; Syria's "Arab Spring")

Could  this be added to Hofmeister's perfect storm, an element he was not aware of when he spoke on CNBC this past week?

The story about Germany ready to cut Greece lose from the EU is not directly connected to the "oil" stories, but something tells me Europe is in "crisis" mode and such dots often eventually connect. The first dots to connect: if Greece is cut loose, and unable to pay its bills, something tells me the country will have trouble buying fuel oil, gasoline, diesel, jet fuel, or natural gas.

************************

[I've been gone all weekend; this is the first time I've seen the news, or read any e-mail, so I haven't had chance to really sort this out. I don't know when this information was first posted -- it was news today or yesterday. Maybe for everyone it's old news and everyone has sorted it out, but it's news to me. Somehow, this seems to be a big story, but maybe I'm over-thinking it.]

Hofmeister -- Supports My Myth -- Wow, Already: LA's February Holiday's Highest Price Ever

Updates

February 17, 2012: $4.00 gasoline in Los Angeles.

Just in time for Presidents Day: get ready for the long holiday weekend's highest prices ever in Southern California as $4 gasoline is expected to arrive in Los Angeles, Long Beach, and probably Orange County, too.

That's what energy analysts are predicting as the average price of a gallon of gasoline in the Los Angeles-Long Beach area reached $3.996 a gallon overnight, up nearly 2 cents since Thursday. That was also a jump of 15.9 cents a gallon since last week.

Original Post

Former Shell oil CEO Hofmeister just on CNBC. Video here.

His comments support my myth.

Perfect storm:

• This administration and previous administration: "business as usual"
• Iran looking to drive oil prices up; strategy: drive Western economies into recession
• oil spill in Gulf --> moratorium in Gulf
• the west never anticipated the huge growth by China

Fracking?

• In the big picture, oil from fracking represents just a trickle of overall supply. The trickle of oil coming from fracking doesn't impact the loss of oil from the Gulf due to the (continuing) moratorium

Killing the Keystone?

• Horrendous decision; part of the "business as usual" policy (or lack of energy policy)

$5 gasoline?

• In 2010, "they" were predicting $5 gasoline in 2012

Conundrum for policy makers and impossible to understand by Americans:

• demand of gasoline continues to decrease (down 6% in past year) and yet price of gasoline keeps going up; go back up to "perfect storm" 

Recession in the west?

• It's already considered "a given" for the Europeans
• Will it spread to the US?

Something tells me we will be seeing and hearing a lot more from Hofmeister this year, so he gets his own tag/label at the bottom of the blog.