cost of gas!!

Jim Godward said:

2 of the big oil companes are in the process of establishing new refinery's, Canada, and expanding one in the US, Billings MT.  They are in the process of moving HUGE pieces of equipment for them through the northwest to the various locations.  3 won't do much to help, but it is a start.

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Those onese being moved through the US northwest to Canada aren't for refineries.  They're for upgrading the oily dirt that is mined in Ft McMurray, Alberta to synthetic crude.  Although the oily dirt gets the dirt removed first of course.

There's been the occasional story in the big city newspaper about the protests in the NW USA along the route of those large peices of equipment.  Including environment protests if they get tipped into the rivers which is rather ridiculous as they don't have any chemicals or fluids in them yet.  They're just steel.  A few fish would get squished but that's about it.

And I'm sure the oil companies and, more importantly, the moving companies have sent engineers to thoroughly inspect each bridge along the way.

Thanks for clearing things up.  The one for Billings is a for a refinery to allow expansion.  As for the oily sand, if the equipment does the job great.  Our papers have refered to it as oil refining equpment so I was obviously confused.

Didn't we have this same thread a couple of years ago when gas went above $4 per gallon? I don't know anyone who quit traveling. Many of us just traveled for a shorter distance and stayed longer or saved money somewhere else to pay for the higher gas price. There are trade-offs in life. For some people, it's deciding whether to buy groceries or medicine. I'm glad my hardest decision is how much traveling to do and how long to stay someplace.

Life is Good
Wendy
Lake Havasu City, AZ

Jim Godward said:

As for the oily sand, if the equipment does the job great.  Our papers have refered to it as oil refining equpment so I was obviously confused.

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Well it is oil refining equipment.  Just not for the standard oil refineries that process the crude oil and make gasoline, diesel, kerosene, etc.  But it processes the heavy oil producing the synthetic crude.

Wendy said:

Didn't we have this same thread a couple of years ago when gas went above $4 per gallon? 
Life is Good
Wendy
Lake Havasu City, AZ

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Wendy,

There was a discussion on local radio yesterday.  I didn't catch most of it as I was in and out of the car while it was going on.  If I remember correctly, the barrel price must be above $65 a barrle for the oil sands to be profitable.  We are there and the big money is betting we will be there for a long time. 

Jim Godward said:

I didn't catch most of it as I was in and out of the car while it was going on.  If I remember correctly, the barrel price must be above $65 a barrle for the oil sands to be profitable.  We are there and the big money is betting we will be there for a long time. 

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And they're trying to design those plants and get firm pricing right now as they are anticipating yet more increases in the price of steel, etc.    They'd like to build them as well right now but practically of course that isn't possible.  There was one story in the paper yesterday predicating labour shortages in Alberta again in six months.

One plant i worked at for two weeks had 15,000 employees on site assembling and building it.  Huge logistics in terms of getting people there by bus, enough trailers for washrooms and lunch, etc, etc.  Although I was there at the end when it was down to 1,500 employees.

We are with Wendy on this one. Fuel costs are hurting everybody but we are not ready to give up our passion for traveling.

A couple things on this topic. Having worked for Valero as a cashier for a while I found that while it is fun to see the oil companies as super villains plotting to screw us, I think the reality is more than they are simply doing what they are legally required to do - namely optimize their profits for their stock holders. Working at a station I could see the price movement daily, and compare our tank levels to those prices. Here is what I think is going on short term:

Consider that the optimum production level for a refinery is to have it running at full capacity all the time. The problem with that is that the gasoline produced has to go someplace. We do not store very much gasoline other than what is stored at the tank farms for local distribution and in the tanks in the gas stations. So, once the gas is produced at the refinery it moves quickly to a tank farm for regional distribution. The tank farm will only hold so much gas. If the tank farm fills up the refinery MUST stop or cut back production - reducing efficiency and profits. So, they closely monitor the levels in the tank farm and adjust price daily (sometimes more often than daily) to encourage more driving and therefore purchasing if the tank farm is in danger of filling, or they raise prices to reduce sales (and make more profit per gallon) if the tank farm does not have enough gas to supply demand. So, consider the distribution channels (pipe line, tank farm, delivery trucks and gas station tanks) to be being constantly monitored to keep them from getting too full or too empty while running the refinery at a constant 100% capacity. Almost the only control they have ( and only control they need ) is to control the price which directly and almost instantaneously affects peoples daily driving habits and fuel consumption.

Having said that I am not nieve enough to think the oil companies at not evil, I think all multinationals are evil. And I think that long term they will do ANYTHING to maximize their profit from their limited product. They know that one day oil will be too expensive to get out of the ground and their cash cow days will end. So, they do have longer term plans and schemes. But the daily, weekly, monthly fluctuations of gas prices are mostly in response to how people drive - the goal being to keep the distribution channel from filling up or emptying.

The second point I would like to make is that for many years nobel winning economists have said that the US economy could not support gas prices of $4.00/gal (adjusted for inflation). They have said that if gas should reach $4.00/gal the US economy would crash into a major recession that would ripple around the world. I find it very interesting that shortly after the gas price reached $4.00/gal and stayed there for a little while the housing market crashed and several banks went under and we entered what has been described as the worst recession since the depression... Makes me go hmmmm.... The second thing that makes me go hmmmm is that no one has mentioned the possibility of the connection. Consider that everything in the world wide economy is based on the assumption of "cheap" energy - oil. Most experts agree that is we were to "run out of oil" there would be a major depression world wide, but WORSE than that, if people knew we were GOING TO RUN OUT, there would be massive panic in the financial markets which would lead to a major depression long before we actually run out of oil. So, there are those conspiracy nuts (like me) that believe we are running out of oil and all the governments in the world are scrambling to get control of whatever they can and are in agreement to keep the actual numbers secret to prevent the market panic.

Driving an RV has a unique advantage in this situation - we can decide where we want to be and move our home there with little notice. My suggestion to all is to keep your tanks topped off so if a depression hits (I don't think it will, but it doesn't hurt to plan for it) you can move to someplace you would prefer to park for a couple years until the economy recovers.

Frank

Frank

FrankNSharon said:

A couple things on this topic. Having worked for Valero as a cashier for a while...

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Now THAT is a perspective I always wanted to hear.  Very interesting input!  I have watched and mentally tracked gas station price fluctuations for years (always try to buy when the price is near bottom, right before the inevitable 20-30 cent rapid increase), but I never knew of the direct short-term relationship with refineries and tank farms.

FrankNSharon said:

Working at a station I could see the price movement daily, and compare our tank levels to those prices. Here is what I think is going on short term:

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Now that is interesting.  I've never read of this analysis of refinery and distribution system causing of short term price fluctuations but it certainly could make a lot of sense.

come on people - keep your rv topped up?  stock up on food and build a bomb shelter...

Let's get a grip...  fuel prices to this?>

if fuel goes up consumption goes down - that is it.

One thing is true.. the u.s. is in deep trouble...

I appreciate the point of view - i am just not buying the theory

The long and short as I see it . We sell wheat for around 12 a bushel and buy oil for over 100 a barrel ??? Can't grow wheat in the sand, Their getting rich off us and our farmers are going under. And before anyone ask, Am I saying starving them for our oil needs? Yep. They would us

mike eddleman said:

The long and short as I see it . We sell wheat for around 12 a bushel and buy oil for over 100 a barrel ???

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And if you really want to get into it......we pay farmers not to plant.  My sister and her husband are not farmers, not even remotely; however they own over 60 acres of land.  The government pays them every year for not planting their acres.  <aaaarrrrgggg>

Marsha~

Our choice is to cut expenses in other areas.  Our fuel cost is about 25% of the total cost of ownership & operation, in our budget for this year.  For budgeting purposes, we used $ 3.50 per gallon for 2011.  This was my assumption at the end of last "season" which for us is around the end of October.  If the fuel cost is more than budgeted, we'll cut other discretionary spending to make up the difference.  Eating out is one of the first things we cut down on if we're trying to make up for a shortfall.  We also don't plan to spend every dollar that we take in, so there is a reserve that we can go into for variables like this.  I know that not everyone can do this, and we also can't sometimes.  We do try to keep our lifestyle at the lower end of our predictable income though. 

stock up on food and build a bomb shelter...

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Ooooo, food and bomb shelter! I did think I that - cool idea!

And here I was simply quoting the leading economists in the world that we (the US) can not afford to pay $4.00/gal for gas, and if it gets there again during this recession it is most likely going to result in a depression. So, I advised that your keep your tank full so you don't get stranded someplace you don't want to be if the bottom falls out and gas becomes rare (like the 25 to 40 car lines we had at our station the last time the gas got to $4.00/gal.

But, I like your idea better - lets build bomb shelters, get BIG knives, and lots of guns... sounds like fun.



fixed quote

Remember back in the 70's when the gas shortage hit.  A report afterwards said that it was caused by everyone being afraid that we were running out of gas.  I think that the report said that b/4 the scare, the average gastank was less than half full.  So everyone got in line to fill up, which emptied all of the gas stations, which caused prices to jump to slow consumption.  It made sense then, when the average mpg was probably 10-15 mpg.  Now the average is probably 20-30 mpg.  I wonder how much gas would be saved if the speed limit was returned to 55  mph?  That's about the speed I drive now, since I ain't ever in a hurry.  Your thoughts?  Eddie Elk 

I wonder how much gas would be saved if the speed limit was returned to 55  mph?

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A lot of gas would be saved, there are many other ways to save also, but we won't.

No one believes we can really be running out of oil, no one believes we can really be affecting the environment, no one believes a lot of things. Mainly because none of those things have ever happened before, and so we have a hard time accepting that they might happen in our life times for the first time.

The US Energy Information Administration is charged with tracking and monitoring the energy production and consumption world wide. 20 years ago they said there was a virtually unlimited supply of oil and we would never run out - a few years later they estimated there was hundreds of years of oil left - recently they estimated that peak oil (when we start producing less oil each year than the year before) would occur in 30 years. Most recently they have started that we may have already pass peak oil. For the past 20 years each administration has "encouraged" Saudi Arabia to increase oil production by as much as 16 percent to keep up with growing demand, each year the Saudi's have agreed to do it, each year they have failed to do it - by a lot. Recent reports indicate that there is reason to believe the Saudi's have been lying about how much oil reserves they have - imagine that, someone lying...

If you get bored look over the EIA's website. There is some interesting information there, if that doesn't light a fire in your pants, let me know - I will give you some links to Pentagon reports indicating what they think is happening with the world oil supplies and the predicted impact on world peace - or the lack of it...

As for me, I plan on enjoying our time full timing, but I also plan to keep my tank full, so I can settle down where I want to and not be stranded waiting in line behind hundreds of other cars should things not go so well. Never hurts to plan ahead a little...

FrankNSharon:

I am assuming this is to Frank: 

No offense, I didn't mean to belittle your point of view.  I love the conspiracy stuff, I just find if one gets too into it it can warp the mind a little. 
I appreciate your opinions, and it does make sense to a point...
I used to visit www.prisonplanet.com all the time, until i got a little too into the theories.  Cloud trails, etc...
My brother is really into that stuff too.
Jay

eddieelk said:

Remember back in the 70's when the gas shortage hit.  A report afterwards said that it was caused by everyone being afraid that we were running out of gas.  I think that the report said that b/4 the scare, the average gastank was less than half full.  So everyone got in line to fill up, which emptied all of the gas stations, which caused prices to jump to slow consumption.  It made sense then, when the average mpg was probably 10-15 mpg.  Now the average is probably 20-30 mpg.  I wonder how much gas would be saved if the speed limit was returned to 55  mph?  That's about the speed I drive now, since I ain't ever in a hurry.  Your thoughts?  Eddie Elk

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During the second big "gas shortage" I owned a gas station. There was NO SHORTAGE! During the last week of the month my supplier would call to ask how much room I had in my tanks for fuel storage. He could not legally sell me the fuel and I could not legally sell the fuel, but his tanks were full and the barge was coming in with more and he had to get rid of fuel somewhere. There was always plenty of fuel for me to buy if I could get state approval to buy it. I was automatically allowed 90% of what I'd purchased that month the year before. I could apply for a waiver each month to get more, which of course I always did.

The reason everyone lined up was because the stations, at least I, wanted to have fuel thruout the month. I could have sold my entire allotment in the first 10-15 days and taken 2 weeks off each month. But, I was a neighborhood station with service bays that needed the customers coming thru, so I sold gas for 4 hours per day.

Currently in the Phoenix area there are a number of diesel pump handles with yellow tape or yellow bags around them. Many Circle K's had no diesel since last Friday. Some still have none today. The Shell station in Scottsdale on the way to Ft. McDowell was out on Friday also. I don't know when they expected a delivery. Price went from $3.29 to $3.69 (and no fuel) in 5 days at the Shell.

Can the state and feds control the supply? Yep, they sure can.

Buck2,

We had the same issue. When gas was high and consumption was down that sets the amount of gas we could buy the next year. It created real problems for us, since we were a convenience store and only about 30% of our profit came from gas sales and the rest from store sales (booze and smokes mainly). When the price of gas fell the next year sales started soaring and we were not allowed to get more than our allotment either, the result was we started "running out" of gas and had to raise the price to slow sales so we would not run out before the next delivery - which meant traffic in our store slowed and inside sales suffered. Our manager fumed the whole time...

BTW, I see you were in Phoenix, our store was in Glendale, small world.

Frank