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Saturday, February 28, 2009

SPRING TIME FOR OIL REFINERIES IN THE U.S.

Hope springs eternal for motorists with West Coast spot market pipeline diesel and gasoline prices down 3 cents per gallon on Friday. But this is just an adjustment of the big upward momentum in prices of the last two days for these two products with diesel up 7 cents and gasoline up 16 cents per gallon.

Federal Reserve Chairman Ben Bernanke, Secretaries Paulson, Geithner and President Obama are finally all singing from the same song sheet. They are now defending the new rescue plan for banks and it does seem that investors are now feeling assured that US banks will not be allowed to fail in the manner that Lehman's did back in September.

Equities markets and the petroleum markets have been taking cues from each other for the last six months in their ups and downs but mostly downs. But what that has to do with the price of potatoes. . . ., or should I say gasoline, is absolutely nothing!

Crude oil and gasoline prices have lately been moving as if they are in their own universe. Crude oil went back down under $43 a barrel on Friday as rumors being spread around in the market, about more OPEC production cuts, were being absorbed in the markets.

The spot market gasoline prices bumped back up this week after seeing major weakness last week. A myriad of confirmed refinery problems in the U.S. along with at least one confirmed permanent closure of the Big West refinery in Bakersfield has tightened supply of this precious commodity. Along with that are the full blown annual spring turn-a-rounds with refineries turning to starting to produce summer gasoline.

This will cause gasoline prices to stop going down and firm up some more in the next few weeks. Better fill your family buggy this weekend because gasoline prices will be going back up 2-5 cents per gallon by the end of next week. You may want hum the parody to the theme music of Mel Brooks' "The Producers" while you are driving to your neighborhorhood gas station today.

Thursday, February 26, 2009

"OH BROTHER CAN YOU SPARE ME A DIME. . . . FOR GASOLINE?"

There is good news or bad news these days depending on which side of the fence you are dealing in the petroleum market. The April WTI crude oil price surged back over $44 a barrel today. This was mainly due to The United American Emirates cutting back on some more oil exports to Asia in anticipation of the March OPEC meeting.

To cut to the chase, this and last week’s downward trend in the petroleum markets has come to an end. Wholesale gasoline rack prices are firming up once again this week due to a myriad of oil refinery problems in the U.S.

There is still is disconnect between the prices of gasoline and crude oil. With a cacophony coming out from oil analysts it's not no wonder motorists are confused about the reasons for the ups and downs for what they pay at the pump. That price is now being determined by the oil refiners who will only pay for crude oil by what the market will bear for gasoline. Therefore gasoline pump prices are now actually leading the price for crude oil. This is may be a classical case of the tail wagging the dog.

Building on this week’s Wednesday increase, crude and refined products futures on both sides of the Atlantic are seeing gains mainly bolstered by signs that gasoline demand in the U.S. may finally going back up.

The Department of Energy inventory statistics report showed an unexpected gasoline stock decline. According to Wednesday's DOE report, motor gasoline demand over the last four weeks has averaged 9 million barrels per day, up 1.7% from the same period last year.

This could be due to the start of another springtime gasoline-led price rally when the oil refineries switch from producing winter to summer gasoline. The process takes an extra refining process and results in a reduction of ten per cent supply of finished gasoline. The typical oil refiner will take a barrel of crude oil and produce about 21 gallons in the winter with only 19 gallons in the summer. There are 42 gallons in a barrel of crude oil.

Bob van der Valk is the Director of U.S. Branded License Program and Fuel-pricing Analyst with 4Refuel Inc. in Lynnwood, Washington and can be contacted at (971) 678-2975 or e-mail to: tridemoil@aol.com


My viewpoints can be viewed on my personal web page at: http://www.4vqp.com/ourconsultants/thegasguy.html

Any views expressed in this newsletter are those of the writer, except where the writer specifically states them to be the views of the 4Refuel group of companies.

Wednesday, February 25, 2009

Imminent Enforcement of Vapor Recovery Systems in California

A letter was written by California Assembly member Anthony Portantino on February 23, 2009 and was sent to Governor Arnold Schwarzenegger. Mr. Portantino is the Assembly member of the Forty-Fourth District. In it he is requesting that the Governor issue an executive order delaying implementation of the California Air Resources Board EVR Phase II regulation scheduled to go into effect on April 1, 2009.

The upcoming debacle will not only immediately close a lot of low volume gas stations but high volume stations as well as any car washes with gasoline islands will not be able to comply as well. Currently over 50% of the 13,000 gasoline stations are anticipated not to be able to meet the imposed deadline.

This is currently a very hot subject being discussed between the California Air Resources Board and California service station owners. Andre van der Valk has been given the opportunity to speak before the CARB board meeting being held on Thursday, February 26, 2009 board at their Sacramento headquarters. It is during the public agenda part of the meeting, and the board does not have to respond to any of his concerns if they choose to do so.

Below this blog is the alert article I wrote last week about this issue.

Tuesday, February 24, 2009

Another Day, Another Dollar for Crude Oil

THE CRUDE REALITY AND MARKET UPDATE FOR 2-23-09

“ANOTHER DAY, ANOTHER DOLLAR DOWN FOR CRUDE OIL”

It was a case of another day, another dollar, or rather another weekend another taxpayer dollar, with the news rife that Citigroup, the US banking conglomerate will be rescued by the US government later today, with a 25% to 40% stake in the cards. That is better news than a complete takeover and the market today will reflect that somewhat more positive approach to yet another bailout.

WTI crude oil price did not retrace its December’s lows last Friday when March prices expired and instead slipped just 54 cents to $40.03 a barrel. Monday's April crude oil price reflected the overall feeling in the market and closed down about a dollar at $38.44 a barrel.

Algerian Oil Minister Chakib Khelil was active in the press over the weekend and was again talking about possible production cuts. Mr. Khelil said that cuts were very likely at the upcoming meeting on March 15th in Vienna. Despite doubts around the compliance of OPEC their actions since September have largely succeeded in stopping oil prices reaching a number much lower than $30 a barrel.

On the gasoline pricing front we finally have some good news for a change for motorists with West Coast oil refineries coming out of their spring turnarounds. The wholesale spot market already dropped 40 cents per gallon last week and unbranded independent gasoline rack prices are back under their branded major oil company counterparts. However both the ChevronTexaco El Segundo and ExxonMobil Torrance refineries have had flaring problems during their start ups over the weekend.

Gasoline and diesel prices will be settling down and gas prices are expected to drop 2 to 5 cents per gallon in the next few days. The next gas price spike will occur before the Memorial Day weekend, which is usually the start of the summer driving season and demand for gasoline goes up.

Sunday, February 15, 2009

Say Your Goodbyes To The Mom & Pop Gas Stations In California!

THE VAN DER VALK GAS PRICE ADVISORY FOR 2-16-09

Posted on February 16, 2009 - 06:55 AM EST

By: Bob van der Valk

This is not an April Fools joke but you may want to pay a visit to one of those conveniently located small gas stations before midnight on March 31st this year. Because that may be the last day you will be able to stop off for two bucks worth of gas and a quick cup of coffee so you can get you to work and back.

That little gas station located around the corner from your home or in the small farm towns in California is currently being threatened. This time it is not an earthquake or a forest fire but a sweeping state regulation requiring them to update their vapor recovery systems at the nozzle on their pumps.

The forewarning came from the California Air Resources Board (ARB), who so far has steadfastly refused to issue a waiver to postpone the mandated deadline of April 1, 2009. It will result in the loss of the jobs and incomes related to many independently owned stations in California.

Most of the gas station owners knew the regulation was coming but did not realize until it was too late that the enforcement for the implementation of the ARB Enhanced Vapor Recovery (EVR) Phase II and In-Station Diagnostics (IDS) rules would mean the death knell of many of their small businesses.

Currently only about one third of the 13,000 gas stations in California are in full compliance with only about 50 per cent of them expected to meet the upcoming deadline. The average cost to install the equipment required to meet the new standards is about $80,000 per station. That amount is costs prohibitive when most of the independent owners are already working on very slim profit margins.

Some of the low volume older gas stations will not be able to afford to install the new equipment on their pump islands even if they are given more time. They will wait for the agents from their local air district to show up with the dreaded red tags and lock up their pumps.

Most but not all of the major oil company stations controlled or owned by Shell (RDS.A), ExxonMobil (XOM), ConocoPhillips (COP), BP/Arco (BP), Chevron Texaco (CVX), Valero (VLO) and Tesoro (TSO) are expected to meet the mandate. They in fact have been pushing the ARB to start enforcing the regulation on time. But some of the branded major oil stations are owned by individuals or small companies and are in the same financial squeeze as their unbranded independent station owners.

There will be a hearing held by the ARB at their Sacramento headquarters on Thursday, February 26, 2009 to review progress or lack thereof for implementation of the new EVR Phase II and IDS rules. The EVR rules go into effect on April 1, 2009 with the IDS rules being phased in two stages with the first deadline in September 2009 and another in September 2010. Enforcement action has been threatened against those stations that do not comply with those deadlines.

Bob van der Valk is the Director of U.S. Branded License Program and Fuel-pricing Analyst with 4Refuel Inc. in Lynnwood, Washington and can be contacted at (971) 678-2975 or e-mail to: tridemoil@aol.com

My viewpoints about the petroleum industry can be found on the Seeking Alpha web site address: http://seekingalpha.com/author/bob-van-der-valk/articles/latest as well on my personal web page at: http://www.4vqp.com/ourconsultants/thegasguy.html

Any views expressed in this newsletter are those of the writer, except where the writer specifically states them to be the views of the 4Refuel group of companies.

Saturday, February 14, 2009

The van der Valk Gas Price Advisory for 2-13-09

I hope you have had your morning coffee as the following may be somewhat tedious. It requires me to get down into the down and dirty details of crude oil trading in order to explain disconnection between crude oil and gasoline prices:

The front month (March) WTI crude oil price is up 75 cents to $34.70 a barrel so far this morning, while the April contract is down 20 cents at $41.97 a barrel. Meanwhile gasoline prices spiked another 2 cents per gallon across the country per the AAA fuelgauge report. Monday's Presidents Day Holiday has some short covering going on but the market is keeping a nervous eye on gasoline demand levels improving after the stimulus package is passed.

The market has been ignoring the March WTI crude oil price and is now concentrating on April. The March price is being squeezed by investors with positions and being used to manipulate the price by the players in the game.

That has been happening every month in the past few months as the future prices are higher than the current month (contango). Those with wet barrels in storage at Cushing, OK in the current month are trying to trade them to forward months in order to find an advantage.

Refiners are at the same time buying crude oil at premium to the WTI crude oil price postings to allow feed stocks (wet barrels) to continue flowing into their facilities. That is opposite of the history where the wet barrels were usually being traded at a discount to the WTI posting.

The March Brent crude oil expires last night and the question now will be that if the WTI/Brent arb trade is lower than it did when it expired last month it could be a sign of further weakness in the landlocked WTI crude oil prices. It will now possible that we will see crude oil dip down into the 20’s but with no appreciable affect on gasoline prices.

On the West Coast gasoline prices firming were caused by refinery delays from coming out of their annual Spring turn-a -rounds along with some glitches with other ones. The average price of regular gasoline will hit $2.25 per gallon as soon as next week Tuesday.

The wholesale gasoline pipeline price is expected to drop 10 cents per gallon today but that price has been out of whack with the rack prices and needed this adjustment. Diesel will be down 2 cents per gallon for the same reason. Oil Price Information Service switches their pipeline market report from 3rd to 4th cycle today and the prices in the last cycle for shipping in February were lower.

The West Coast market is a precursor for the rest of the country with the other refineries switching from producing winter to making summer grade gasoline. That process requires an additional process to lower the Reid Vapor Pressure in gasoline to accommodate the use of ethanol into gasoline as the choice for using oxygenate.

I will be off traveling to Las Vegas next week for the annual Western Petroleum Marketers Association Convention. We will be exhibiting the 4Refuel Fuel Management Online program at their trade show in my current capacity as the Director of U.S. Branded License Program.

I will continue to post my viewpoints and observations at: http://bobthegasguyvandervalk.blogspot.com/

Thursday, February 12, 2009

There is no soft cushion for crude oil in Cushing

THE VAN DER VALK GAS PRICE ADVISORY FOR 2-13-09

This is a follow up to a question asked of me by Gary Richards, reporter with the San Jose Mercury News, about to details on how Wall Street has had a stranglehold on the crude oil trading market.

In the financial markets the relevance of continuing to use the West Texas Intermediate crude oil price for trades is just now coming into question. The posting relates to a storage tanks a at a terminal currently filled to the brim with the WTI crude oil in Cushing, OK. The position of the terminal is such that crude oil can be shipped by pipeline to various refineries in other parts of the country mainly the Gulf Coast of the U.S. Today’s decline in the March WTI crude oil price was achieved amid exceptionally brisk volume even though the contract is set to expire on February 20th.

The discount of West Texas Intermediate (WTI) crude oil, the grade traded at the New York Mercantile Exchange (Nymex), to London’s Brent crude oil posting widened to a record $10.67 a barrel today after supplies at Cushing, Oklahoma, rose once again.

The market is now already ignoring the March WTI price and concentrating on April. The March price is being squeezed by investors with positions and is being used to manipulate the price by the players in the game.

That has been happening every month in the past few months as the future prices are higher than the current month. Those with barrels in the current month are trying to trade them to forward months in order to find an advantage. The contract is nearing five-year lows of 32.20 dollars hit on December 18.

Refiners are at the same time buying crude oil at premium to the WTI crude oil price postings to allow feed stocks (wet barrels) to continue flowing into their facilities. That is opposite of the history where the wet barrels were usually being traded at a discount to the WTI posting.

The March WTI crude oil price, which settled below $40 a barrel in each of the last three sessions, traded down below $34 a barrel today. That is the lowest level seen in more than three weeks. This was based on builds of inventory reported on the weekly DOE stock statistics published yesterday.

The other posting widely used by financial circles is the Brent crude oil price, which is now about $11 higher than the WTI crude oil price. That means the WTI price disparity has grown larger with no real connection to what refiners are paying for their supply of feedstock. The Brent crude oil price is usually only about a few dollars higher.

The March Brent crude oil expires tonight and the question will be that if the WTI/Brent arb trade is lower than it did when it expired last month it will be a sign of further weakness in the landlocked WTI crude oil prices. It is now possible that we will see crude oil dip down into the 20’s but with no appreciable affect on gasoline prices.

The results of what has been happening on the Nymex in the last few years, with crude oil and gasoline prices, is all the proof one needs to see that Wall Street was in charge of determining the price we paid for the energy to run our industry. The true cost for exploring and producing oil has to eventually relate to what it takes to find it and bring it to the market.

The Oil & Gas UK organization, representing most of the major and independent oil producers in that country, came out with a report yesterday that said: "The cost of developing and producing oil and natural gas in 2008 rose by 12% compared with 2007. The break even oil price for new field investment is now over $40. Brent crude oil was posted at around $45 yesterday. Only a third of new developments now under consideration break even at current costs."

There is a disconnect between the price of gasoline in the U.S. especially on the West Coast with the price of crude oil price The price of gas has been increasing pennies a gallon almost every day and is now hitting the $2 per gallon mark in the U.S.

In California that price is already at $2.25 per gallon with the Greater Seattle area hitting $2.19 per the AAA fuelgauge reports. Meanwhile crude oil went down to $35 a barrel on the Nymex today from being at $40 on Monday. In the last few years gas prices would have followed in lockstep with crude oil prices.

A $5 a barrel drop in the price for crude oil would have typically meant an at least 10 cents per gallon drop in the price of gas. Instead the price in Washington State will be heading up some more and go over $2.20 per gallon as soon as tomorrow.

On the West Coast the gasoline and diesel spot market prices were basically flat today. The wholesale gasoline pipeline price did jump up another 6 cents per gallon yesterday. That makes the increase a total 17 cents per gallon for gasoline since Monday with the total affect not yet having been passed along to the pump price.

Meanwhile Billings, Montana has seen the biggest price spike for gasoline in the country. Their pump prices went all the way from $1.34 to $1.74 per gallon in less than three weeks.

In Phoenix the inversion between unbranded and branded rack gasoline is still an amazing 50 cents per gallon. In other words the independent unbranded gas stations have to buy their gasoline at a higher price than their branded major oil company neighbors.

Shippers have been hesitant to nominate tenders being shipped from El Paso to Tucson and in turn to Phoenix through the Longhorn pipeline. With questions about ownership of the product w being trans-shipped in the Longhorn pipeline. Without the Longhorn Pipeline volumes to the Phoenix market will be squeezed. In such an environment the independent refiners, like Western have also been hurting and are trying to keep their gasoline prices up.

Wednesday, February 11, 2009

The Crude Reality and Market Update for 2-11-09

The March WTI crude oil price is back down a to a little over $36 a barrel today. Apparently there is no support for crude oil prices after comments made, by former OPEC President and current Algerian oil minister Khelil , that OPEC will make further cuts in oil production if crude stays below $40 a barrel.

Bearish factors for crude oil prices include:

1. Crude oil inventories have risen for the 18th time in the last 20 weeks when the DOE publishes its weekly inventory statistics later this morning.

2. Concerns that global oil demand will weaken further after the drop in Japanese machinery orders for the third straight month in December.

3. That the French economy will slip into recession in the first quarter of this year for the first time in 16 years, and that French business confidence and manufacturing may weaken further in the coming months.

Bullish factors for crude oil prices include:

1. The drop in the dollar index to a 1-week low.

2. Hopes that U.S. energy demand will increase if the US economic stimulus package is successful in boosting the US economy.

3. Comments from OPEC Secretary-General Abdalla el-Badri that the cartel is prepared to cut production again when it next meets in March.

4. The American Petroleum Institute on Tuesday said that gasoline stocks dropped by nearly 3 million barrels for the week ending Feb. 6 and the DOE statistics this morning supported that number.

5. Treasury Secretary Geithner's laid out general plans yesterday to fix the nation's ailing financial sector and resuscitate the U.S. economy. It was in turn greeted very coldly by the investment community, who just saw more of the same in recent attempts by President Barack Obama to stabilize the country's banks.

It will be another balancing day between the doldrums crude oil prices have been in and the continuing rise in gasoline prices in spite of depressed demand levels.

On the West Coast gasoline prices are up 5 cents and diesel is up 2 cents per gallon this morning. No hopes are on the horizon to see any relief soon as the pump.

The rest of the country is also now starting to react to production cuts and unanticipated maintenance problems at U.S. refineries with the ever upward movement in gas prices now reaching the $2 per gallon mark.

Washington state motorists should consider themselves fortunate that they don't have to buy gasoline in California today. The price there is already at $2.239 and climbing steadily upwards.

Another spike in the wholesale pipeline price of 7 cents per gallon has not yet been factored into the pump price. As California has led the price of gas down when the bottom fell out of the market last year, they will be showing the lead in the up market as well.

Tuesday, February 10, 2009

To Pass Or Not To Pass The Stimulus Package? That Is The Question!

Here we go again with a new day but the same old routine. WTI crude oil price was back up rounding the $40 a barrel mark this morning. Then went zig zagging all day and went back down to settle around to $39 a barrel. Meanwhile, on the West Coast, gasoline was very strong again up 5-7 cents and diesel down 2 cents per gallon.

This is an almost instant replay of what happened on Monday. Tuesday morning's market reminds me of the movie Groundhog Day. In the film, Bill Murray plays Phil Connors, an egocentric T.V. weatherman who, during a hated assignment covering the annual Groundhog Day event in Punxsutawney, PA finds himself repeating the same day over and over again.

So what's new today? Well, on Tuesday morning hope sprang eternal when the U.S. Senate passed its version of President Obama's stimulus package. The oil traders are now banking on the fact that at the end of the long process it will give the economy a much needed boost and in turn improve crude oil and fuel prices.

With the vote of the Senate to pass the stimulus package, all that is missing now is putting the Christmas bow on the box. The final result reminds me of the old saying about a camel being a horse designed by committee.

Even though actions in Washington are expected to have some affect on the petroleum prices, they are still firming and have completely ignored their raw materials costs. That is not because of any geo-political events but because the refineries are retooling for their annual switchover from producing winter to making summer gasoline.

On top of that, we have had some refinery glitches in California causing gasoline prices to spike at the pump in the Golden State. The Chevron El Segundo and Exxon Mobil refineries in the Los Angeles basin have both reported flaring over the weekend, which is indicative of some impairment with one or more of their units.

The big news in the Midwest is all about Crescent Oil stopping the supply of gasoline to its branded and unbranded stations in six Midwestern states after filing for bankruptcy last week. Crescent distributes fuel to more than 340 locations in Kansas, Oklahoma, Arkansas, Missouri, Illinois and Louisiana.

The Midwest petroleum market was in turmoil Tuesday morning with the fuel supply stoppage at Crescent. Other wholesale distributors are stepping in to grab additional market share. Crescent declared bankruptcy due to rapid expansion and faced strong competition in the retail market from Quik Trip; a Tulsa, OK based major supplier and retailer. They also direct-operated 35 convenience stores and retail price volatility was the main reason given for the company's financial woes.

In Phoenix, Arizona the unbranded and rack prices are now inverted by 50 cents per gallon due to almost no availability of gasoline in the spot market. That is a either good or bad indicator that the worst news is yet to come for gasoline consumers on the West Coast.

One independent wholesaler in Los Angeles has already raised its wholesale price for gasoline by a whopping 13 cents per gallon Tuesday night. Their rack price for unbranded gasoline will be up to $1.83 per gallon resulting in a break even price at the pump of $2.35 before dealer margin is added. In other words $2.50 per gallon for regular unleaded gasoline at the pump is now in sight for Californians.

But no matter which way the wind blows or the direction in which the stimulus package is headed, it will not have the expected changes in the petroleum industry. It will be the same as it was yesterday, is today, and will be tomorrow. The process on how gasoline prices are determined will be not be changed just by passing a law.

We can only hope that an Andie MacDowell will be around to comfort us at the end of the day. Or if not, then at least we can listen to Sonny and Cher sing "I've Got You Babe" over and over again.

Monday, February 9, 2009

The Crude Reality and West Coast Market Update

March WTI crude oil went up $2 and was last traded back over $42 a barrel this morning. There has been no more downward talk after last Friday's skirting with the $40 a barrel threshold. That was due mainly to large long March position being forced to roll into April contracts at the lower number. The Nigerian rebels have called off their truce over the weekend. This has once again threatened that country's continuing to ship their most wanted sweet crude oil to the U.S.
On the West Coast the wholesale spot gasoline prices has been a strong performer for the last month but is now started to show some weakness down 5 cents per gallon this morning. But don't get your hopes up that pump prices will be coming back down any time soon. The average price in the U.S. is still headed to over $2 per gallon in the next week due to overall production cuts by the refineries. Diesel meanwhile is showing some strength with a 2 cent bump.

The price of gasoline is already at $2.20 per gallon on the West Coast per the AAA fuelgauge report. The break even price for unleaded regular gasoline at the spot market unbranded rack has been over $2.25 per gallon for the last week and that is where the overall price should be by the end of this week.

Crack spreads at the U.S. West Coast refineries are an amazing $35 a barrel today. There is a differential of 25 cents over the the branded by the unbranded wholesale gasoline price. That is the main cause for the strengthening of the refinery crack spreads as they do not have any surplus gasoline to sell in the spot market. So remember to keep your car's gas tank gauge on high.

Sunday, February 8, 2009

Tomorrow's Gas Prices, Today


The van der Valk Fuel Price Projection

The price of gasoline for February 9, 2009 will be:

Los Angeles/
Long Beach
2.180
Up .1 cent

San Diego
2.252
Up 4.5 cents

Bakersfield
2.308
Up 2 cents

Las Vegas
2.124
Up .8 cent

Orange County
2.174
Up 1 cent

San Jose
2.187
Up 2 cents

San Francisco
2.246

Up .4 cent
Seattle
2.159
Up 1.8 cents
Billings
1.729
Up 2.1 cents

Boston
1.892
Up 1 cent

*The methodology in determining tomorrow’s gasoline prices includes a spot market wholesale/refinery rack price differential calculated from the benchmark WTI crude/NYMEX gasoline prices. These are the average prices per gallon for regular unleaded gasoline includes all applicable federal, state and local taxes.

Saturday, February 7, 2009

Why Are Gas Prices Up While Crude Oil Is Down?

The WTI crude oil price is trading below the $40 a barrel mark after the unemployment rate rose to the highest rate since 1992 at 7.6%. But not even bad unemployment numbers and the stalled stimulus package have been able to keep gasoline prices from heading back up all across the country.

Demand concerns for the moment is the key for oil trading front month WTI at a low of $39.31 a barrel. On the West Coast product prices have both moved down in symphony with both gasoline and diesel down 3 - 4 cents per gallon.

Meanwhile back at the ranch in the U.S. the AAA fuel gauge report shows that price of gasoline is going up almost overnight. Why that is happening has motorists fondly remembering the good old days from yesteryear (or was it just last month?) when gas prices were around $1.50. There was even talk then that we might be heading back down to a buck a gallon. Most of the country will be heading up to $2 per gallon within the next week. The West Coast has already been over that magic $2 mark for the last two weeks.

Motorists have now come to the realization that even with crude oil prices down gas prices just seem to be going up, up, up almost overnight. The usual pundits and analysts are scratching their collective heads and are trying to come up with various reasons as to why that is happening.

The answer is simply that the petroleum market has finally gotten tired of losing money on refining fuel. With refineries either cutting back production, or in at least one case shutting down, the supply has come down to the lower demand level.

On top of that the West Coast refineries are now switching over from producing winter to making summer grade gasoline. That by itself is a planned event but the market loses 10% of its supply almost overnight because of the mandated lower Reid Vapor Pressure pressure. The rest of the country's refineries will be doing the same thing in about a month.

So if you have been waiting for gas prices to drop back down you may now know how the Phoenix Cardinals felt after losing Sunday's Super Bowl game. Or as the line from the movie The Fly goes: "Be afraid, be very afraid! You're afraid to be destroyed and recreated, aren't you?"