Tuesday, May 26, 2009

Will Motorists Suffer a Memorial Day Gas Price Hangover?

Dateline: Terry, Montana
By: Bob van der Valk
05-26-2009 10:00 AM MST

The July WTI crude oil price is a basic no change down 21 cents to $61.46 a barrel. The spot market gasoline price is up 1 cent per gallon and diesel no change so far this morning. The average price for regular unleaded gasoline is $2.421 per gallon in the U.S. with the West Coast at $2.667 per gallon.

U.S. motorists were expected to drive a little more this Memorial Day weekend with renewed optimism that the economic slump has hit bottom. Expectations of gasoline use were put at 1.8% higher than Memorial Day last year with the economy in the recovery mode.

The consumer confidence index for May jumped to 54.9 from 40.8 in April 2009. The index is now at its highest since September 2008 based on a graph published by the Confidence Board based on research done by TNS, Taylor Nelson Sofres PLC is the world’s largest custom market research company in 80 countries, shows the following:

Over the weekend we did have some bad news with the possibility that Nigerian violence will cut oil output. ChevronTexaco was forced to cut off about 100K barrels of crude oil supply representing about one fourth of the total output for Nigerian crude oil. Most of that crude oil is destined for U.S. refineries and any interruption in the supply of crude oil will have an immediate impact on prices.

On top of that North Korea successfully set off an underground atomic blast and also fired off a couple of missiles over the weekend. This was in an apparent attempt to prove that they are going to be capable of launching an atomic weapon at any of their enemies.

By far the most positive comment for stability in the immediate future of oil prices was the statement released by the Saudi Arabia oil minister Ali al-Naimi over the weekend. He stated that OPEC will likely stay the course with regards to production cuts at the upcoming meeting this Thursday in Vienna. This was an advance signal for discussions between him and Steven Chu, the U.S. Energy Secretary, to show support their in assisting the economic recovery.

Take a little "Hair of the Dog" if you are having a weekend hangover but keep your gas tanks full as gasoline prices are not expected to come back down before the fall of this year.

Tuesday, May 19, 2009

It’s a Real Gas to Talk Gasoline Prices

Dateline: Terry, Montana
May 18, 2009
By: Bob van der Valk

My wife and I recently struck up a conversation with a very nice elderly couple while shopping and waiting in line to have some fabric cut at the Jo-Ann store in Bellevue, Washington. The wait was almost 45 minutes so we had plenty of time to discuss various subjects. Our conversation quickly turned to the state or our economy after comparing how many years each of us have been married to our spouses.

Friday, May 8, 2009

Crude Oil and Gasoline Prices Undergoing Stress Test

Don't look now, but the price of crude oil has been moving sharply higher over the last couple of weeks That is now up 80 per cent over the last 3 months with the price of WTI crude oil increasing from $32 to $58 a barrel in just a short thee months. The price of was up another 85 cents per barrel early Friday heading towards the $60 a barrel mark by the end of the day. Fuel prices for gasoline and diesel are going up in lockstep with another 2-3 cents per gallon increase today.

At the same time the national gasoline price per the AAA fuelgauge report from went from $1.56 to $2.16 per gallon as of today. This would normally set off alarm bells in the media with articles about suspected gas price gouging. These would then be followed up with the usual threats of investigation by head line grabbing politicians and divergent government agencies.

Reporters have been quick to report that at $2.16 we are still paying almost a buck and a half per gallon less than we did before Memorial Day last year. Their question of the day remains: “Why are prices now heading back up to $2.50 on the West Coast and the national average to $2.25 per gallon?”

In plain and simple terms the refineries have finished making their switch to summer gas and it reduces supplies by 10% per cent. This year, however, as gasoline prices have been going back up the price of crude oil has been dragged up along with it.

Along with that President Obama's current budget proposal, which must be approved by Congress, includes ending "unjustified tax loopholes" for oil companies. That will raise $26 billion over the next 10 years for alternative energy development.

The White House rejected as "unfounded" industry claims that by ending the tax breaks it would take a significant toll on US domestic oil and gas production. It said oil and, to a large extent, gas are internationally traded commodities whose prices are determined on the world market. "The oil and gas subsidies are costly to the American taxpayer and do little to incentivize production or reduce energy prices," the administration said in its budget package submitted to the Congress.

The budget also includes increasing federal road taxes on gasoline and diesel with 10 and 14 cents per gallon being added to the 18.4 and 24.4 cents respectively.

Price of gasoline is not going to going back down any time soon perhaps not until the fall of this year. But that will be another story for another day.

Wednesday, May 6, 2009

Happy Cinco de Gaso

It is Cinco de Mayo in the US to celebrate Mexican heritage and pride. We also commemorate this day in Holland as Bevrijdingsdag or Liberation Day. It is celebrated each year on May 5th in the Netherlands (the official name for Holland) to mark the end of the Nazi occupation during World War II.

The nation was liberated by Canadian troops, with the assistance of the British and American armies. After the liberation in 1945, Liberation Day was commemorated every 5 years. Finally, in 1990, the day was declared to be a national holiday with the liberation celebrated every year.

The provinces of Utrecht, North and South-Holland were the last provinces in Holland to be liberated. The population in that area suffered greatly during the winter of 1944-45 from starvation and bombings. My family lived in The Hague, South Holland and was able to survive the hunger winter. We eventually were able to immigrate to the US on special visas issued under the Refugee Relief Act of 1954.

We have been in the US for almost 53 years and I have spent 50 of those working in the petroleum business. My family was fortunate to have been given the opportunity to live and work in this country with its many generous people.

The June WTI crude oil price is down 50 cents back down to below $54 a barrel. The spot market prices for gasoline and diesel are down 2 cents per gallon this morning as well.

The oil traders are now looking ahead to the weekly Department of Energy inventory statistics being published tomorrow morning. Gasoline prices will spike up if they show another big draw for gasoline stocks as they did last week. This will be regardless of crude oil stocks anticipated to increase once more.

May is the typical month in which summer driving season starts. Gasoline prices will be staying firm with lower than normal supplies available. Refineries are also keeping a tight hold on production

OPEC is also providing support for the oil price by indications that they are not happy with $50 a barrel and hinting at further production cuts when they meet later this month in Vienna, Austria. Warren Buffet emerged from his office and sounded positive notes providing support to the raw commodity markets as well.

Saturday, May 2, 2009

Stop the Swine Flu Bug

Super Bowl Fever is gone, March Madness is over and April swine flu fever is now spreading throughout the world. This dreadful disease has to be stopped in its tracks at least by calling it something else.

At a news briefing, Homeland Security Secretary Janet Napolitano and Agriculture Secretary Tom Vilsack took pains to repeatedly refer to the flu as the "H1N1 virus."

The "H1N1 Influenza Type A Virus" is the actual correct, but hard to remember, name for the current swine flu epidemic sweeping throughout the news media.

Israel has already rejected the name swine flu, and opted to call it "Mexico flu." Jewish dietary laws forbid the eating of pork. The Muslim world has also joined the cause and came up with their own suggestion to call it "Netanyahu flu".

The CDC has now decided to conduct a contest to give this dreadful disease a more appropriate name in the US. They will be using the newly adopted name in their news conferences keeping the anxious public updated. Following are some of the sample entries received so far:

- Hamthrax- Aporkalypse- Hypefluenza- Sowmonella- Global Hamdemic- Epigdemic- Hamageddon- Baconsumption- Wilburculosis- Smallporx

Additional entries should be forwarded to the White House attention of Joe Biden, Vice President of the United States. He will evaluate them for further consideration by a panel of judges appointed by the President.

Perez Hilton, Tom Vilsack and Janet Napolitano have tentatively been picked by President Barack Obama to judge this contest to decide the winning entry.

Timothy Geithner is considering instructing the Treasury Department to take over the pork industry and combines it with the banks and auto industry. The Department of "Babe" is the name tentatively picked for this new government controlled entity. Bill Clinton has shown interest in running this new company and has promised to get us to at least start talking about something or someone else for a while.

You can do your part and join the "Stop the Swine Flu Bug" (SSFB) movement by signing up in the comment section at: