Gas Prices Expected to Jump $.10 per Gallon in Coming Days
August 7th, 2006 | by Brian Carr |Expect to pay an addition $.10 or more for a gallon of gas for the foreseeable future, thanks to oil giant BP having to shut down its Prudhoe Bay (Alaska) oil field due to extensive corrosion on one of its pipelines.
By having to shut down the Alaskan oil field, the United States will lose nearly 400,000 barrels of oil per day - roughly 8% of domestic production. And, unfortunately, BP now says that it may be months before the field is reopened.
While the effect will certainly be felt by drivers nation wide, it appears that our west coast friends are going to be hit the hardest. You see, nearly all of this oil field’s production serves refineries in the western third of the nation.
News of the shut down caused a spike in the price of crude oil which closed at $76.98, while the average retail price of regular unleaded gas shot up to $3.04 - roughly $.02 less than the all-time high achieved shortly after Hurricane Katrina.
Call me crazy, but doesn’t stuff like this make you wonder about how these oil companies achieved their record quarterly and yearly profits? Were they at the expense of forgoing expensive renovations and upkeep? I don’t know if it’s just a strange coincidence.
Regardless, I think this goes to show that we will continue to have to live with $3.00 per gallon gasoline as well as have to come to grips with two facts:
- We’re NEVER going to have the luxury of cheap oil again.
- We’re going to have to face the very real possibility of $4 and $5 gasoline in the not so distant future.
I’m trying my best to not be a pessimist or a doomsayer, but at the same time I don’t want to burry my head in the sand and pretend that things are magically going to get better.
So, I hope that you’ve taken some of these gas tips to heart and have found ways to get better gas mileage. For those of you who still think achieving just a just a 5% increase in fuel economy won’t matter, come back and read this post when you’re paying $4 or $5 per gallon.
Hopefully I’m wrong.
But I’m not counting on it.
26 Responses to “Gas Prices Expected to Jump $.10 per Gallon in Coming Days”
By Bilbo on Aug 7, 2006 | Reply
With peak-oil here already, the prices will continue to rise. By the northern hemisphere’s winter next year you won’t be able to afford gasolene, or gas… With Iran suggesting it will cut off its (dwindling) supply if sanctions are imposed, you might expect something worse sooner… A total collapse of the world’s economy will see America with a supply shortage that will eventually become a supply nightmare… Unless you’re living on a farm and are armed to the teeth, you might have to resort to “Soylent Green”… Expect rolling blackouts and brownouts, expect food shortages, expect the unexpected… An earthquake may take the place of the usual hurricanes for an extra seasonal reason to “up-the-ante”. When you’re paying the same as Australians (net-energy suppliers)are paying right now (US$5.20 a gallon for gasolene) then you might decide to trade in the gas-guzzler for something that might slow the rapid decline in world oil… Conversely, you might decide it’s best to party-hard while you can, “better to burn out than fade away”…
By nick on Aug 7, 2006 | Reply
Boo hoo. Here’s to a free market and capitalism!
By Jake Goddard on Aug 8, 2006 | Reply
Does it really surprize you? I’m almost as tried of hearing stories about how high gas prices as I am hearing about Infamous Jew Hater Mel Gibson. Look, this is an obvious corporate move, and don’t expect a $.10 hike at the pump, try a .25 or even .30 hike in prices, because of course you must adheer to the decree of supply and demand, but we’ve also got to pay these idiots so they can fix their damn pipe. Why not do some stories about stray puppies and cute little stray kittens used as an alternative to oil? How about we start looking into why everyone is dragging their feet to make cars with higher fuel efficency? How about we look into how idiototic this idea of digging up colorado for the shale oil is? Repugnant.
By Carol on Aug 8, 2006 | Reply
Don’t blame it all on BP. The line is owned, and maintained, by a consortium, with one of the biggest being our favorite oil scum, Exxon. BP is actually one of the minority shareholders. Wanna guess why BP is the one being hung out to take the heat? So Exxon can smugly wallow in the profits and not have to put up with the fury of American pissed off by one more instance of Exxon putting profit over safety, environmental protection and the consumer’s pocketbook. Just wait, once repairs start, they’ll put on their sad faces one more time and tell us they are so sorry to have to pass the costs of that to us as well.
By sakanagai on Aug 8, 2006 | Reply
The problem is that there was a time when oil companies did invest in infrastructure. However, it was not profitable and they ran the risk of being too efficient. They closed refineries and tightened refining capacity so that there would be reason for higher prices. They’ve now gotten used to it and we are paying the price. However, there is an effect on the consumer. The oil companies are well aware that prices can’t get too high. Even though oil and gas prices will rise through the end of the summer, it’s very unlikely that prices will stay high. Assuming Iran doesn’t close Hormuz, we are still looking at sub-70 oil next year and around $60 the following.
By Brian Carr on Aug 8, 2006 | Reply
Wow, we sort of go across the whole spectrum from comment number 1 (the sky is falling) to comment number 5 (it’ll all be just fine, soon).
I think any guess as to where things are going is completely wild speculation (something I’m guilty of), but you can only hope that it will expedite the process of people finding ways to become more energy efficient, especially forcing auto makers to ramp up production of cars that exceed 40 mpg.
By Mike on Aug 8, 2006 | Reply
In reallity there is enough oil left in the ground to last a long time. The big problem is that new oil fields are not being commissioned because of either political opposition or fear of loss of profit. The same applies to refineries, since no new refineries have been opened in like almost 30 years. Also the price can only get so high before people would rather leave it behind all at once, and I think that time will began around $4/gallon. This is when you will see hybrid and pure electric sales skyrocket, either that or minimum wage will increase to a nice $10/hr so that people can afford to get to work. Both quickly kill profits of big business and will cause change, I mean think about it, $48 just to fill a Civic or xA, $80 for an SUV and that could be a few times a week, so you could say up to $10,000 a year to operate your vehicle. So with a minimum wage of around 10/hr that would give you around 30,000 a year, not enough to survive on with gas that high in fact you would have to make close to 50,000 just to live in an apartment more to have a house.
Just my $.02
By Derek on Aug 8, 2006 | Reply
To respond to the original 2 statements:
1.) We will have cheap oil again. The reason for prices being high is not because China or Asia has a booming economy. Sure, that contributes to perhaps a 10% increase from what used to be a $28 barrel of oil. However, yesterday oil hit $78 which leaves a difference of $50 for us to pay for. A barrel of oil is 40 US gallons, so do the math and we’re talking about $1.25 per gallon increase.
The real reason for the increase is in part due to the way oil is sold. It’s sold on a commodity market. In a commodity market, price increases aren’t based on actual costs associated with bringing the product to market. Rather, they’re all based upon speculation. Given all the geo-political activity going on around the world, traders [of oil] are jittery and this volativity crosses over into the market. Ever notice that when Hugo Chavez farts, the price of oil goes up? How about a story of violence in Nigeria, or when Iran opens their mouth about wiping Isreal off the map?
It doesn’t cost BP, Exxon, or any other Co. any more $ to bring a barrel of oil to market—thus the big profits. When Iran, Venezuela, and Nigeria calm down, we’ll see the market go back down again. Look at what happened after the embargo and high prices of the 70s and 80s. High prices dropped, and in ‘01 we were paying 98 cents a gallon.
2.) Before prices go down, we will likely see them increase. Most people who went out and bought a huge guzzler in order to keep up with the Jones never considered the possibility of higher fuel prices, so instead of considering high prices when determining what they can afford, they financed themselves to to the limit on the vehicle at that time. Now the higher fuel prices are hitting these boneheads where it hurts, and they’re the ones we most often hear whining about what they pay. Next time around perhaps they’ll plan better.
By Risteard on Aug 8, 2006 | Reply
British Petroleum (BP) sells Scotland’s resources at $8.00 (American) in Belfast; $6.00 (American) in the 26 Counties of Ireland; so it must burn their asses to have to sell it at $3.00 to Americans.
But, that is all changing now.
By Dave on Aug 8, 2006 | Reply
It has to get worse before it gets better, however I do think that it may very well be time to trade in those gas hogging soccer mom toting SUV’s for something a little more practical. Who cares if you can go to Sam’s Club or Wal-Mart to get juice boxes at $8.00 for 1000 of them and then need the SUV to haul them home. Sorry I have a deep seeded hatred for SUV’s. I do feel that we will end up paying for gas at a much higher cost than we are paying now, however in all of this gas guzzling, Mel Gibson Jew Hating talk over the past few weeks I have not heard one person not one person refer to the use of public transportation. Why are those two words such a taboo in this country. I lived in Europe for 10 years and never owned a car. Reason being they have a much better transportation system than we do and it is cost effective. It doesn’t cost 10 or 15 dollars a week to ride the bus back and forth to work like it does here, but people need to realize that we are paying for someone else to get rich be it “BIG OIL” or even the transportation people, but someone needs to stop it, we can’t go to Congress since they recieve 25% of the “back door” profits from big oil, but we need to figure out what to do.
By Andy on Aug 8, 2006 | Reply
Hey guys, stop thinking about your pockets. Over in england we pay £5.00 is a gallon, thats about $7-8 in dollars. all im saying is this could be good for you and make you think about the price of the environment and your health. i know people in America who will drive 10 yards down the road.
By Hans on Aug 8, 2006 | Reply
If I recall,the Alaskan Oil is so high in Sulphur,that the entire Production was exported to Japan,which has the only Refinerie capable of processing it.So what’s all this Bull about raising Prices?
How long do we have to wait before these corporate criminals are sent up the Tiber for a long stretch?
Also,Inflation(printing Money)is nothing more than a hidden Tax Increase,fabricated by the “Regressive”Bums in Power!!
By Jerry on Aug 8, 2006 | Reply
All it takes is one negative post about high gas or some political event to hit The U.S. and the conspiracy theorists come out of the woodwork. Quit your bitching and come up with a solution and push it into production/use.
By NoneOfYouBusinnes on Aug 8, 2006 | Reply
One thing I like is the 8% of US production figure. It’s misleading, check your facts. Domestic oil production only accounts for 46% or so of our consumption. Around 27% of that is from Alaska. So what’s the real percentage? You also have take into account the $78 per barrel price is for Sweet-Light crude, not the stuff from Alaska which normally sells for $26-$28 a barrel. So the production stoppage actually causes oil companies to have to use oil that is double or almost triple the cost of the Alaskan crude to make up the difference.
The reason for the huge profits is because oil is stored. It isn’t refined as soon as it’s brought into the country. So they using crude bought at $50-$60 a barrel and charging the amount it costs to replace it at todays futures prices.
Oil is a huge racket, regardless of which side you look at it from.
By Pimpel on Aug 8, 2006 | Reply
someone here(Jerry?) was screeching for a Solution,well there really is one.
Quit breeding like Rats you ignorant Morons,90% of this useless Humanity is being artificially kept alive,polluting the Planet beyond Repair,deport 11 Million illegal Aliens with their Brood,that will make a huge Dent of this senseless Squander of Resources.
While you’re at it,a severe culling of the Riff Raff at the Top, called the “ruling Elite” is also much needed.
By Stephen on Aug 8, 2006 | Reply
The problem with America’s public transportation, or lack thereof is a problem that began almost a hundred years ago. Did you know that major cities had train and bus service back then and that those trains, busses and trollys ran on electricity? There were electric cars then also. When oil companies began to buy up any company involved in mass transportation and then converting trains and busses and trollys in urban areas to gas or diesel. The goal then was to create demand for their product. Just as it was when diesel engines, which were designed to be used to power farm equipment, were converted from organic oil burning to petroleum based fuel. That was the genius of the diesel. Invented for farmers, using fuel readily available on their farms (corn, peanut or any vegetable oil).
These oil companies back then began a cycle which removed any alternative fuel option from peoples minds. Oil exploration in this country, and for that matter the world, was in its infancy. It was cheap and (seemingly) abundant, but there were options. So they had to create a dependance (addiction) for their product. They succeeded. Now we have urban sprawl (a characteristic unique to the U.S.) and we have to have cars or some sort of individual long range transportation. While most of the civilized world lives in population centers, close to their jobs or livelyhoods, we work in New York and live in Connecticut, or commute to L.A. from Orange County. We own at least two cars per family and in many cases 3 or 4. Most of the worlds families have one or none at all.
What we have done to ourselves will not be undone in the near future. Oil over $100 per barrel or gasoline at $5 or even $6 per gallon will not change our culture overnight. Will people be pissed? Sure. Will we discuss it on message boards and in editorials expressing our outrage? Of course. But will we continue to drive 2 blocks to the 7 -eleven for a gallon of milk instead of walking? You bet, because we are Americans and we do what we want, when we want. I may have no clue about my responsibilities (global, local or otherwise) but godamn it, “I know my rights.”
By Doug on Aug 8, 2006 | Reply
In reply to comment 4 by Carol, I believe you are confused. While it true that the Trans-Alaska Pipeline is run and maintained by a company called Alyeska Pipeline Company that is in turn owned by 6 oil companies or a consortium as you put it, this issue affects tranist lines owned by Bp and has nothing to do with the “pipeline” itself. These transit lines get oil from the wells to the TAP. I don’t think Exxon and Bp share the responsibility for the transit lines that are causing this problem, Bp is the sole operator of these lines. In fact it was only after an oil spill earlier this year by Bp that the feds demanded that Bp, not anyone else, inspect all 22 miles of transit pipes they operate. It was that inspection that found the 16 miles of pipe needing replacement.
It’s interesting timing to us Alaskans with tough negotiations going on with the oil companies over new taxes and a gas pipeline project contract in the works. Things that make you go hummmmm….
By Unca Xitron on Aug 8, 2006 | Reply
I live in Montana, where there is snow on the ground many months out of the year, and I drive an SUV. I’d really like to know why SUV owners are targeted for the wrath of environmentalists.
A standard pickup truck uses as much or more fuel as an SUV, and can generally hold 1/2 to 1/4 the people. So why isn’t everyone up in arms about pickup trucks?
Minivans aren’t much better on fuel, but nobody is targeting the soccer mom.
True, public transportation would be a wise choice at this point in time, but in places like Montana, it is not an option. And without four-wheel-drive, get ready to spend a lot of time not getting to where you need to go.
So how about we stop spouting the “SUV’s suck” rhetoric if we’re not also going to target the other gas guzzlers out there. SUV’s are capable of carrying a lot more people than pickups, so they are the far more fuel economical of the two. Beat up on pickups for a while and leave us SUV owners in peace for a while.
By Ken on Aug 8, 2006 | Reply
It is amazing how little people understand economics. The BP pipeline deal is complex but let’s just say BP is in it alone, what happens when the pipeline stops flowing? BP loses the sale of oil from the gas line. This reduces supply with constant demand so prices rise. BP has to spend billions to fix the pipeline while competitors reap both increased profits due to the supply shortage and increased market share since they are now selling at or near 100% of everything they can make.
Who gets hurt more than consumers? BP. After BP gets the pipe line back in service supply will be increased thereby lowering prices. When the pipe line does come back on line the oil from the line will be sold at or less than the price it was selling before it broke down.
People treat economics like you can just bend reality to suit your moral values. Economics are laws of nature don’t fight it, use it.
By Brian Carr on Aug 8, 2006 | Reply
I disagree with you, Ken. BP will have the benefit of higher gas prices, too, as the Alaskan oil field wasn’t their only source of oil.
I do agree that they will have to fork out their own money to fix the pipeline problem, but whose fault is that? Seems to me that it’s their own fault for not being willing to spend the money BEFORE it became a huge issue.
It appears no one at BP has ever heard the saying saying, “an ounce of prevention is worth a pound of cure.”
By Ken on Aug 8, 2006 | Reply
In today’s market the way to make more profit is by selling more oil not less. BP is a loser here. Have you seen their stock its down 5% since the announcement. BP will pay for their lack of prevention in the wallet.
By Ross on Aug 8, 2006 | Reply
I just wanted to correct two things I saw people say:
1. BP is a majority stakeholder with exxon in the pipeline so whoever said they were a minority shareholder is full of crap.
2. Europeans forget their vehicles get muhc better gas mileage so you go much farther on your $8/gal but none of you take that into account. You also don’t take into account we Americans usually drive much farther for work/social activities, please remember that before saying something stupid like “quit whineing about $4/gal”
By big-x on Aug 8, 2006 | Reply
response to post
8: “A barrel of oil is 40 US gallons, so do the math and we’re talking about $1.25 per gallon increase.” a barrel of oil is 42 US gallons no matter where you are in the world.
12: “If I recall,the Alaskan Oil is so high in Sulphur,that the entire Production was exported to Japan,which has the only Refinerie capable of processing it.” this is not true. while bp sent oil to japan back in the 80’s, the refineries on the west coast (especially those in washington state ) were designed for high sulfer crude.
14: now less that 1 million bbls a day flow through the trans alaska pipeline. it was designed for 2 million plus. the oil in the fields there, including the new ones found as recent as 1998, will continue to produce well past 30 more years. anwr and the npr land has more twice as much as the north slope. but hey lets pump everyone elses oil first
17: yes BP is the majority holder in the pipe line company and they were the ones who decided not to clean the lines as frequent as some of the others that they don’t own. conoco-philpps cleans theirs at least twice a year.
here’s another thought. they placed a bypass line around the one that leaked 6 months ago so they could replace it. they have pipe clamps that they could place on this one so they could put a bypass line in for use during replacement. but why are they not doing this. could it be that so far this year there haven’t been any tropical storms or hurricanes so prices could rise and be blamed on them?
By sakanagai on Aug 9, 2006 | Reply
Unca XitronI’m sure that everyone here understands that some people have little choice in driving a “Gas guzzler”. I live in farm country where vehicles need to transport or tow more weight than a sedan can handle. The SUV drivers that are targetted are not the ones forced into one due to safety reasons, but the single folks in cities driving to the Starbucks in their Escalades. The target is excess, too many people getting a vehicle far too large for their needs.