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Thread: $4 per gallon coming

  1. #1
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    $4 per gallon coming

    Here is the latest excuse. From me --- no comment.


    Gas Prices Seen Spiking Again in Spring

    Wednesday January 30, 4:39 PM EST

    NEW YORK (AP) ? Get ready for another surge in gasoline prices.

    Experts are predicting pump prices, which jumped by almost a dollar a gallon in each of the last two springs in many parts of the United States, will spike again this year as refiners and gas stations switch from winter- to summer-blended fuels.

    The increases, starting as early as February in southern California, could push the average national price to a record $3.50 a gallon or more by June.

    That would be 17 percent higher than today's average of just under $3 a gallon, which already is about 80 cents a gallon higher than year-ago levels thanks to the surge of crude oil that took futures prices briefly to $100 a barrel. Prices in urban areas on each coast could approach $4 a gallon.

    And the reason for the spring price shocks? Analysts say it's linked to a shortage of alkylate, a little-known and expensive gasoline additive that some in the industry are calling "liquid gold." It has become a must-have ingredient since refiners stopped using MTBE two years ago when the potentially cancer-causing additive was found to be seeping into ground water.

    The alkylate shortage has become the most important driver of summer gas prices, said Doug Leggate, an analyst at Citigroup Global Markets. "Supply of (alkylate) will set the price of summer gasoline ? not inventory levels," he said.

    Oil companies deny they are purposely limiting production of alkylate, which like gasoline, jet fuel and asphalt is a byproduct of the oil refining process. But only recently have some started studying how they can boost output, and alkylate prices today are more than 15 percent higher than spot gasoline prices. That means overall costs will jump when it is added in larger quantities to summer-blend fuel.

    Without additives, gasoline doesn't burn completely, increasing tailpipe air pollution. And untreated gas evaporates more quickly in hot weather, potentially causing vapor lock when it changes from a liquid to a gas and blocks fuel lines.

    The federal government long ago required refiners to boost the oxygen content of summer-blend gasoline to make it burn more completely, a problem that was solved by adding MTBE and, more recently, ethanol.

    But ethanol also has a high evaporation rate, so refiners increasingly have turned to alkylate, which Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, N.J., calls the "magic bullet" in making summer gasoline.

    Alkylate and other gasoline additives don't raise the same safety issues as MTBE because they don't bond with water as effectively as MTBE did, analysts say.

    Demand for alkylate changes with the seasons, falling in autumn and rising in the spring. On average, alkylate makes up about 10 percent of a gallon of gas, though that rises to as much as 15 percent in summer. But making more of it is not as simple as throwing a switch since the underlying chemical properties of oil limit how much of any one refined petroleum product can be produced.

    On average, about 44 percent of each barrel of oil ends up as gasoline, 22 percent as diesel fuel and heating oil, 9 percent as jet fuel, and about 4 percent each as heavy fuel oil and liquefied petroleum gas, according to the Energy Department. The remainder is comprised of smaller products and additives.

    The refining process is loud, hot and smelly. Boilers separate, or "crack," oil into new substances by subjecting it to high temperatures and pressure. As different products are boiled out, pipes carry them to other boilers or vessels where they're further refined, mixed with other substances or cleaned of pollutants and toxins.

    Alkylate is made via a chemical reaction sparked when olefin fluids and isobutane ? two of the smaller byproducts of the main gasoline producing unit ? are mixed with acid.

    "As opposed to the (gasoline unit) that cracks big components into small, this one takes two components and basically combines them," said Mark Fligner, director of planning and economics at Valero Energy Corp.'s refinery in Paulsboro, N.J., across the Delaware river and just south of Philadelphia.

    Owners of about two-thirds of U.S. refineries have invested the $100 million or more it takes to add an alkylate unit. The rest have to buy alkylate on the spot market if they want to use it as additive in their gasoline supplies.

    Refiners aren't gaming the system, purposely limiting alkylate production to boost gas prices, said John Auers, senior vice president at Turner Mason & Co., a Dallas consultancy. "They're not because they can't," he said. "You can't make more alkylate than you have feedstocks."

    But there are tradeoffs that every refiner must weigh. For example, olefins and isobutane are in high demand for use in producing other lucrative products like plastics. Refiners can tweak their main gasoline producing unit to make more olefins and isobutane, but that would cut the gasoline output.

    Alkylate prices have jumped from 77 cents a gallon in the summer of 2001 ? when MTBE was still in use ? to nearly $3 a gallon at points over the past two summers. Wednesday's price on the spot market was $2.72 a gallon, 40 cents more than the spot price of gasoline, according to Platts. Retail prices for gas are higher because things like state and federal taxes are added. In recent summers, that spot market differential has jumped as high as 60 cents.

    Refiners place the blame for spring gas price increases on crude costs, environmental regulations that have increased the overall cost of refining, and their inability to expand or build new refineries fast enough to keep up with gasoline demand.

    John Pickering, vice president and general manager at the Paulsboro refinery, said Valero makes enough alkylate to meet its needs, but concedes that there is a national shortage of the additive in the spring and summer.

    Other refiners contacted by The Associated Press said they are reluctant for competitive reasons to talk about how they blend gasoline, or whether they face alkylate shortages.

    What is known, however, is that refiners are hiring companies such as UOP LLC of Des Plaines, Ill., to determine whether they can increase the capacity of their existing alkylation units. "In the last year or so, there has been a significant uptick (in business)," said Ashis Banerji, director for refining at UOP, which licenses alkylation technology to refiners.

    And the 36 percent of domestic refineries that don't have alkylation units are looking at adding them.

    "Our impression is that refineries are moving as fast as they possibly can to add alkylation capacity," said Jim Pawloski, business director at UOP competitor DuPont Clean Technologies, a unit of DuPont Co. He said his unit's business has jumped five-fold over the past five years and will likely double again this year.

    The steep jump in summer alkylate prices has also caught the attention of at least two companies that used to produce MTBE. Enterprise Products Partners LP and Texas Petrochemicals Inc., both of Houston, say they're closely studying whether to convert idled MTBE plants into alkylate factories.

    That also highlights the conundrum that is alkylate: If too many refiners decide to spend big bucks to crank up production, the premium prices now enjoyed by alkylate makers could disappear.

    Refiners have to weigh the cost of such an investment against the incremental cost of simply buying the extra alkylate they need. "I'm not sure that it would be economical," said Jeff Hazle, technical director at the National Petrochemical and Refiners Association.

    But if production doesn't rise, American motorists will be faced with big jumps in spring gas prices for years to come.

  2. #2
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    Re: $4 per gallon coming

    I don't know about the summer fuel refining process but reduced US economic activity in theory should reduce demand in general even in Asia if the US stops consuming... in general terms.

    The alkylate 'problem' might add to the cost of US fuel but I wouldn't think it would be as bad a serious political or military stoppages/market variations.

    Not that I would know...

  3. #3
    Vulture of The Western World Eric's Avatar
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    Re: $4 per gallon coming

    Yep... I have little doubt we'll see $4 gas by summer; the only thing that may tamp down the rising prices would be massively reduced economic activity - and of course the continued devaluation of the dollar.

    But the bottom line is - we'll be paying more, one way or another.

    Better get limber enough to grab your ankles, because it'll soon be time to squeal like a pig!

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    Re: $4 per gallon coming

    Quote Originally Posted by Eric
    Yep... I have little doubt we'll see $4 gas by summer; the only thing that may tamp down the rising prices would be massively reduced economic activity - and of course the continued devaluation of the dollar.

    But the bottom line is - we'll be paying more, one way or another.

    Better get limber enough to grab your ankles, because it'll soon be time to squeal like a pig!
    Ain't nuffin good goin' to happen so long as the gummint continues to debase the dollar.

  5. #5
    Vulture of The Western World Eric's Avatar
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    Re: $4 per gallon coming

    Quote Originally Posted by jdm
    Quote Originally Posted by Eric
    Yep... I have little doubt we'll see $4 gas by summer; the only thing that may tamp down the rising prices would be massively reduced economic activity - and of course the continued devaluation of the dollar.

    But the bottom line is - we'll be paying more, one way or another.

    Better get limber enough to grab your ankles, because it'll soon be time to squeal like a pig!
    Ain't nuffin good goin' to happen so long as the gummint continues to debase the dollar.
    Yeah...

    I have got to cash out my savings in the bank and buy something tangible, like more land.

    I have a bad feeling about 2008....

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    Re: $4 per gallon coming

    Quote Originally Posted by jdm

    Ain't nuffin good goin' to happen so long as the gummint continues to debase the dollar.
    Are you advocating arnarchy then? Or pure market?

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    Re: $4 per gallon coming

    Quote Originally Posted by robmcg
    Quote Originally Posted by jdm

    Ain't nuffin good goin' to happen so long as the gummint continues to debase the dollar.
    Are you advocating arnarchy then? Or pure market?
    Anarchy is OK only if it is well organized. Personally I advocate nothing beyond a comfortable ban k account. Send money.

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    Re: $4 per gallon coming

    Quote Originally Posted by jdm
    I advocate nothing beyond a comfortable ban k account. Send money.
    Is the support of a curmudgeon deductible? I would give you money but I expect welfare recipients to be more obsequient than you have demonstrated so far. You could try grovelling and begging and putting in a decent day's work on a trial basis...

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    Re: $4 per gallon coming

    Quote Originally Posted by robmcg


    Is the support of a curmudgeon deductible? I would give you money but I expect welfare recipients to be more obsequient than you have demonstrated so far. You could try grovelling and begging and putting in a decent day's work on a trial basis...
    I've tried all of that and found that my talents lie more on the side of the entitled consumer.

    If you would send money I could help get the economy moving in the right direction, there's nothing worth spending it on in NZ, anyway.


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    Re: $4 per gallon coming

    Quote Originally Posted by jdm
    If you would send money I could help get the economy moving in the right direction, there's nothing worth spending it on in NZ, anyway.
    I've bought near $300 of parts for my engine from Texas, and am paying the US Post $120 to send them to me, and STILL you complain. Things were far better when we had British cars...

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    Re: $4 per gallon coming

    Quote Originally Posted by robmcg
    Quote Originally Posted by jdm
    If you would send money I could help get the economy moving in the right direction, there's nothing worth spending it on in NZ, anyway.
    I've bought near $300 of parts for my engine from Texas, and am paying the US Post $120 to send them to me, and STILL you complain. Things were far better when we had British cars...
    Not for us.

  12. #12
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    Re: $4 per gallon coming

    Quote Originally Posted by jdm
    Not for us.
    Yes but you are a member of a consumer society which expects a product to work.
    Fools!
    Even a GM car needs to be taken apart to make it work properly.

    At risk of boring you with stuff I dimly recall writing back in the CServe days when you were Librarian, sorting my hand-scanned b+w pics of about 60Kb JPG ... I had a wheelchair friend who had been service manager for the biggest BMC Dealership in ChCh in the late 1960s, which was a big dealership, and the cars were mostly built in local subsidised factories from shipping crates of metal pressings and machined parts. The cars were pretty much hand built buy the time they were sold at retail. Thus my amusement with the CServe stories of US disasters with Jags. I knew the dealership principals for two Jag dealerships slightly too, but they were from 'old' families...

    In these days of iPods and memory sticks and hard drives I recall it was only 23 years ago that I had no phone, no computer, and a '57 Jag and a '69 Mini and a house, a dog and a girlfriend and stereo record-player and fondness for whisky... and FWIW have spent a bit of time just recently trying to reconcile the modern car with the mostly male need to fiddle with machinery.

    I trust this has explained your error(s)

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    Re: $4 per gallon coming

    Quote Originally Posted by robmcg

    ... and FWIW have spent a bit of time just recently trying to reconcile the modern car with the mostly male need to fiddle with machinery.

    I trust this has explained your error(s)
    It surely explains yours.

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    Re: $4 per gallon coming

    Quote Originally Posted by jdm
    Quote Originally Posted by robmcg

    ... and FWIW have spent a bit of time just recently trying to reconcile the modern car with the mostly male need to fiddle with machinery.

    I trust this has explained your error(s)
    It surely explains yours.
    So you would demean young fast drivers, the entire 'go fAST' industry.

    This is anti-American. Anti capitalist. Anti freedom.

    Probably you would defer to Iron Rule Nazis before you would defer to Stailism... imagine if you if you havng shovelled snow in Vermont after TX was face to face with me a Russian kid who loved music and went with the flow and was by dint of luck in Westren handshake photo.

    And he died in 1952 at 30yrs... in 1945 fit and young he commanded 10,000 men and enough guns to almost level any ground, RAF and USAF overhead, and similar men, his friends, and fit and young Japan had not yet capitulated...

    This wasn't just the War To End all Wars as WW1 was, we now have religoius nutters on either side...

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    Re: $4 per gallon coming

    I cannot believe that the US is worried by $4/gal.

    But Lorna had neighbours with a mad son and they live in pzza and coca-cola. He is on ritalin....

    Go figure as America might say.

    Lorna is s kind at 70yrs and I the neighbours are a man who pulls his piece out after invadihg her house without invitatrion and now they invading her home every day sometiime 3x and other neighbours have shut up or moved. She at 70yrs and old dog cannot confront them. both being friends who call her 'step mother'

    You think $4 is a problem?

    Get police? Conflict would kill her...


  16. #16
    Vulture of The Western World Eric's Avatar
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    Re: $4 per gallon coming

    "I cannot believe that the US is worried by $4/gal."

    You would understand if you lived here.

    Many of us have little choice but to drive extensively because there is not much in the way of viable public transport in/around the places where most people work and live. As an example, ten years ago, when I worked at The Washington Times, I had a daily commute into DC of roughly an hour each way. That entailed about a tank per week in gas to get to the office and back. In those days, it was about $30 per week. Today, the same ride would cost at least $65 per week - or nearly $300 per month just for fuel to get to work. That is a serious bite for most people. So why not live closer to the office? Not possible. The affordable neighborhoods in DC were (and still are) lethally dangerous places for white people. The decent areas are exorbitantly expensive. The near-in suburbs are also absurdly expensive... so unless you made six figures or wanted to live with roomates in your 30s - or 40s - you moved farther out.... it is a common problem.

    Also keep in mind the ripple effect; $4 gas amounts to another 20-something percent uptick in the cost of.... everything. Because everything is petroleum related or petroleum dependent, from the pesticides used to grow crops to the fuel used to get them to the store - etc.

    And because of "free trade" labor outsourcing of manufacturing and other jobs to places like China and India, wages have either remained stagnant or declined while the purchasing power of each dollar continues to fall.

    This is why we are in big trouble on the economic (and social) fronts.

    And it's why $4 per gallon hurts even more than it ought to.

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    Re: $4 per gallon coming

    Quote Originally Posted by robmcg
    I cannot believe that the US is worried by $4/gal.

    But Lorna had neighbours with a mad son and they live in pzza and coca-cola. He is on ritalin....

    Go figure as America might say.
    Easy to figure, they are all crazy: beer is the only beverage to have with pizza.

    FWIW, in the US a 'piece' is a hand gun.

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    Re: $4 per gallon coming

    Quote Originally Posted by jdm
    Easy to figure, they are all crazy: beer is the only beverage to have with pizza.
    When I were lad, a pint of milk was 3p that's thruppence, or about 3 cents. Now it's more expensive than coca cola or petrol. And lots of adults cannot boil an egg and fill their supermarket trolleys with expensive heat'n'eat rubbish and soft drinks. All down to corrosive US influence I reckon...

  19. #19

    Re: $4 per gallon coming

    I really have very little sympathy for americans paying $4/gallon. I paid more than that to fill my cars up yesterday. Compared to what other people in the world pay for fuel (especially the UK), the cost could be a lot higher.

    The government of my country is at fault for letting our oil companies sell the stuff cheaper to you guys while we pay more for it at home. Why? Because of near-sighted provincial and federal politicians who want to pad their wallets. Countries that produce copious amounts of petroleum products should give rebates to it's citizens, as we are in effect selling off our country's resources. Many other countries have had little trouble with rebates, discounts or similar programs.

    But what do I know? I'm just a Canadian.

    :

  20. #20
    Senior Member Ken's Avatar
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    Re: $4 per gallon coming

    Quote Originally Posted by ReasonOne
    I really have very little sympathy for americans paying $4/gallon. I paid more than that to fill my cars up yesterday. Compared to what other people in the world pay for fuel (especially the UK), the cost could be a lot higher.

    But what do I know? I'm just a Canadian.

    :
    Read and weep. Have just filled my bike up at 1.069 per litre, 4.85 per gallon/$9.443 per gallon at todays exchange rates. I was pleased to get such cheap petrol, four miles down the road it is 1.119 per litre, 5.08 per gallon/S9.88 per gallon. It's all relative, Seven-Up cost twice as much again.

    Ken.
    Die dulci fruimini!
    Ken.
    Wolds Bikers, Lincolnshire, England.

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