Yesterday oil futures hit $78 per barrel. It seems there are problems in the North Sea production, causing the pricing increases.
That and the switching over to produce home heating oil for the upcoming season. Home heating Oil now cost $2..11 to produce leaving the refineries
The last time it was priced this high was last Aug. Part of the problem is not supply related, but refineries are now at peak demand.
We just do not have enough refinery capacities to meet the demand. For those that may not know, no new refineries have been built in USA since the 70’s
At this point every glitch cough will disrupt production and prices will soar Including Hurricanes. That wood/ pettet/corn/ coal/ stove may be looking mighty good come January
Time is almost gone to season wood properly. Time to get pellet supplies in order. Pellet wise the time is now. I doubt there will be any price declines in the next few months.
and if shortages occcures these prices today are looking good. Another Katrinia disaster, all bets are off finding economical pellet prices..
Here is a question I been thinking are pellet supplies like our oil refinery capacities they are at Peak ? IF so how does that effect pellet stove sales?
It is still early but how are pellet stove sales going. How are pellet sales progressing what about supplies?
Moderators this post might be better in the hearth? Please this is not Pellet VS wood debate, but a reality check of what to expect and current pricing and supply conditions.
If you want to debate Pellet VS wood start a new post
No new refineries since the 70’s and I’ve seen two perfectly operational ones torn down in my lifetime. Didn’t want to update them to meet EPA standards. I honestly believe they saw reducing refining capacity as a way of making prices unstable. Instability seems to spell billions for these companies.
There have been no new ones built but almost all of the existing ones have been updated/expanded in that time. Not saying we don’t need more new refineries, I just think the “no new refineries since the 70’s” quote is slightly misleading, they should be saying what increase/decrease in capacity there has been in that time.
Here in Kansas we just had a major flood at the Coffeyville Refinery (100,000 barrels/day capacity) which shut it down and polluted half the city. That has caused our gas prices to go up ~20 cents/gallon, but we are still cheaper than on the coasts at $3.09/gallon.
There have been no new ones built but almost all of the existing ones have been updated/expanded in that time. Not saying we don’t need more new refineries, I just think the “no new refineries since the 70’s” quote is slightly misleading, they should be saying what increase/decrease in capacity there has been in that time.
Here in Kansas we just had a major flood at the Coffeyville Refinery (100,000 barrels/day capacity) which shut it down and polluted half the city. That has caused our gas prices to go up ~20 cents/gallon, but we are still cheaper than on the coasts at $3.09/gallon.
It’s a shame that the ‘bounty-full’ rains those in the midwest have hoped for...have come “all at once”...and in selected areas.
For those that have never driven across Kansas or that region in general… it trully is the “Bread Basket” of this country. Mother nature can be nasty to those folks…
Here “on the coast” gas prices have dropped to somewhat of a relief though… the cheapest “in town” right now is $2.83/gallon at the local Cumberland Farms (convience store chain)...not sure what the prices are over at ‘Gasoline Alley’ though....
July (typically) ends up being the ‘cheapest’ time to stock up on heating oil...I don’t want to even try to speculate what we are in for this winter though..
I saw a funny car commercial the other night by Honda. They were touting their “highest miles per gallon fleet.” At the end of the commercial they stated that one of their models could go 600 miles on a tank of gas. Don’t get me wrong, I own their products and think they make great vehicles, but how stupid do they think we are? I guess if you can’t make it get more mpg, then you just have to install a bigger gas tank! I expect we will see many more gas mileage marketing angles in the near future.
Much product can be (and is) refined overseas and shipped here as finished. So the refinery excuse may not be accurate. It is a “free” market, and that means rumor, speculation, profiteering and many other factors are at play. They (traders, corporations, etc.) can inject stories and press releases into the media almost at will to change the perception or price. Think Diamonds.......my dad told me you could buy a $100,000 ring today, and if you went to sell it tomorrow, you would be lucky to get $30,000 for it. It’s like the Golden Rule (he with the gold rules), except it’s the Oil Rule (he with the Oil, rules).....
T, I think the current price is just about at the top of what it was (adjusted for inflation), so it’s not “cheaper”, and also keep in mind that it hit that earlier high (1980?) for a very short time.
The big oil companies (the five that control 55% of the crude) are now saying since Bush has called for increased ethanol production, it is just too risky to build new refineries that may not be needed. What a joke! They know that if they build more refineries, their capacity will increase, but the profits will probably stay the same or be lower since gas prices will go down. They are just like OPEC, release just enough to keep the prices low enough that people won’t seriously consider alternatives.
I think the lack of U.S. refinery capacity may have been an issue in the recent years, but the larger problem now is that oil producing countries are pumping as much oil as they can, which is about 84 million barrels a day, and world daily demand is at that level and growing. Add to that the fact that a good deal of the world’s oil reserves are locked up in politically unstable places like Iraq and Nigeria. I believe the ugly truth is that we are at or near the Peak Oil producing point and slowly but steadily from now on less oil will be pumped from the world’s oil fields, while demand will continue to rise. The North Sea’s production has been decimated, the Mexican oil field in the Gulf is declining, Iran and Venezuala are ekeing out every drop they can Of course while richer nations like the US will be able to buy oil for a good while longer, we can expect to pay increasingly higher prices. I suspect that in a couple of years from now we will look back on the days of $75/bbl as the good old days.
T, I think the current price is just about at the top of what it was (adjusted for inflation), so it’s not “cheaper”, and also keep in mind that it hit that earlier high (1980?) for a very short time.
Not when you factor in the greater percentage of taxes.
Taxes used to make up about 10% of gasoline and now make up about 20%.
I think the lack of U.S. refinery capacity may have been an issue in the recent years, but the larger problem now is that oil producing countries are pumping as much oil as they can, which is about 84 million barrels a day, and world daily demand is at that level and growing. Add to that the fact that a good deal of the world’s oil reserves are locked up in politically unstable places like Iraq and Nigeria. I believe the ugly truth is that we are at or near the Peak Oil producing point and slowly but steadily from now on less oil will be pumped from the world’s oil fields, while demand will continue to rise. The North Sea’s production has been decimated, the Mexican oil field in the Gulf is declining, Iran and Venezuala are ekeing out every drop they can Of course while richer nations like the US will be able to buy oil for a good while longer, we can expect to pay increasingly higher prices. I suspect that in a couple of years from now we will look back on the days of $75/bbl as the good old days.
I was going to type a reply, but ChrisN covered it pretty well.
Not when you factor in the greater percentage of taxes.
Taxes used to make up about 10% of gasoline and now make up about 20%.
???
We are talking about the price you pay, not what the components of that price are.....
It appears the record high is an adjusted price of $3.22 TOTAL PRICE including taxes.
I think we are still a bit below that, so you are correct there....although some places (like Ca.) are very high (higher than $3.22)
Taxes are bound to go up for a number of reasons, among them:
1. The US road infrastructure is falling apart fast, with thousand of bridges, etc. needing replaced.
2. State governments always need more money, and gas taxes are less visible than sales tax or more property tax, etc.
but, of course, that is another story. I doubt that taxes would go down, and in fact I would support higher gas and oil taxes (carbon taxes), but ONLY if the money was “lockboxed” for use in alternative energy, roads, pubic transportation, etc.
As things are right now, it is more likely to go to other stuff, including lining pockets.
We are talking about the price you pay, not what the components of that price are.....
But when you accuse oil companies of profiteering (something all capitalists do BTW) the reality is they haven’t changed profit margins at all, just acquired more customers. In fact in many cases actual prices have fallen.
The reality is oil companies simply aren’t to blame for today’s prices, government interference in the marketplace and a myriad of other factors including rising world demand are.
Every time I hear people whine about the price of gas I chuckle and tell them to look at the actual price versus monetary inflation.
Nah, I don’t think I accuse them of that. I own too many Energy stocks to do that!
The more they charge, the more I make.
But in all seriousness, it is not a problem of profiteering. As you know, oil is a relatively low profit item. Why, we make VASTLY higher percentages on woodstoves and chimneys.......
The price is still low - in my opinion - although it is starting to get to a point where it may be somewhat accurately priced. Try to get some guys to push your Prius down the road at 50 MPH for 40 miles, and you’ll develop a new appreciation for what $3.00 can do.
Still, the $3.00 does not figure the “real” cost of wars, security, pollution, roads, traffic and other aspects. I suspect closer to $5.00 or more would cover a more sustainable situation that didn’t involve human sacrifice.
We are talking about the price you pay, not what the components of that price are.....
But when you accuse oil companies of profiteering (something all capitalists do BTW) the reality is they haven’t changed profit margins at all, just acquired more customers. In fact in many cases actual prices have fallen.
The reality is oil companies simply aren’t to blame for today’s prices, government interference in the marketplace and a myriad of other factors including rising world demand are.
Every time I hear people whine about the price of gas I chuckle and tell them to look at the actual price versus monetary inflation.
I think the problem is necesity of home heating oil. One can chose not to take a sunday drive but one has a hard time choosing not to heat their home
Even without taxes, recently home heating oil pricing as gone beyond fuel pump cost , untill recently that never happened. Its not the cost of fuel going up ,but along with that every food article you buy goes up, due to increased transportation cost.. IT is a spiral that really hurts needy famillies. Every time they turn around scrafices are made to the point of eating or being warm.
Unfortunately it could be a guy and his familly that worked for a company 20 years till, the company just closed its doors and moved opperations to the pacific basin.
After a year all his savings are gone,, he is working but $10 jobs he falls deeper in the hole. I am describing potentially the next donor recepiant . He has an old slam in insert that is so dangereous to opperate, but he will be using it and taking risk.
I’m prepared to spend money to get one, eventhough my winter finances may not be much better than his, if this winter is a repeat of last.
I’m certain you know about the Kennedy cheap heating oil program. Many older folks have a tough time with wood or pellet stoves, and oil bought under this program is cheaper than either.
http://www.citizensenergy.com/
“the Oil Heat Program is more than doubling in size, expanding to reach tens of thousands of the neediest households in many states. Eligible families can purchase one-time deliveries of up to 200 gallons of home heating oil at a 40 percent discount”
Not to say a person should not burn wood, but when it comes to keeping the house warm for needy people, I hate to see them breaking their backs.
