What drives the price of fuel higher - YOU
It won't be long now before Americans finally wake up and realize the demand for fuel drives the price UP. The ONLY way to drive the price DOWN is to stop using Gasoline.
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For the week eding January 14, 2012, Marathon Petroleum Corp. of Michigan told investors this week it expects to post a small loss for the fourth quarter of 2011 because the prices of its products like gasoline and diesel fuel haven't gone up fast enough.
“Refined product market prices did not increase sufficiently to offset the higher crude oil costs during the fourth quarter of 2011,” the Findlay, Ohio-based company said in its announcement.
Marathon Petroleum has a substantial influence on Michigan’s fuel picture. Industry insiders say the vast majority of gasoline sold in the state, no matter the brand, is refined at Marathon Petroleum’s Detroit facility.
The company’s statement noted that the price of benchmark West Texas Intermediate crude oil increased from $79.20 on Sept. 30 to $98.83 on Dec. 30. That’s a 24.7 percent increase.
The benchmark crude closed Friday at $99.11, down $2.45 for the week.
By contrast, the Michigan statewide price for a gallon of unleaded regular was $3.40 a gallon at the end of September – and $3.38 a gallon at the end of December. Earlier in the year, when crude oil prices also were around $100 per barrel, retail prices were around $4.
The futures prices of gasoline, which often appears to have a direct impact on retail prices, closed unchanged for the week of January 14, 2012 at $2.75.
All of this is because demand for gasoline is WEAK. The oil industry MUST move it to consumers who burn it up, as the refining equation MUST stay relatively balanced - the country MUST consume as must of ALL the refining products made from oil in a just-in-time fashion
Iran exports about 2.3 million barrels of oil per day, mostly to Asia. The world consumes about 89 million barrels a day. The United States especially, consumes roughly 21 million barrels of oil per day - the lions share followed closely now by China at about 10 million. At those consumption rates, sanctions will never stop the export and flow of oil from ANY countty - only perhaps decrease the price it can harge.
On December 4, 2011 CNN reported, "
"""The average price of regular gasoline is $3.29 a gallon, the Trilby Lundberg Survey found.
That's down 9 cents from two weeks earlier, and down a total of 18 cents over the past six weeks, said publisher Trilby Lundberg of the Lundberg survey
While crude oil prices rose $3.55 a barrel over the past two weeks, gas prices fell due to "shrinkage in the profit margins of the downstream portion of the oil industry -- that is, refiners and retailers," Lundberg said. "They were unable to pass through the higher oil prices because American motorists' demand for gasoline continues to shrink due to hard economic conditions."""
If people drive less, the price of fuel drops because they MUST keep making it due to the flip side of a constant Diesel fuel demand.
December and January usually bring the lowest gas prices of the year to states like Arizona, but this year, prices have been rising ahead of the Christmas holiday this time in 2010 because positive economic news in the U.S. and steady global demand have buoyed oil prices.
The average price of regular gasoline in Phoenix was $2.91 in 2010, according to AAA Arizona, about 34 cents higher than a year earlier.
Some stations were charging much more. A Scottsdale Circle K near Hayden Road and Shea Boulevard is selling regular gas for $3.11 a gallon and a Fountain Hills Chevron station is charging $3.10 a gallon, according to Gasbuddy.com where people can report the highest and lowest prices for certain cities. In Los Angeles $3.50 / gallon gas can already be found easily.
The cheapest stations in the area are selling regular gas for more than $2.73 a gallon, according to the Gasbuddy site..
That doesn't bode well for summer prices all across the Nation - it is pre-cursor of what is to come.
The states uses a less expensive winter blend of gasoline. There isn't huge demand." It does not have AS MUCH ethanol in it.
If people take their planned summer vacations and demand rises as usual, spring will bring higher prices. The "summer blend" is more highly ethanol blended because it helps keep down emissions - it burns a bit cleaner.
The improving U.S. economy and demand from China is linked to keeping oil prices high at a time of year they normally fall.
Recent economic news on housing starts, the national tax-cut package and other events have bumped up the price of oil.
China's oil demand was more than 13 percent higher in November compared with November 2009, according to a report from Platts, a division of the McGraw-Hill Company., reaching a new record during the month.
China will now be helping to keep US fuel prices high by it's competition in demand. Gasoline will NEVER go down again to match your salary or pay which is by proxy falling as fuel prices increase.
U.S. oil demand is expected to decline during the next decade with more fuel-efficient cars and increased ethanol use. But U.S. demand will be more than offset by developing countries' growth, meaning prices won't fall because the U.S. uses less.
At some point, the expense of fuel begins to affect the general U.S. economy and the recovery. In fact it has ALREADY happened.
The national average price for a gallon of regular gas Wednesday was $3, according to AAA.
Arizona tends to have prices lower than the national average in winter because it is not as affected by cold weather, which raises demand for heating oil and can pull up gas prices.
But, in summer, with a different fuel blend required in the state, Arizona prices can be higher than the national average.
Arizona has had some relief from that phenomenon in recent years with an expansion of the supply line that brings fuel from Texas to metro Phoenix.
Another line brings fuel to Phoenix from Los Angeles, where prices are higher.
Drivers can take some comfort that, early in 2010, most national experts predicted $3 a gallon gas by summer, and it didn't happen until this week.
The weak U.S. economy kept prices down for the year, but 2011 could see a national average price of $3.30 a gallon, said Phil Flynn, vice president of research at PFGBest futures brokerage in Chicago.
One prominent national expert recently predicted summer highs of as much as $3.75 a gallon, but Flynn said he thinks that is unlikely.
"We expect the economy will get better in 2011 and demand will get stronger," he said. "If the U.S. economy gets better, the value of the dollar gets stronger, and that will put downward pressure on price of crude oil."
He said the current anomaly of rising prices in winter doesn't mean prices will stay abnormally high throughout 2011.
"I know it's winter and we shouldn't be this high," Flynn said. "But we are here because of a lot of refinery problems, and things that will get corrected."
A large storage tank's roof collapsed at an Arco BP tank farm near San Bernardino, Calif., last week, and that could further crimp supplies in the southwestern region for the short term, he said. These kinds of accidents impact an already strained "just in time" delivery system where little of no reserve is kept.
Drivers hardly can keep up with prices as they rise.
Pull you head out of your rear - you cannot win with the Gasoline price game if you keep using it.
