Rising Fuel Prices

[JSH]

Originally Posted by oil pan 4

How do you explain the price oil, gasoline, diesel going up months prior to the invasion?
And if you look at a price chart the invasion appears to have had little to no impact on prices. It was going up months before and it's kept going up since.
When the war is over and prices are still going up then what you going to blame it on?

Did you read past the first line? There are a lot of factors outside of Ukraine.

Why were oil prices going up in 2021? Lack of supply (a large cut back in production due to the price collapse in 2020) and a massive increase in demand from a booming global economy.

Read an industry trade journal - there is no mystery to oil and gas prices. Remember the Texas freeze that took out a large portion of US refining and production? - that had an effect too.

Oil refineries shut as Texas energy industry reels from deep freeze.

https://www.dallasfed.org/research/s.../swe2102c.aspx

[redpoint5]

Recession should pull prices back down too.

[JSH]

Originally Posted by redpoint5

Recession should pull prices back down too.

Yes, it will. Prices always spike coming out of recessions and collapse going into them.

The rose colored glasses never seem to work when you are in a recession unlike when it is past and prices are spiking again. People seem to forget that when gas was $2 a gallon back in May 2020 unemployment was higher than it had ever been since the Great Depression - 50% higher than even in 2009. Nobody was celebrating $2 gas in 2020 because they were living the crisis that caused it.

[cRiPpLe_rOoStEr]

Originally Posted by hayden55

The interesting part is electricity and natural gas prices are the same as when I moved into my house at the beginning of 2021.

Electricity prices in my country are mostly regulated by some eventual increase of the usage of coal, bunker oil or natural gas according to the weather, since most of the electricity here is provided by hydroelectrical powerplants.

[serialk11r]

Originally Posted by redpoint5

Recession should pull prices back down too.

It's worth noting that gasoline prices have both a refinery component (severe supply problem in the US) and a crude oil price component (increasing demand in developing countries to offset reduced demand in developed countries suggests limited downside).

[cRiPpLe_rOoStEr]

The worst part is that even renewables such as ethanol become pegged both to gas prices and food prices...

[rmay635703]

Something interesting is despite recent reductions in the cost to refine taking 2008 as an example our price per barrel is no higher than then but our price per gallon is.

Where does the discrepancy land? Profit and shareholder value.

Our primary “shortage “ right now is strictly in refining capacity which is a manufactured crisis, oil companies have been allowing refineries to go black with no plan to repair or modernize.

They have floated bailouts despite the fact record profits could be used to repair.

BP has had the let it break and pay a fine mentality for decades and has had many complaints from its employees about not repairing broken infrastructure, that tendency is paying dividends right now

[cRiPpLe_rOoStEr]

Some refineries which were supposed to be operating more than 10 years ago, but never were built, are part of the problem in Brazil. At least 3 refineries in Ceará, Maranhão and Pernambuco, with a more Diesel-oriented refining profile, succumbed to the corruption of some previous governments. AFAIK Petrobras is still paying damages to shareholders after a class-action lawsuit in the United States...

[JSH]

Originally Posted by rmay635703

Something interesting is despite recent reductions in the cost to refine taking 2008 as an example our price per barrel is no higher than then but our price per gallon is.

Where does the discrepancy land? Profit and shareholder value.

Our primary “shortage “ right now is strictly in refining capacity which is a manufactured crisis, oil companies have been allowing refineries to go black with no plan to repair or modernize.

They have floated bailouts despite the fact record profits could be used to repair.

BP has had the let it break and pay a fine mentality for decades and has had many complaints from its employees about not repairing broken infrastructure, that tendency is paying dividends right now

US refineries are going black or getting converted to chemical plants because oil companies believe US gasoline consumption has peaked. No reason to spend billions of CapEx on equipment that lasts decades if you expect demand for your product has peaked or will shortly.

https://www.spglobal.com/commodityin...eps-rising-eia

EDIT:

Chart of US gasoline use. We have been pretty flat for almost 15 years after steady growth prior to the mid-00's. Gasoline usage still has not returned to 2019 levels and likely won't if work-from-home and hybrid work becomes a permanent thing. Even without a switch to EVs steadily increasing fuel economy standards mean gas consumption will hold steady or fall even as population increases.



Data here:
https://www.eia.gov/dnav/pet/hist/Le...s=wgfupus2&f=4

[rmay635703]

Nice gimmick but not the whole story,

Refineries realistically only can operate reliably at a max output of 75% with absolute reliability of supply way down in the 60’s (at least if historical breakdown and disruption data can be trusted)

There is no indication that our gas consumption is going to drop in half in 5 or even 10 years so even in 2019 we had inadequate installed capacity.

So they have either
1. Made an error
2. Are partying at the end of the world milking it for everything they can get.

The reality is the switch away from gas is not going to happen quickly enough even in their wildest dreams to justify their lack of action.

This is purely a grandstand to extort money, and doing this may actually backfire massively as Ukraine and other entities get sorted in the next few years.

To show just how boneheaded and short sighted we are, we are actually importing finished and straight run gasoline into the country, which is the dumbed most ideotic thing we have ever done in our history