Gas Prices Could Rise to $5 Per Gallon
 

Locally we have been watching prices rise headed to $4.00 a gallon.
What will happen if the entire region decides they want to rise up and
be free?

Gas Prices Could Rise to $5 Per Gallon Due To Middle East Protests In Libya

Short term problem, (possible) long term gain.

Maybe, maybe not. The oil situation and the region can't possibly
continue business as usual.

Take the power away from the few that control all of the resources, slap down the dictators... I think we will see things ease a bit. Democracy is catching on like wildfire in that part of the world, while we seem less democratic here in the U.S lately. It happened very quietly in Southern Sudan last month when the citizens voted for independence from the Republic of Sudan to create the World's newest country, which went relatively unreported by the media. I am curious to see what happens in Libya. In the meantime, oil will be high for a while; however, it was already trending up before the crisis began in the middle east (Africa).

Did everyone in the media flunk geography and world history? When did Libya and Egypt annex itself from Africa and become part of the middle east? Just curious...:dunno:

Haha, that mentality is a product of post 9/11 public awareness. Lots of vague coverage on countries and issues that no one cared about until a small minority of people decided to declare a war on western ideals.

Now Muslim is middle east, and middle east is bad. After further reading, I have learned that Northern Africa is considered to be part of the "Middle East"


Speaking about the price of oil, recently a report revealed (I think from wikileaks) that Saudi Arabia has been overstating its reserves and production capacity for years.

The recent and more accurate information leads us to believe they may in fact be on the cusp of peak production, and it daily production capacity will be on the decline shortly. This is all contrary to what the Aramco would want us to believe.

CTV News | Wikileaks reveals imminent Saudi oil peak

I paid $1.37 per litre yesterday, equates to $6.22 per gallon, $5.18 for the smaller US gallon (dollar is at par).

Don't think we will see it drop back down to $5 per gallon anytime soon. Forecast is for over $6 per US gallon here in the next two months. Hard to understand why the US is still cheaper, given that Canada is your largest supplier of oil. Time to raise those taxes.

Isn't that crazy. Most people don't know that we get so much oil from you guys. It's a quite fact that Canada sells us so much oil. I never understood why your gas is so expensive up there since you have so much oil. I always make sure I fill up down here before I head up there for the day to work.

Cheers,

What I always think of when I hear the rumors of gasoline being scarce.

http://www.hollywood-diecast.com/roa...rior%20pic.jpg

Orig MadMax: great flick!

An art. from today's NewYawkTimes on why the Libya fiasco added to the oil price hike. However, back at the Speculation & Prop Up Every Commodity's Pricing, if one was forced to take 'possession', I bet the spot price would be ~$60 tomorrow, and 'futures' would be even less, but I'm not king, yet. Embolden is mine...
GL, mD


Why the Disruption of Libyan Oil Has Led to a Spike in Prices
By CLIFFORD KRAUSS

Published: February 23, 2011

• The unrest in Libya has forced oil companies to shut down production of as much as a million barrels a day of some of the world’s highest quality crude. For the first time, the turmoil that has spread from Tunisia to Egypt to Bahrain has made an appreciable dent on world oil supplies.

Libya produces less than 2 percent of the world’s oil and exports little to the United States. But the quality of its reserves magnifies its importance, causing a spike in both American and European oil price benchmarks despite assurances from Saudi Arabia that it was ready to pump more oil to calm markets.

In New York West Texas Intermediate Benchmark crude for April delivery briefly touched $100 on Tuesday for the first time in more than two years, before easing moderately. In London, Brent crude for April delivery rose $5.47 to $111.25 a barrel.

Libya’s sweet crude cannot be easily replaced for the production of gasoline, diesel and jet fuel, particularly by the many European and Asian refineries that are not equipped to refine heavier grades of oil. Saudi Arabia may have more than 4 million barrels of spare capacity, but it includes heavier grades of crude that are higher in sulfur content and more expensive to refine.

“Quality matters more than quantity,” Larry Goldstein, a director of the Energy Policy Research Foundation, an organization partly financed by the oil industry.

Should the turmoil in Libya last for more than a few weeks, oil experts predict that European refiners will be forced to buy sweet crude from Algeria and Nigeria, two principal sources for the United States. That could push gasoline higher in the United States, where prices have already risen 6 cents a gallon in the last week to an average of $3.19 for regular.
“Nigeria and Algeria are already producing flat out so they can’t come up with another million barrels a day,” Michael Lynch, president of the Strategic Energy and Economic Research consultancy firm, said. “That means there will be a scramble for lighter crude supplies.”
Mr. Goldstein said the disruption could “force all sweet crude refiners into a bidding war.”

Sweet crude is particularly suited for diesel, which is far more popular as a fuel in Europe than in the United States. In contrast to Europe, American refineries are outfitted to handle a heavier grade of crude oil that comes from countries like Venezuela and Mexico.

Gulf Coast jet fuel prices soared about 6 cents, to $2.86 a gallon on Tuesday, putting pressure on airlines to raise fares. Meanwhile, diesel prices have risen 4 cents in the last week to $3.57 a gallon, the highest level since October 2008.

The last time there was shortage of sweet crude, in 2007 and early 2008, oil prices spiked to more than $140 a barrel, although that shortage was caused by spiraling demand and not a sudden cut in supply.

Mr. Lynch said the Brent benchmark was headed for $120 a barrel and West Texas Crude would reach $110 “in the near term.” That could easily push the national average for a gallon of regular gasoline to $3.50, a price that economists have identified as a tipping point for consumers juggling expenditures of gas with discretional shopping and dining out.
Still, the United States remains less directly vulnerable than most European or Asian nations because its large refineries are capable of processing both sweet and sour crudes. That versatility makes the United States an exporter of both diesel and jet fuel.

At the moment the oil storage depot in Cushing, Okla., has plentiful supplies, which is one reason the American West Texas Intermediate price benchmark is about $10 below Brent oil which is traded in London.

If supplies of sweet oil become tight, the United States can release supplies from the Strategic Petroleum Reserve, but that would probably only have a marginal impact on prices. Europe is most immediately impacted by the Libyan crisis. More than 85 percent of Libya’s 1.5 million barrels of exports go to Europe, with more than a third of that going to Italy. Most of the rest goes to Asia. About 5 percent is sent to the United States.

Eni, the Italian oil company, Repsol of Spain, Total of France, Statoil of Norway and BASF, the German chemical and energy company have halted much if not most of their oil production in Libya and moved personnel out of the country.

In a research note, Barclays Capital estimated that around 1 million barrels a day of production has been shut down, or more than half the country’s total. Much of Libya’s oil producing capacity and port operations are in the eastern part of the country where the government has lost most political control.

That puts the focus on neighboring Algeria, a country with a long history of unrest. As an OPEC member that produces about 1.42 million barrels a day, Algeria is the seventh biggest source for oil imports to the United States.

There have been sporadic protests against high food prices and unemployment over the last several weeks, including at least two large protests in Algiers demanding the resignation of President Abdelaziz Bouteflika.

“You have a powder keg in Algeria with social problems, ethnic problems and an Islamist organization blended together and overlapping,” said Michael J. Economides, a professor of engineering and energy economics at the University of Houston. “Many refineries would go into paroxysm if they lose Libyan and Algerian oil.”

Most Middle East oil production is in the control of national oil companies that operate as virtual state agencies and coordinate their security needs with the national militaries.

But that is not the case in either Libya or Algeria, where American and European oil companies have invested heavily to increase production that had been lagging. Foreign companies have shown in Libya, and to a lesser extent Egypt, that they will shut down exploration and production and close their offices rather than jeopardize the safety of their employees.

I read a good article today about how it isn't democracy that is catching on, but rather regime change. When the military decide to stop backing one dicatator, and get ready to put the next one in, that isn't democracy. And when the military can't agree on a course of action, and it degenerates into tribal warfare, it is civil war instead of democracy.

Regardless, fuel prices will keep rising for awhile.