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June 20, 2011

China and Fuel Consumption


Thoughtful managers anticipate problems by studying trends. Recent volatility in fuel prices has many short-term causes. Meanwhile, there are some major trends worth noting. Stuart Staniford has an interesting comparison of the size of US and Chinese vehicle fleets. They will soon be equal, but only for a heartbeat.

Staniford also has a chart showing that the Chinese expressway system was about to equal the US Interstate system in highway miles based on 2009 data.

China is the largest, of course, but many countries are part of the rapidly rising demand for vehicles and fuel. Prof. James Hamilton, a leading expert on oil prices, reviewed the Staniford analysis and writes as follows:

China today is 1/3 the current oil consumption per person in Mexico. No question, there’s potential for a lot more growth in demand from China. What’s substantially less clear is where the oil to fuel those cars could come from.

Filed under:Fuel Price Trends | by OldProf @ 11:16 am | 

June 14, 2011

The High Point for Gas Prices?


Gas prices are high, but shouldn’t get any higher through the summer,according to the EIA.

Patrick DeHaan, senior petroleum analyst, said gas prices have peaked in May for the past two years, reflecting the temporary supply problems created by the changeover from winter to summer gas and the beginning of the summer driving season, which kicks off around Memorial Day.

“There could be a rise later on, depending on the hurricane season,” he said. “There’s a lot of infrastructure in the Gulf of Mexico. Twenty percent of the refineries

Sounds like a big ‘if’ to me. No way will we see anything like $3/gallon.

Filed under:Fuel cost,Fuel Price Trends,Gas price | by Pump Girl @ 6:41 pm | 

June 7, 2011

OPEC To Meet Wed.


Does that scare you? Civil unrest, a faltering US economy and Saudi troops taking on the protesters in Bahrain could mean some sparks.

Oil experts expect little change in the output policies which means little change in the price of crude.

“I think there’s going to be a lot of theatrics, but beyond that I don’t think it affects the outcome,” said Frank Verrastro, director of the energy program at the Center for Strategic and International Studies. “If OPEC becomes less cohesive, that means each country goes its own way on production.”

“All these countries need money,” said Fadel Gheit, oil analyst at Oppenheimer & Co. “They will produce as much as they can get away with without destroying demand.”

A new term for us: demand destruction.

It happens when high prices make consumers (the golden geese) change their habits and use less gas.

Filed under:Energy,Fuel cost,Gas price | by Pump Girl @ 5:10 pm | 

High Gas Prices Affect Economic Activity


Oh yes! In case the question is on your inquiring mind, according to a Deutsche Bank analysis every one cent increase retail gas prices, reduces annual non-energy consumer spending by about $1 billion

Doesn’t seem a good way to get the economy back on track.

On the plus side,

Deutsche Bank’s optimistic view is that since gas prices are now receding (slowly, from very high levels) that growth will rebound in the second half.

For bulls/economic optimists out there, it’s this view on gas, combined with the presumed snapback in Japan that offer the best hope right now.

Filed under:Energy,Fuel cost,Gas price | by Pump Girl @ 4:46 pm |