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February 25, 2013

Oil Company CEOs Officer United Front on Oil Drilling

 

On Monday, the organization known as Business Roundtable released a detailed brief to the Obama Administration outlining precisely what the broader business community sees as the future of gas and oil utilization in the United States. According to McGraw-Hill Company’s website Platts:

“A national association of CEOs on Monday called on the federal government to ease oil and gas permitting, re-evaluate the impact of regulations on the electricity industry, and gradually eliminate wind power subsidies as part of a broad national energy strategy.

…the Business Roundtable also recommended increased incentives for state-level energy efficiency programs and increased federal funding for ‘pre-commercial’ energy research and development.

‘America is on the threshold of a historic, long-term energy boom, but what is holding us back is the lack of a national strategy for taking advantage of this vast opportunity,’ John Watson, the CEO of Chevron, said during a phone call with reporters.

‘It is vital that the government work with us to develop a policy framework that supports investments by expanding access to public land, onshore and offshore, streamlining approval processes for major energy projects such as the well-known Keystone pipeline, creating regulations based on sound science and thorough cost-benefit analysis and recognizing and respecting the roles of state and federal government, particularly in the area of shale gas development,’ he said.”

However, there was significantly more contention over the idea of exporting natural gas around the world. Reuters reports:

“New technology has already put vast natural gas reserves within reach – unlocking shale deposits and creating a sudden glut of the fuel – but executives stayed silent on whether that bounty should be exported.

Energy interests hope natural gas sales abroad will help their bottom line while some domestic industries fear exports will rob them of cheap fuel that could expand the nation’s manufacturing base.”

Given that these remarks are being released so shortly after President Obama’s most recent State of the Union Address, it appears as though this is the business community’s attempt to put on a fully unified front. It has long been postulated that increased domestic oil drilling would help reduce prices at the pump for the average American. However, if the export of some of these resources has the effect on the economy that some seem to suggest, it is possible Americans could soon find themselves in the opposite situation.

Filed under:Alternative Energy,Energy,Fleet Managers | by Eyes on Energy @ 11:55 pm | 

February 15, 2013

Seasonal Shift Signals Coming Rise in Price

 

A spokesperson for the American Automobile Association announced today that their organization has predicted prices at the pump to increase steadily in coming months. Kearny Hub reports:

“Mid-February typically is when gas prices begin to move higher in advance of summer’s increased demand, said AAA spokesman Gene LaDoucer of North Dakota. The switch to more expensive summer blends also is under way, he said. Fortunately, the pace of price hikes should slow.Experts expect this year’s national average to peak below $3.80 per gallon, well off 2012’s average high of $3.94, LaDoucer said.”

This prediction is in line with current patterns, as frequent drivers would be keen to notice. Southern California is one of the hardest hit areas of the country. There, prices have continues to rise for three straight weeks – with no indication of stopping. According to ABC News:

“According to figures from the AAA and Oil Price Information Service, the average price has increased 47.2 cents during the 22-day streak, the longest since a 27-day-long period of price increases from Feb. 7 to March 4.

The average price for a gallon of regular gas in the Los Angeles and Long Beach area is now $4.22 per gallon, which is up 53 cents since last month. In Orange County, drivers are paying $4.21 a gallon. In the Inland Empire, the average is $4.18. In Ventura County, the average hovered near $4.21.

Analysts say the increase is the result of low levels of production in Southern California due to refinery maintenance.”

While market forces are driving the current price increase, there is always the potential for unforeseen events to cause sudden spikes. All things considered, the ability to lock into today’s prices would be an enormous benefit to drivers and fleet managers alike.

Filed under:Fleet Managers,Fuel Price Trends,Gas price | by Eyes on Energy @ 6:43 pm | 

February 10, 2013

Frustration in Congress: Lawmakers Struggle Over Record Oil Profits

 

Americans are feeling the squeeze as prices at the pump continue to rise, further deepening the pockets of multinational oil companies. This has provoked the ire of some on Capitol Hill who feel these high fuel prices are slowing growth in their districts. Daniel Graeber of Oilprice.com notes:

“U.S. Rep. Ed Markey, ranking member of the House Natural Resources Committee, said he wanted lawmakers to repeal what he said amounted to a $7 billion tax break for energy companies.

‘I will soon be introducing legislation that will end Big Oil’s subsidies,’ he said in a statement. ‘As Congress works to address the numerous fiscal challenges facing our nation, it is time for Republicans in Congress to join me to end Big Oil’s subsidies, which is a common sense deficit reduction measure available right now.’

At the same time that BP was beating analyst’s expectations, motor group AAA said American consumers in February paid more for gasoline than what’s typical for this time of year. A decision by Hess Corp. to close a New Jersey refinery, followed by a fire that closed the Toledo refinery for PBF Energy, helped push gasoline prices higher in the United States. Crude oil prices above $100 per barrel, meanwhile, added to consumer woes.”

While lawmakers may squabble on the big issues, they are still far from coming to any sort of consensus over ways to bring fuel costs down for the average person. Plans for increased offshore drilling or new domestic pipelines face opposition both from Democrats in Congress and from President Obama. It is clear that for the time being, individuals and fleet owners alike will have to budget at the mercy of the market.

Filed under:Causes and Solutions,Fleet Managers,Fuel Budget,Fuel Cost Control,Gas price,Price Shocks | by Eyes on Energy @ 10:16 pm | 

June 27, 2012

Trend Change

 

For an extended period of time energy markets have had a declining forward curve in futures, although the trend showed seasonal fluctuation.

This is a condition called “backwardation.” It means that future prices are expected to be lower. It does not mean that potential buyers should wait, since the lower prices can be locked in at any time.

It is a mistake for consumers to focus on the current spot price of gasoline or oil. The forward curve is much more important.

The danger sign? This comes when the futures curve shifts from a declining pattern to one where prices show an increase in future months — Contango. This is happening now in Brent Crude, although we do not yet see it in other markets. Izabella Kaminska at FT Alphaville is all over this important story. Take a look at the chart of the forward curve in Brent.
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For fuel consumers this deserves close attention.

Filed under:Fleet Managers,Fuel cost,Fuel Price Trends | by OldProf @ 10:50 pm | 

May 28, 2012

Summer Driving Season

 

I saw a great article this weekend on the start of the summer driving season. AP Energy Writer Jonathan Fahey really nails it with this summary:

Our rants about gasoline and the oil industry may not always be based on facts, but one thing is undeniable: Americans are obsessed with the price of gasoline. More than any other good or service we buy.
In the language of economists, the price of gasoline is “salient.” That means it sticks in our brains. Here’s why:
We’re reminded of the price every time we pass a gas station and see those huge, numbered signs. We buy gas every week, unlike bills we pay monthly or a couple times a year. Milk is $4 a gallon, but we buy only one. When we fill up with gas, we spend $50 or more.
And the biggest frustration, which comes into focus as the numbers spin ever higher at the pump: There is no alternative.

The whole article is well worth reading.

It is an interesting time, with several factors in play:

1) Summer driving season has this on people’s minds;
2) Risk is still high;
3) Prices have eased.

This is a great time to think about locking in prices — if you have the ability to do so.