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January 30, 2013

Bank of America Reports Pop in Oil Prices

 

A Bank of America commodities memo from January 29 reports a jump in oil and gas prices, led primarily by RBOB Crude Oil.

“The oil complex, led by RBOB, ripped higher yesterday on news that Hess would be closing its Port Reading, NJ refinery by the end of February. RBOB prompt cracks rallied $2/bbl and Cal13 structure gained 5 cents/gallon when the news hit the wire. The closure takes 50-60k bbls/day of gasoline production out of Padd 1 going into the summer, with Girard Point already going into turnaround for 45 days on Wednesday. Though not a game changer, this exacerbates the already short supply situation in Padd 1, a region that typically cannot resupply itself during the summer. With demand performing decently well and production clearly on the seasonal down slope, the Padd 1 gasoline outlook is very strong. Heating was initially dragged higher on the news but was sold quickly, with cracks closing at previous lows and spreads nearly unchanged.

WTI and Brent followed RBOB as well, gaining 90c and 50c, respectively. However, crude too was unable to hold the gains, coming off $1.20-$1.30 from the highs as producers took advantage of the spike to sell flat price. Crude eventually rallied back to unchanged over the remainder of the session, settling up 56c in WTI and 20c in Brent. WTI Dec13/Dec14 continues to rally, widening by another 20c, its highest since September 2012.”

In doing so, the Bank of America highlights something that we at Pumps have been saying for a long time. Underlying supply issues in gas and oil markets continue to expose themselves whenever the smallest of price shocks occur. Even during what ought to be a cyclical period of relative decline, prices continue to shoot up at unpredictable intervals. What is predictable, however, is the need for protection against these events.

Filed under:Causes and Solutions,Fuel Cost Control,Fuel Price Hedging,Gas price,Hedging | by Eyes on Energy @ 9:48 pm | 

January 23, 2013

Refinery Issues Mounting in Midwest US & California

 

A new report by the American Automobile Association suggests that refinery failures could result in higher gas prices in much of the United States, despite the cyclical pressures that tend to keep prices down in the winter. According to Automotive Fleet Magazine:

“A glitch at a Chevron refinery in El Segundo, Calif., caused a temporary shutdown, the effect of which could be magnified due to other refineries in California shutting down due to either unplanned repairs or seasonal maintenance, according to AAA. In addition, an electrical fire at ConocoPhilipps’ Wood River refinery in Roxana, Ill., shut down production.”

While current gas prices still remain lower than they were near the end of December 2012, these supply shocks illustrate the potential of short term fluctuations to overpower cyclical market forces. It is times like these in which hedging fuel could provide the type of protection so sorely needed by fleet managers and individuals alike.

Filed under:Fuel Price Hedging,Fuel Price Trends,Gas price,Price Shocks | by Eyes on Energy @ 8:32 pm | 

June 26, 2012

New Gas Promo

 

Listen up, Loyal Readers,

I am paying 20 cents less than you are at Shell stations in my (Chicago) area. Hard work and research, you may ask? No. This one slapped me in the face. A new promotion popped up at my local grocery store. For every $50 I spend, I save 5 cents/gallon at participating gas stations.

Who knows how long this will last, but you know what? If you have a fleet of cars, trucks or buses that you have to fill up with gas, AND your drivers don’t have a loyal shopper card for my grocery store, you have an opportunity any time you want to take it.

You can hedge your fuel prices by contacting Gas-Lock.com.

Think gas prices are heading down for the long term? Seriously?

Oh hey, let me know about any other great gas deals you come across. Thanks!

Filed under:Fuel cost,Fuel Price Hedging,Gas price,Hedging | by Pump Girl @ 6:34 pm | 

June 7, 2012

Oil Prices Lower, Now How About the Pump?

 

Oil prices traded down to $85/ barrel on Wed. and that should be good news, but why doesn’t it translate to a much lower pump price?

The US has an amply supply of crude, but apparently we just can’t refine it fast enough to drive gas prices lower. The wicked old supply/demand curve again.

Oil futures traders love this stuff, though. They will be going long when it hits the magic $75/barrel mark

Filed under:Fuel cost,Fuel Cost Control,Fuel Price Hedging,Fuel Price Trends | by Pump Girl @ 4:41 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.