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May 22, 2013

Minnesota Senator Blames DoE for High Prices

 

Minnesota Senator Al Franken, whose state has suffered from record gas prices in the run up to Memorial Day weekend, has placed the blame for this spike in part on the Department of Energy. Senator Franken argues that the DoE’s decision to stop publishing refinery maintenance reports made it impossible to coordinate scheduled shutdowns in a way that would minimally disrupt prices at the pump. The Duluth News Tribune writes:

“The reports, authorized under the 2007 Energy Independence and Security Act, were intended to help oil companies avoid shutting down multiple refineries in the same region of the country at the same time. The department stopped publishing the reports and collecting data from refineries in 2011, citing a reduction in funding, Franken said.

Franken, D-Minn., challenged Adam Sieminski, head of the Energy Information Administration, about the issue in a hearing Tuesday after Sieminski acknowledged that simultaneous refinery shutdowns were contributing to the price spikes.

‘Gas prices in Minnesota have gone up in a startling way,’Franken said. ‘And the spike is related to multiple refinery outages in the Midwest.’”

Meanwhile, there is little relief in sight for consumers in the Midwest. The following chart from Cars.com illustrates exactly how much these refinery shutdowns have wreaked havoc on prices over the last week alone.

With the Memorial Day weekend fast approaching, all too many drivers will likely continue to feel the pain of high prices for the foreseeable future.

Filed under:Gas price,Price Shocks | by Eyes on Energy @ 12:34 pm | 

May 20, 2013

Continued High Prices Result in Varied Responses

 

As much of the Midwest suffers from the persistent high prices caused by several refinery shutdowns earlier in the month, lawmakers and motorists alike have adopted a variety of ways to cope.

In Minnesota, where prices recently rocketed to all time highs, state legislators have taken it upon themselves to prevent future outbreaks. According to ABC News in Minneapolis-St. Paul:

“The uptick prompted Senator Amy Klobuchar (D-MN) to send a letter to Secretary of Energy Steven Chu on Thursday urging him to examine the timing of the closures.

Sen. Al Franken (D-MN), who introduced legislation last year to eliminate excessive oil speculation that drives up gas prices, released a statement saying he’s working with the Department of Energy to explore ways to avoid multiple closures like this in the future.”

However, motorists are simply trying to go about enjoying their Memorial Day vacation plans. In Sioux Falls, South Dakota, local news sources report:

Cross-country traveler John Pietkiewicz said ‘You’ve got to pay [the higher prices]. You think more in terms of I’m glad that I have a vehicle that’s relatively fuel efficient.’

Marilyn Buskohl, AAA said: ‘I don’t really foresee that it will really affect travel. I really think that people are people are unfortunately having to get used to the high prices and I think they just somehow make it work.’

And some travelers agree, they are not going to let the increase in prices stop them from keeping their vacation plans intact.”

With no end in sight to these still increasing prices, it is certain that consumers and fleet managers alike are feeling the summer squeeze.

Filed under:Gas price,Price Shocks | by Eyes on Energy @ 4:25 pm | 

May 17, 2013

Midwest Gas Prices Continue to Spike Due to Refinery Malfunctions

 

States in the upper midwest are feeling extra pain this week as mounting refinery malfunctions drive prices at the pump to record highs. Aside from the two Chicago-area breakdowns that were responsible for trouble earlier in the week, problems at refineries in Kansas and Oklahoma also served to exacerbate the situation. According to the USA Today:

“Gas prices in Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, Ohio, Oklahoma and Wisconsin have spiked up to 40 cents a gallon the past week alone…

While the USA may be dripping in new found crude oil deposits and early May supplies were at their highest levels since the early 1930s, issues at a handful of refineries that turn crude into gasoline and diesel fuel underscore how kinks in the supply chain can cause quick surges in what consumers pay at the pump.

In Minnesota, regular, unleaded gas averaged $4.15 a gallon heading into the weekend — an all-time state record. With some Twin Cities outlets now selling gas for more than $4.50 a gallon, making Minnesota the priciest state for gasoline in the continental U.S., overtaking California, which now averages $4.06 a gallon. In oil-rich North Dakota, prices average $3.98, also a record-high.

‘It’s amazing what problems refinery issues can cause,’ says Patrick DeHaan, senior analyst for price tracker gasbuddy.com. ‘If another refinery went down, all hell would break loose.’”

As Americans prepare to hit the road once again for the summer driving season, it appears as though there will be no relief for the immediate future. The Wall Street Journal reports:

“Rising crude-oil prices and tight supplies are among the factors that have recently pushed prices higher at the pump, according to AAA’s Daily Fuel Gauge Report. For 73 consecutive days the national average has been lower than it was on the same day a year ago…

The recent trend toward higher prices has affected most states, with only West Virginia and Ohio posting lower prices now than a week ago.  Prices in six states; Oregon, Minnesota, Washington, Oklahoma Nebraska and Iowa) have jumped by more than 20 cents, AAA said.”

This is yet another telling example of the power seemingly insignificant price shocks can have over large parts of the country. As more refineries switch away from their winter mix, more delays and malfunctions remain a definite possibility.

Filed under:Fuel Price Trends,Price Shocks | by Eyes on Energy @ 5:28 pm | 

May 16, 2013

Falling Gas Prices Lead to Deflation

 

The most recent reporting of the Consumer Price Index found an unexpected drop in inflation – almost entirely attributable to the degree to which gas prices have fallen in recent months. CNN Money reports:

“The Consumer Price Index, a key measure of inflation, fell 0.4% in April, according to the Labor Department. Compared to a year earlier, prices are up only 1.1%, a level of inflation that’s considered rather low.

Falling gas prices were the main driver for the broader decline for the second month in a row, the Labor Department noted.

The average price for a gallon of unleaded gas fell by about 13 cents in April, ending the month at $3.51, according to AAA.”

However, this trend may represent some other issues in economic stability. According to the USA Today:

‘Subdued demand means that core inflation is likely to edge lower, as retailers will be forced to pass previous falls in raw material costs onto customers,’ Paul Dales, an economist at Capital Economics, said in a note to clients. ‘The Fed may soon put more emphasis on fading inflation trends.’

As evidenced by the sustained, region-wide rise in prices through much of the Northern Midwest, these overall trends are often bucked by short term price shocks. It is unwise for fleet managers and consumers alike to take lower current prices as an indication of future costs.

Filed under:Fuel Price Trends,Gas price,Price Shocks | by Eyes on Energy @ 5:20 pm | 

May 15, 2013

Illinois Refinery Shutdowns Boost Minnesota Prices

 

According to the regional American Automobile Association, the extended inactivity of two Chicago-area refineries is wreaking havoc on gas prices two states over. According to Minnesota Public radio:

“Gail Weinholzer, the director of public affairs for AAA Minnesota-Iowa, said due to the inoperative refineries, gas prices in the upper Midwest/Great Lakes region are spiking. She notes that the average price in Minnesota was $3.85 a gallon Wednesday morning, well above the national average of $3.59 a gallon.

‘We do not expect there to be any relief for the Upper Midwest/Great Lakes region until probably late June to early July,’ said Weinholzer.

Weinholzer said many stations in Minnesota are reporting prices over $4, including some in the Twin Cities charging $4.19 a gallon.

Unfortunately, there appears to be no hope for relief in the very near future. The Star Tribune elaborates on the depth and breadth of the problem:

…the high gas prices will remain with us for a while, possibly through the July Fourth holiday. Weinholzer [of AAA Minnesota] said reduced capacity due to the closures of two large refineries in the Chicago area is the main culprit in driving the prices up.

The two refineries, which supply much of the gas supply for the Upper Midwest, are offline and might not resume operations before Memorial Day, she said. Even then, there might not be any relief.

‘Restarting a refinery is not like flipping an electrical switch,’ she said. ‘It takes time to ramp up, and other issues, glitches can occur.’

Sudden price shocks like this serve as a persistent reminder to consumers and fleet managers everywhere. Although trends predict lower prices nationally through the summer, these common refinery problems can often cause large and unexpected fluctuations in prices all over a given region.

Filed under:Fuel Cost Control,Fuel Price Trends,Price Shocks | by Eyes on Energy @ 6:07 pm |