Why is Gasolline Consumption Tanking?
- Thread starter UT1986
- Start date
That’s interesting.
Shouldn’t the addition of 10% Ethanol drive gas prices lower? A federal EPA mandate not passed by Congress was scary when it happened, but I at least figured it would cut US demand down by 10%. If consumption is down, I wonder why my gas prices haven’t come down.
I don't think the chart even accounts for the 10% decrease in demand based on our Government helping out corn farmers and Monsanto. The EPA head who passed the mandate was a former Monsanto executive.
Shouldn’t the addition of 10% Ethanol drive gas prices lower? A federal EPA mandate not passed by Congress was scary when it happened, but I at least figured it would cut US demand down by 10%. If consumption is down, I wonder why my gas prices haven’t come down.
I don't think the chart even accounts for the 10% decrease in demand based on our Government helping out corn farmers and Monsanto. The EPA head who passed the mandate was a former Monsanto executive.
Here's the likely scenario according to experts from an article posted in the Chronicle a couple of weeks ago: "The market got the jitters earlier this week over the threat of a strike that could close some refineries. Also, during the fall and winter, two refineries on the East Coast were shuttered, along with a major plant in the Virgin Islands and some smaller ones in Europe. That prompted fears that gasoline supplies could be hampered.
And traders and speculators, too, have jumped on the bandwagon and bid up gasoline futures.
On top of that, the raw material for gasoline - crude oil - is up 3 percent over the last month. Gasoline prices have been guided by the price of benchmark Brent crude. On Tuesday, Brent traded for almost $111 a barrel. In July 2008, it traded at a historic high of $145.91.
"If you look at a graph, as Brent kept going up, gasoline followed. That's the driver," said Brian Youngberg, senior energy analyst at brokerage Edward Jones in St. Louis."
The Link
...And an article from Yahoo.
"Gas prices will go up or down based on what happens with Iran, PFGBest analsyt Phil Flynn said. If the situation calms down, retail gas prices could fall from 25 cents to 50 cents a gallon. If the situation intensifies, prices could increase by the same amount.
"It's that much of a wild card," Flynn said. "I think it's a very volatile situation and I think we could go either way."
High gas prices have been affected in previous years by a stronger economy because consumers have more to spend on filling their tanks. Although the U.S. economy is improving slowly, Flynn said many consumers still have habits that they picked up during the recession — such as watching how much they spend on gas and finding ways to combine trips in the car.
The Energy Department said this week that crude supplies fell slightly last week but remain above the average level for this time of year. Gasoline supplies rose with demand for gasoline over the four weeks ended Jan. 13 about 6 percent lower than a year ago."
The Link
And traders and speculators, too, have jumped on the bandwagon and bid up gasoline futures.
On top of that, the raw material for gasoline - crude oil - is up 3 percent over the last month. Gasoline prices have been guided by the price of benchmark Brent crude. On Tuesday, Brent traded for almost $111 a barrel. In July 2008, it traded at a historic high of $145.91.
"If you look at a graph, as Brent kept going up, gasoline followed. That's the driver," said Brian Youngberg, senior energy analyst at brokerage Edward Jones in St. Louis."
The Link
...And an article from Yahoo.
"Gas prices will go up or down based on what happens with Iran, PFGBest analsyt Phil Flynn said. If the situation calms down, retail gas prices could fall from 25 cents to 50 cents a gallon. If the situation intensifies, prices could increase by the same amount.
"It's that much of a wild card," Flynn said. "I think it's a very volatile situation and I think we could go either way."
High gas prices have been affected in previous years by a stronger economy because consumers have more to spend on filling their tanks. Although the U.S. economy is improving slowly, Flynn said many consumers still have habits that they picked up during the recession — such as watching how much they spend on gas and finding ways to combine trips in the car.
The Energy Department said this week that crude supplies fell slightly last week but remain above the average level for this time of year. Gasoline supplies rose with demand for gasoline over the four weeks ended Jan. 13 about 6 percent lower than a year ago."
The Link
Thank you for posting this. Not to alter the topic- but this thread and its graphs demonstrate exactly the real concern I have- the very high prices of gasoline in a depressed demand environment suggest one major concern:
The markets do not believe supply can match or keep pace with this weakened demand. And yes, demand is growing if we were to show charts of the developing world- but the USA is not the only area experiencing depressed demand, less driving etc. Thus- when you only have two real factors that make a price (supply and demand)- it is the supply side that deserves attention.
People in the industry hate alarmists- ala Matt Simmons etc, but the market is telling the truth. The oil industry has severe supply concerns in the near future. No- it's not peak oil, it's peak easy, cheap oil. The remaining oil out there is more difficult and expensive to find, and the rate of procurement may barely keep pace with demand if at all.
And that's why I own some GLD and OIL in my portfolio!
The markets do not believe supply can match or keep pace with this weakened demand. And yes, demand is growing if we were to show charts of the developing world- but the USA is not the only area experiencing depressed demand, less driving etc. Thus- when you only have two real factors that make a price (supply and demand)- it is the supply side that deserves attention.
People in the industry hate alarmists- ala Matt Simmons etc, but the market is telling the truth. The oil industry has severe supply concerns in the near future. No- it's not peak oil, it's peak easy, cheap oil. The remaining oil out there is more difficult and expensive to find, and the rate of procurement may barely keep pace with demand if at all.
And that's why I own some GLD and OIL in my portfolio!
Two DFW radio shows for the past 3 years + have pretty much banged the pot on this subject & covered it in full.
570am Sat mornings in the 9-9:30 segment on Ed Wallace's show, he gives a brief 5-15 minute rundown on in-ground (accounted for) & offshore (unaccounted for) volumes, refinery closures and capacity %'s. He was far ahead of the pack in early 2008 on the subject & why prices were rising (NOT wholly supply and demand)
1080am Charley Jones, midnight Sunday night. Has a hick - sounding guy (fmr CFO) that is hard to listen to, but his projections and detailed explanations since 2008 have been spot on. Podcasts are on the KRLD 1080 website.
Ed Wallace = liberal lean
Charley & his CFO guest = conservative lean
suffer thru their political talk, dig out the factual content.
570am Sat mornings in the 9-9:30 segment on Ed Wallace's show, he gives a brief 5-15 minute rundown on in-ground (accounted for) & offshore (unaccounted for) volumes, refinery closures and capacity %'s. He was far ahead of the pack in early 2008 on the subject & why prices were rising (NOT wholly supply and demand)
1080am Charley Jones, midnight Sunday night. Has a hick - sounding guy (fmr CFO) that is hard to listen to, but his projections and detailed explanations since 2008 have been spot on. Podcasts are on the KRLD 1080 website.
Ed Wallace = liberal lean
Charley & his CFO guest = conservative lean
suffer thru their political talk, dig out the factual content.
Ag with kids
2,500+ Posts
Statalyzer
10,000+ Posts
My parents had an ethanol-burning minivan for a while and Dad kept track and the decline in gas mileage almost exact cancelled out the decline in the price. It was less than 1% difference in how much he was paying per mile either way.
And from what I've heard (although I haven't looked in this deeply), it's been a horrible experiment in terms of its main unintended result on fields outside of the narrow world of automobiles - higher food prices in developing nations. Lots of well-intentioned, good-sounding ideas are failures because not enough people thought beyond the overly simplistic picture of intended causes to figure out what the side effects might be, and it's highly possible that ethanol is one of them.
And from what I've heard (although I haven't looked in this deeply), it's been a horrible experiment in terms of its main unintended result on fields outside of the narrow world of automobiles - higher food prices in developing nations. Lots of well-intentioned, good-sounding ideas are failures because not enough people thought beyond the overly simplistic picture of intended causes to figure out what the side effects might be, and it's highly possible that ethanol is one of them.
It's important to clarify what type of ethanol- but yes, Corn based ethanol sucks.
Output per unit of energy from:
Corn 1:1
Sugar Beet 7:1
Algae Based 50:1
Unless you can grow sugar as they do in Brazil or limited parts of the US- algae is the real gold mine, and corn is the huge mistake. I would bet if Iowa weren't the first states Presidential candidates visit- corn based ethanol wouldn't have the mandates that it has.
Credit to Exxon for investing in an algae company, as well as a half dozen start ups in Silicon Valley for working on the algae side. I believe it will happen within a decade that we will have cost effective algae based fuel on a larger scale. It's just dumb to replace food with fuel.
Output per unit of energy from:
Corn 1:1
Sugar Beet 7:1
Algae Based 50:1
Unless you can grow sugar as they do in Brazil or limited parts of the US- algae is the real gold mine, and corn is the huge mistake. I would bet if Iowa weren't the first states Presidential candidates visit- corn based ethanol wouldn't have the mandates that it has.
Credit to Exxon for investing in an algae company, as well as a half dozen start ups in Silicon Valley for working on the algae side. I believe it will happen within a decade that we will have cost effective algae based fuel on a larger scale. It's just dumb to replace food with fuel.
HammerOfTheHorns
100+ Posts
Ethanol is nothing more than a corrupt quid pro quo payoff to Midwest politicians. It's a total scam and has been since day one.
Expect it to continue.
Expect it to continue.
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