Tag Archives: diesel

Business/Economics, Idaho, U.S.

Occupy America Corporate Rip Off: Gas prices in Idaho go up despite most of the U.S. seeing prices go down, blame decreased production

September 19, gas prices in Idaho are about 70 cents above the national average.  One local TV station tried to give the usual explanation by saying it’s a mix of regional demand and state taxes.  FAIL!

I just checked on demand, and according to the latest numbers from the U.S. Energy Information Administration, demand for gasoline across the country is still below last year’s numbers.  On August 26, 2011, the four week average demand for gasoline was at 9.169 million barrels per day.  Compare that to the four week average of a year ago at 9.261 million barrels.  So there is a slight decrease in demand.

Regarding fuel taxes; there has been no increase in Idaho fuel taxes since 1996!

What is happening is that production of fuels has been dropping.  In other words, production is falling faster than demand, and that has the same effect as demand going up; prices go up (when there is less of something, in relation to demand, it becomes more valuable).

According to U.S. Energy Information Administration, PADD 4 gasoline production is down from last year. PADD 4 includes Colorado, Idaho, Montana, Utah and Wyoming.  The four week average for “finished gas” production, for August 2011 was 0.273 million barrels per day.  Compared to last year’s production of 0.296.

In other words, fuel producers are deliberately keeping production just under ‘demand’ in order to keep prices high.

Business/Economics, U.S.

What Economic Recovery? Diesel Fuel usage new Canary in the Coal Mine, Recovery is Dead

“I was optimistic we’d have a better month, but it looks now like the recovery ended last summer, which means we’re just idling.”-Ed Leamer, University California Los Angeles economist

If you use diesel fuel you might have noticed that the price has been slowly going down.  That’s good for those of use who pay at the pump, but for the economy as a whole it’s a Canary in the Coal Mine of worse to come for our economy.

Diesel fuel prices are dropping because of a huge drop in demand.  That drop has been ongoing since last year, and in the past four months has been picking up speed.

Most users of diesel are transportation industries.  They ship products all over the country, but shipments of new products have dropped so much in eight of the past 12 months, that trucks, ships and aircraft are sitting idle.

According to the Ceridian-UCLA Pulse of Commerce Index, the drop in diesel fuel demand is proof any economic recovery that might have been, is over.

Ed Leamer says the two main reasons demand is down: Low wages/lack of jobs and high debt.  Notice they’re the two things our elected officials, across the board from local leaders to the White House, can’t seem to deal with.

Leamer also says such a drop in demand, in the U.S., is a first in world history: “U.S. demand has been such a key for the rest of the world for so long. This is sort of uncharted territory.”

 

 

Business/Economics, Opinion, U.S.

Occupy America: Why are Diesel fuel prices so high? Diesel commodity futures trading less than Gas, even with low sulfur refining

Read my November 20, and November 5, 2011, postings about current diesel prices.  It’s bad news, it explains why prices are only going up, and how fracking of natural gas is really for fuel production.

May 3, Diesel fuel prices are higher than gas, at the pump.

In Idaho, as of May 3, most gas stations are selling Diesel for about $4.15 per gallon.  The highest is $4.50 near Mountain Home.  That’s way higher than gas.  Most gas stations are selling gasoline around $3.65 per gallon, with the highest at $4.00 near Hailey, Idaho.

Yet Diesel futures are selling for less than gas futures on the commodities market.   As of May 2, gas futures, for June delivery, were at $3.34 per gallon.  Compare that to Diesel NY at $3.29, and Diesel Gulf at $3.31 per gallon.

So why is Diesel so much higher at the pump?

Many websites say it’s because Diesel must be refined to low sulfur standards.  That doesn’t explain the higher price at the pump!  The commodity prices paid are for already refined Diesel, so the claim that low sulfur refining is the cause doesn’t work.

Some people say it’s because Diesel is actually in higher demand than gasoline, due to industry (like trucking & airlines, “jet” fuel is actually a form of Diesel/Kerosene) and the military (possibly the biggest user of Diesel, thank the War on Terror).  That might be, but normally the commodity price reflects anticipated demand.

Some journalists have asked oil executives about fuel costs, but oil executives can only talk about the price of refined fuels sold on the commodities market, not at the pump.

What about taxes?  It turns out that taxes for Diesel are more than taxes for gasoline.  In Idaho the average (January 2011) pump tax (combined state/federal) for Diesel is 49.4 cents per gallon.  For gas, in Idaho, it’s 43.4 cents.  That’s only a 6 cents per gallon difference, so that doesn’t explain the 50 cent per gallon difference in the pump price of Diesel vs gasoline ($4.15 for Diesel minus $3.65 for gas).

By the way, California has the highest tax rates in the country for Diesel at 76 cents per gallon, and gas at 66.1 cents.  That’s because California has higher local and state taxes on top of the federal taxes.

So, the only conclusion I can come up with is that Diesel fuel prices, at the pump, are higher than gasoline due to higher taxes for Diesel, and maybe  higher demand for Diesel (again that’s usually what drives commodity prices, before it gets to the pump).  Maybe gas stations are trying to make up for their extremely slim profit margins on gas prices by jacking up the more stable Diesel prices?



Business/Economics, U.S.

Think gas is high now, wait ’till May. Or: How you can predict next month’s gas prices

Unleaded gasoline is traded on the commodity market.  That’s the price you need to watch.  Oil prices only affect gas prices indirectly.  Yes, as oil prices go up so will eventually gas prices, but for a direct cause watch refined unleaded gas prices (if you use Diesel watch Diesel futures prices).

Oil and gas are traded in the commodities markets as “futures”.  That because they are being bought in advance.  Example: Today’s unleaded gas “futures”, being sold in the commodities market, is for May “deliveries”.  So today’s “market” price of gas is actually for gas that will be sold at gas stations in the month of May.

What is today’s market price for gas? As of April 20, the closing price was $3.25 per gallon.  That price is not paid for by the gas station you get your gas from (and evil “speculators” looking to make fast profits).  It’s the price paid by the companies who supply it to the gas stations.  Of course they need to make a profit, so they’re going to charge the gas stations more.  This is why gas station owners, especially the independents, says they make only a few cents profit on every gallon.

Now, to explain how you can predict next month’s gas prices.

On April 18, the average “retail” price of gas at the pump, in the United States, was $3.84.   The April “futures” price was, on March 21, $2.98 per gallon.  That’s almost a full dollar difference.  You can see that’s not much of a profit split between the gas stations, and the gas suppliers.  But you can also predict how much we’re going to be paying in May.  It’s not good.

Current May “futures” are around $3.25 per gallon.  Add about a dollar for profit and you can see that average “retail” price at the pump, in May, is going to be around $4.25.  Ain’t no trick to it, just stop paying attention to the stock markets, and start paying attention to commodity markets.  What ever is the “future” price of gas that day, just add about a dollar to it to estimate what you’ll be paying at the pump in the next month.  This also applies to Diesel prices.  Also, if you live in the evil state of California, your prices are going to be much higher, due to federal, outrageous state, and even outrageous local gas taxes.  You might as well add at least two dollars onto the commodity market price of gas.

Fukushima

Diesel powered Locomotives brought back to life after Japan Disaster, Low Tech saving High Tech!

The recent catastrophic disaster in Japan, which tore up many rail lines in northern Honshu, has brought back to life retired diesel powered locomotives.

That’s because, even on the rail lines that have been fixed, there is no electric power to run Japan’s modern electric trains. Electric power is going to be an issue for long time, because of the failed Fukushima Daiichi nuclear power plant.

Rail officials must be glad they didn’t get rid of their old diesel powered locomotives.  About a dozen 40 plus year old engines have been brought out of retirement.

A relatively short rail line, from the west coast of Honshu, to the eastern prefectures, has been restored. The diesel engines have started running, bringing diesel fuel, and other supplies, to help people in those areas.

One of the engineers was around when they retired the diesel locomotives, and he’s glad they’re back.  Low tech to the rescue of a high tech society.