Archive for the ‘Gas’ Category

Did you hear that for the first time in a Miley Cyrus (that’s 16 years for those of you who don’t know), U.S. consumption of gasoline has DECREASED??!!?! What is happening to us? I feel a swell of pride like when I sold Humani-Tees in 6th grade. I am making a difference. February to the beginning of March, we dropped 1.1%, according to government data. Well done, us.

Oddly, though, as the Wall Street Journal reported:

As supplies have outstripped demand, gasoline inventories have been on the rise for the past four months, reaching their highest levels since February 1994. Yet, in a sign of the growing disconnect between demand and the market, prices at the pump are being driven higher by a powerful rally in crude oil.

Oil, the most important economic factor in the world, is no longer constrained by free market expectations!

For serious though, if there’s one thing I understand, it’s a rally to make money. Whether it’s cheerleaders washing cars or drama geeks selling muffins, rallies and money making go hand in hand.

What time is it? Oh, it’s COOKIE TIME.

For serious serious though, what the fuck does a powerful rally in crude oil actually mean? Does it mean that the people in charge of the oil supplies are working with each other to set prices at artificially (according to the market) high levels? I really don’t know.

Investors piling money into commodities as a refuge from inflation have helped push oil prices close to their inflation-adjusted record of $103.76 a barrel, set in 1980. On Thursday, oil closed at $102.59 a barrel on the New York Mercantile Exchange, a new high in nominal terms, but slipped back 75 cents on Friday to settle at $101.84 a barrel.

Oh. Huh. I take that to mean that as the U.S. goes into a recession, rich people want to protect their assets from the loss of the dollar’s power by putting it into commodities… less liquid, but more solvent, right? Am I right, Prof. Economectrix?

As refiners pay more for the oil they use, gasoline prices have gained sharply in recent weeks to an average of $3.13 a gallon in the week ended Feb. 25, up 40% from $2.24 a gallon in January 2007. That’s stoking worries that prices will rise even more sharply as demand gets a boost from the approaching vacation season, when more Americans take to the road. Some experts predict gasoline could cost as much as $4 a gallon this summer.

If oil prices pull gasoline higher in the current economic climate, Americans are likely to pare back consumption even more, which should help at least damp the rise in prices as refiners build up a safety margin against fears of supply disruptions, experts say.

So in the first paragraph they say that because we all like to take road trips in the summer, our increased demand could drive up the gas prices even MORE. But then in the next para they say that this rise will drive usage down. Even though, as they noted earlier, the oil market is not following the prescribed free market prediction of high supply equalling lower prices. I guess the rules only work in the cases where it means that the oil companies (suppliers? refiners? help me out, Prof.) make more money. Balls!

Economists and policy makers have puzzled for years over what it would take to curb Americans’ ravenous appetite for fossil fuels. Now they appear to be getting an answer: sustained pain.

It’s funny, because this strategy works for teenage girls, too. Zing, anorexia!

 So what does this mean in terms of our context in the world?

“If you think about the fact that U.S. motorists are responsible for one out of nine barrels of oil consumed in the world…and that consumption is no longer growing the way it used to, that’s a major structural change in the market,” says Adam Robinson, analyst with Lehman Brothers.


The longer gasoline prices remain high, the greater the potential consumer response. A 10% rise in gasoline prices reduces consumption by just 0.6% in the short term, but it can cut demand by about 4% if sustained over 15 or so years, according to studies compiled by the Congressional Budget Office.

There’s that sustained pain they were talking about.

As consumers make major spending decisions, such as where to live and what kind of vehicle to drive, they are beginning to factor in the cost of fuel. Some are choosing smaller cars or hybrids, or are moving closer to their jobs to cut down on driving. Those changes effectively lock in lower gasoline consumption rates for the future, regardless of the state of the economy or the level of gasoline prices.

Anne Heedt, of Clovis, Calif., has been moving toward a more fuel-efficient lifestyle for the past few years. She owns a Toyota Prius hybrid but takes her bike on errands when weather permits.

“We’re not always going to have the same accessibility to gasoline that we’ve had in past decades, so we do have to start thinking about what we’re going to do over the next 50 years,” said the 31-year-old Ms. Heedt, who used to work at a medical office but is between jobs.

Goddamn hippies. The Wall Street Journal wants us all to move to communes and live off the land! Sick.


A weaker economy gets some of the credit for lessening demand. The EIA estimates that a 1% reduction in personal income cuts gasoline demand by 0.5% as consumers, along with truckers who deliver goods, cut back on driving, says Laurie Falter, an oil-industry economist at the agency.

So by not giving you your due raise this year, your employers are actually doing their part to save the environment! They know that the less you get paid, the less gasoline you’ll use.

Keep getting poorer, keep not buying gas! There’s a sunny side to every recession.

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