How Close Is $4-Per-Gallon Gasoline?
Would the price of crude oil have to rocket up $40 more per barrel for us to see $4-per-gallon gasoline? If you use the back-of-the-envelope calculation that the government's chief energy forecaster employed Monday to gauge how much more pain at the pump is headed our way, it would indeed take nearly $140-per-barrel crude oil to add a dollar to the pump price. But we may not have to wait that long.
Guy Caruso, head of the Energy Information Administration, used a simple barrels-to-gallons conversion for his rough calculations. He divided each dollar by 42, because that's how many gallons are in a barrel. That means a 2.38-cent increase (which, for simplicity, he rounds up to 2.5 cents) in the price of a gallon at the service station for every $1-per-barrel jump in world crude.
That led to Caruso's painful prediction that the pump price probably will increase by 20 cents per gallon in the next two or three weeks even if there is no further change in crude oil, because we have seen only a 30 cent run-up at the pump since September on a $20 jump in the crude oil price. (Multiply 20 dollars by 2.5 cents and you see the full pass-through would be 50 cents.)
But that same $20 jump could cause a much more dramatic gas price hike if it happens as refineries are switching over to cleaner-burning blends for warm weather, summer driving season is getting underway, and the industry's stocks are low. In fact, the gas price hit an all-time record last spring just on those factors, with very little change in the price of crude.
"He was just doing a simplistic pass-through of crude oil costs, but crude oil prices are not the only thing that leads to the price at the pump," says Jonathan Cogan, spokesman for EIA. "There are inventories, demand, all of those things come into play. A crude oil price increase in the fall and winter is different than one in the spring and summer." That's something to keep in mind if you're longing for warmer weather.
Tags: gas prices | oil | Energy Information Administration
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What to do?
Supply and demand does rule! The facts are that the rising gas prices have only got us thinking and not reacting. On any given day all across America you still see only one person per car, People racing for positions from stop lights as if qualifying for next weeks race, Disregarding speed limits and fast food drive-thrus backed up. We can make choices that lower our individual gasoline consumption, but it is going to take sacrifice! We have to dethrone ourselves from our chariots and commute with others via car pools or public transportation, allow others to pass us without feeling dishonored and the need for redemption!, drive under the posted speed limit not slightly over and get out of our vehichle and go into the establishment we choose to do our daily business with (Banking, Food, Pharmacy ...). All of these choices could be implemented immediately and would have a considerable impact on the supply and demand rule if we all participate. Now there will always be the business person or worker who thinks their schedule is too busy or complicated to car pool, the young person gunning their cars because they just don't get it, those who just can't break the speeding habit and those who legitimatly have difficulty getting in and out of their vehicle (Americans with Disabillities). We all need to do our part to set an example and be more understanding.
lowering gas prices, because we carry a full tank of gas in millions of cars.
My contention is that if we leave our 2 gallons of gas out of our tanks this week when filling up the tank, and 3 or more gallons next week or the next time you fill up,on continue to do so, the cride ships delivering the oil will back up ,and supply and demand will cut the cost of oil be supply and demand rules. I would think if we all join in and conserve a little also, we could watch prices go lower. Try it and see how it works spread the word to all you email friends, lets get 100,000,000 people not carry 5 gallons of gas in our tanks for 5 to 10 weeks, we don't suffer, the gas companies DO. If we could not buy a billion gallons of gas in 10 weeks, what do you think the price will do?????
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