Posted By RichC on July 18, 2008
Now that wholesale prices for refined fuels are retreating a bit from their speculator driven lofty levels, I’ve been asked by a few people when this change is going to be felt at the retail level? My best guess would be soon … but then I’m wrong more than I’m right these days.
Gasbuddy.com reports: unleaded regular $3.85; diesel $4.59
A CinciTDI friend — Blair — who I’ve quoted before, has a way of making a few political observations while offering up some wisdom from from the inside (he’s in the oil industry):
“Wholesale prices have fallen 26.5 cents a gallon total over two days since Bush said he wants to drill and lifted the Presidential moratorium on off shore drilling. All this before the approximate one year, before we would even see the first drop of crude from areas with existing infrastructure â€“ such as the gulf coast.”
If you’re a tree huggers and want to starve more people to death in third world countries with higher crop prices to pursue biodiesel, don’t worry. Nancy Pelosi ( head of our new Congress) is standing firm and says drilling for oil won’t solve the problem immediately and without Congress and that Congressional rubber stamp, we wonâ€™t be drilling off our shores anytime soon â€“ even though Russia, China, Spain and Canada are out there drilling now. Iâ€™m guessing Nancy thinks the Chinese drill cleaner or are greener than us â€“ who knew? For those of you who have kids, take a hint from Nancy – donâ€™t send them to college either â€“ since that investment takes 4 years. This applies more if you kid gets into a medical school since that process takes up to 8 years for and end result. Just keep the money and send you kids out the door with zero education and if you doubt me, look how far it got Nancy. Obama is backing up Nancy P too and he has a Harvard Pedigree – â€œ drilling won’t get us more oil.
My wife is headed towards the grocery store tonight. She always asks if there is anything I can think of. The milk I splash into my coffee everyday is extremely low, but Iâ€™m going to take the advise of the guy from Harvard and tell her getting more milk wonâ€™t solve the problem. I’m glad Nancy or Mrs. Obama do not do my grocery shopping and Iâ€™m willing to take bets that my better half ignores the Harvard intellectual’s advice and comes back with more milk. What I have learned is the smart guys from Harvard must take their coffee bitter black.
Not everyone appreciates Blair’s sarcastic humor, but his ‘generally longwinded emails’ are enjoyable to read. I’ll include a bit more thought on the petroleum diesel side of the question — when will lower wholesale prices for diesel be felt at the pump:
Global Diesel Tightness Should Ease in Early 09
The â€tightnessâ€ in global diesel supplies may ease early next year after peak winter demand in the northern hemisphere passes and new refineries start, the International Energy Agency said today.
â€Both crude and middle distillate markets may see some respite in the second half of 2008, but more likely by early next year,â€ the IEA said in its monthly Oil Market Report. â€Supplies should increase over the second half of the year and into 2009 as new refining capacity comes on stream in both China and India.â€
Strong summer demand from China, stockpiling before winter, new European specifications for lower-sulfur fuel and potential refinery start-up irregularities after maintenance stops will probably support prices until then, the IEA said.
Record fuel prices have led to protests across Europe by truckers, taxi drivers and fishermen. Diesel prices have risen 47 percent so far this year in Europe and gasoline gained 28 percent. Diesel for delivery in the Antwerp-Rotterdam-Amsterdam area reached a record $1,338 a metric ton on July 3, according to data compiled by Bloomberg.
Natural gas shortages in Australia, Argentina, Chile, and South Africa have resulted in a surge in demand for diesel to help ensure power supplies, the IEA said. Apache, provider of a third of Western Australiaâ€™s natural gas, is expecting to resume full output by the end of the year after a June 3 pipeline explosion. Mining companies in the area have switched to diesel from gas after the explosion.
Refining margins, or the profit from turning oil into fuels, continue to suffer because of lower gasoline demand, the IEA said.
Refiners in the Mediterranean and northwestern Europe who use Russiaâ€™s Urals blend of crude in their plants were the worst hit, losing $7 a barrel, the IEA said. This has led to economic run cuts at ConocoPhillipsâ€™ Wilhelmshaven refinery in Germany and Hellenic Petroleum SAâ€™s Elefsis plant in Greece, it said.
Supplies of jet fuel and gasoil, Europeâ€™s equivalent of heating oil, may fall short of rising demand as air travel increases in the summer months.