UPDATE 4:50pm EDT: LOOP (Louisiana OffShore Oil Port) has been closed. Gustav is forecast to hit it directly. Any damage to LOOP would be catastrophic to the county and could raise oil prices $10 or more per barrel. This port provides over 1-million barrels of oil per DAY to the United States (via Middle East ships)
The wholesale market opened at 2:30pm EDT, as it always does Sunday afternoons for overseas trading. Gasoline has taken a large jump higher, currently holding at a 10-cent gain. Crude oil is up a marginal $2.50/bbl at this hour as well.
When Katrina hit, wholesale gasoline prices had easily seen swings of 50+cents/gallon. Today, SO FAR, its just 10-cents. Hopefully it will stay there.
I just crunched the numbers- with 2.2mb of refinery utilization shut (as of 3pm Sunday), the *remaining* refiners must ALL boost their utilization to 99.5% to cover for the refineries that have shut. That seems unlikely, but it IS possible. This should LIMIT any large hike in wholesale prices.
Keep an eye here today as I continue to monitor Gustav and refinery, rig, and industry news that could cause a prices to rise to over $4/gal again.
Currently, I would plan on filling up TONIGHT for $3.75 or less if possible, and brace for a price hike pending what happens on the market.
If we see a hike, it could be to $3.89, but again, that depends on the next few hours.
This situation reminds me of the night before Katrina hit and I filled up the night before prices took a huge jump. That COULD happen again. If you hear rumors, be sure to check here or feel free to comment and let us know what you’ve heard.
Note: I decided I had better take a quick break from vacation. I was away hiking in Yellowstone, please forgive me for not posting.
When my phone got service yesterday, I had received numerous voice-mails informing me that a Hurricane “Gustav” had formed and could be effecting gas prices. Unfortunately I’ve been out of the loop- until now.
Gustav looks like it will be a dangerous category three or four when it hits Louisiana later this week. What’s this going to do to gas prices? Well, for the time being, the market is calm. One must realize that after Katrina, refineries and rigs have been much improved when it comes to large hurricanes. Also, refiners haven’t been producing as much gasoline as before Katrina.
With refinery utilization continuing to be much below 90%, any negative impact on Gulf refiners could be offset by all other refiners raising their utilization to 95%+. When Katrina hit in 2005, refinery utilization had been at 97.1%. With utilization THAT high and Katrina flooding refiners, there was no way that other refiners could up their production much. Last week, utilization was a measly 87.3%. Any capacity that goes offline could be offset by other refiners raising production runs.
Also, those refiners in the Gulf area have poured money into making their rigs and refineries better prepared for massive hurricanes. They didn’t just repair their facilities… they made them better.
The market may jump to its senses, but if we don’t see more than a 10-cent gain, you’ll see traders viewing that as a weakness in the market. We’re also helped by a continued gain in the U.S. dollar against the Euro.
It’ll be interesting to see what oil and gas does when trading opens Sunday.
I would definitely stay tuned here… I’ll be home early this week with more information as I receive it. We could see prices rise, but things are calm… for now! I see prices in GR falling to $3.70. Prices may continue their fall until Gustav gets closer to making landfall.
Monday, August 25, 2008, 2:00 PM: Wholesale prices spiked up last Thursday, and we got the price hike last Friday to $3.89. Then, on Friday, wholesale prices dropped a lot, and … prices didn’t drop very much, yet. There are prices below $3.80 scattered about, and I predict over the next few days, you’ll see prices falling significantly, so hold on to fill up.
Has anyone noticed how some of Speedway’s newly remodeled facilities are already showing signs of rust, neglect, and filth?
Before filling up on my way out of town on vacation, I stopped by the Speedway at 28th St. and Byron Center to find the pumps looking filthy dirty. I happened to look up and see the massive poles that hold up the overhang showing tons of surface rust. Eew! This station had just been remodeled a few years ago, why is it looking filthy, beat up, and neglected?
Anyway, I quick filled my tank and left. Has anyone noticed stations in fair or poor condition that you’ve avoided? Are there stations that are well kept that you frequent?
Let us know by leaving a comment. We might even use your information in a future post!
Also, prices did hike in Grand Rapids from what I can see, but with the wholesale market down 17-cents yesterday, I can’t see it lasting very long.
Wednesday, August 20, 2008, 4:30 PM: AXXIS prices have gone down 12 cents since the last price hike, but NYMEX prices have gone up. I suspect that, all-in-all, wholesale prices are down a bit (particularly given my silly August formula from my last posting), but at the same time there are a lot $3.78’s around, which may be getting close to the 0-cent margin price. So, it seems like 50/50 again about a price hike tomorrow or Friday, so I’m again going to bail on making a prediction. If you see gas for more than $3.84, though, keep driving, possibly to Wyoming or Lowell.
Ouch! What a terrible DOE report today, looks like large losses in gasoline stockpiles is becoming the norm. I’ll keep this short today so that I can enjoy just a little bit of vacation.
The DOE report as said was pretty rough for gasoline consumers. While oil inventories rose an amazing 9.6 million barrels, gasoline dropped by 2/3 that amount, falling under 200million barrels for the first time in recent memory. Midwest PADD lost a marginal 1 million barrels, which could have been worse, but look for wholesale prices to trade higher today. It may also lead to a price hike as the Grand Rapids area has nearly stalled on additional price drops.
Gasoline demand is also coming off its weakest numbers, demand seems to be making a comeback as prices fall under $3.
I’d look for a price hike to $3.89-$3.95 soon, but keep in mind how difficult price prediction seems to be this August.
If you can get gas under $3.80, I would strongly suggest you do so today.