Month: September 2008

You’re invited to TheGasGame.com’s first LIVE Q&A session!

That’s right- we’re inviting all of our preferred readers (those of you who keep coming back, and we appreciate you!) to join in and ask questions during our FIRST Q&A session here on Wednesday, October 1 (that’s THIS Wednesday) at 7:30pm EDT.

Be sure to have your questions written down so that you may ask them ahead of time. I will be attempting to answer all your questions you have as best I can regarding oil and gasoline prices. My crystal ball is a bit hazy, but I might even take some wild guesses as to where prices are headed too.

BE SURE TO JOIN IN THE FUN here on Wednesday night. ANYONE is welcome to join. I know we’re based in the Midwest, but EVERYONE is welcome to ask questions.

The Q&A will be held in the Chat Room (CLICK HERE) starting around 7:25pm EDT with questions starting shortly after. It will last as long as needs be, with the latest questions being posted around 8:30pm or so.

Feel free to join in at anytime! I look forward to helping everyone as best I can!

Patrick

Bring Down Those Prices! (continued from Sept. 15)

Comment on the September 15 prediction:  We haven’t had a price hike since then, and prices have been falling, albeit slowly.  Basically CORRECT.

Monday, September 29, 2008, 7:00 PM:  Two weeks ago, I wrote that NYMEX prices were starting to plummet, because Wall Street financial firms — many who have been involved in speculation in the energy markets — were falling apart.  This new dynamic continues today.  The bailout has been voted down, the Dow fell nearly 800 points, and NYMEX gas prices dropped 25 cents per gallon.  Although this could all be reversed tomorrow, if not, given the good news on the refinery front, wholesale prices should collapse this week.  Then, it is a matter of waiting for this collapse to work its way to retail prices, and we could see $2.99 a gallon in October.  Just a small benefit of a troubled economy.

Port Arthur refineries kicking it back into high gear

That’s right… Port Arthur’s major refineries have finally been restored power and all four of them have announced they are at the beginning stages of restarting their facilities. This is excellent news for everyone as these refiners mark the last facilities to come back online after Gustav and Ike battered the Gulf.

Prices nationwide should continue their fall, however, I’m still expecting another record low to occur this week in the DOE’s inventory numbers. We’ll likely see stockpiles of gasoline fall another 3+ million barrels while we should see a large gain in crude oil stockpiles. Imports of both crude and gasoline should have skyrocketed as ports re-open and tankers full of gasoline arrive at U.S. ports. We’re still seeing shortages in parts of the country, but those issues should resolve themselves in the next week or two as all facilities restart and electricity is restored to energy infrastructure.

In Grand Rapids, prices should continue their fall, we may get as low as $3.49, but be careful not to hang on to “E” too long…!

I filled up as a precaution, should you?

With prices falling (and rightfully so) to the $3.60’s (suburbs) and $3.70’s (GR area) and much lower in other parts of the state, is a hike likely anytime soon? It could be… chances are really 50/50, but I personally filled up just in case so I wouldn’t get caught losing too much money if prices came down. If any hike occurred, it wouldn’t be more than $3.79 or so.

Nationally, there are still major refineries without power and that are closed in Texas and Louisiana. Refineries operated at a record low 66.7% of capacity last week, as reported by the Department of Energy in its Weekly Report.

We’re hurting folks, but not as bad as those dealing with REAL GASOLINE shortages in Georgia, Tennessee, areas of the Carolinas, and the upper South. They are encountering major supply issues as refiners are slow to pickup the pieces.

Nationally, I expect prices to rise up-to a dime more before things calm down. I think realistically, we won’t be back to normal until mid-Winter. Supplies of gasoline in storage are at a record ALL TIME LOW dating back to 1969. Folks, this is pretty unprecedented.

Other news, TheGasGame.com will be making a splash onto Washington, D.C. airwaves as Ed was called for a radio interview! Cool! We are also looking to add another major source of information (this is huge and I’m quite excited about it). The source may provide inside information to the oil/gasoline industry and will fuel my curiosity to learn more, which will ultimately benefit our audience here.

Be sure to stay tuned to the REFINERY STATUS page as well. It will be updated as necessary or as new information becomes available. It is quite accurate at this time.

Patrick

Are Oil Prices Rigged?

You know that part of the intellectual basis for The Gas Game is to use energy prices on future markets to approximate wholesale prices and then try to predict what is going to happen to retail prices. Following the futures markets have always made me wonder if they are manipulated, or perhaps the better word is abused.  The abuse is that traders buy and sell futures contracts — paper gasoline — but have no interest in real gasoline.  When the contracts come due, they “roll them over” to another month, rather than deliver the gasoline or take delivery.  Some of this is OK with me — I’ve played the stock market a bit — but I’ve read articles that suggests that this speculation has distorted those markets.

A few weeks ago, I read this article in Time magazine that makes that case that it is quite possible that those markets are distorted, because there really isn’t a lot of money being exchanged on NYMEX.  Key quote:  “The point is, it would only take about $9 billion to control the entire long position in oil. That sounds like an enormous amount of money, but some of the major individual players in oil are bigger than the market itself: Sultan Hassanal Bolkiah Muizzaddin, of Brunei Shell Petroleum, is worth about $23 billion; Saudi Prince Alwaleed Bin Talal Alsaud is worth about $21 billion; Russian Vagit Alekperov of LUKoil is worth about $13 billion. No, we’re not implicating any of these guys in market rigging; in fact the list of billionaires with that kind of swag is long. The point is that anyone in that category could clearly handle the risks of the oil  futures market, and they might even be willing to take delivery on oil.”

Given that the U.S. government is throwing $700 billion around this weekend (and that’s a whole different story), $9 billion just seems like a rounding error.

Prices are lower all around us, what gives?!

Come on Grand Rapids! Hastings is $3.82, I was there last night. Lowell is $3.87, but Grand Rapids still isn’t any cheaper than $3.95! Honestly now… Lowell and Hastings stations aren’t much different than stations in Grand Rapids… they likely bought their fuel from the same rack as the stations from Hastings, but GR is STILL 15-cents higher per gallon! It’s been several days now and it seems no one wants to lower their prices, and average COST today is STILL $3.66! Prices have remained the same on the wholesale market, so come on! I’m not asking $3.66 overnight, but a penny lower every day!? This gets frustrating in times like this. Stations on average are making a margin of 34.6-cents per gallon. That’s a nice chunk there… and like I said, I’m NOT asking stations to make no money… but someone STEP UP and bring prices down. I think that if there one station or a chain of stations that would be consistently the first one to make bold steps lower how much positive publicity they could get from TheGasGame… but hey, that’s probably not enough, is it?

IKE UPDATE: Hurricane Ike is gone, but refineries are still closed, the worst off was likely Shell’s Deer Park, TX refinery that fell victim to a lot of rain. Damage is still minimal, but there are some light repairs necessary. STAY TUNED to the Refinery Status page to check on how restoration is going. ExxonMobil also reported water damage to its Beaumont, TX refinery. In the mean time, the massive 567,000bpd Baytown refinery is continuing to make progress towards a restart. Marathon had also said that their 76,000bpd refinery had been restored electrical power.

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