Tag: refineries

Speedway States prepare for more price hikes!

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That’s right, I expect another good jump in gas prices, as soon as tomorrow (Friday) in many Speedway States. Speedway did not raise as high as anticipated resulting in a higher risk of a price hike sooner, and the wholesale market was up a large amount today.

Wholesale spot prices from Chicago rose 13-cents today and close at $1.35/gallon, nearly a 40-cent rise since Monday! Prices have risen about 15-cents today, but stations are going to be very eager NOT to lose money and will likely be forced to make a larger second hike. In my opinion, Speedway is probably upset that they only raised prices to $1.85 when they really could have gone higher. Now they might be forced to deal with negative PR with two price hikes. Will they hold out to Monday to avoid some negativity? Its happened before, but as you can see, they’re still losing a LOT of money per gallon with their small 15-cent hike. Prices at Speedway would need to jump to $2.05 to equal the same price on the wholesale market tonight.

We may see Speedway attempt to raise to $2.05 in a very odd fashion, or you may see small stations attempt to rise first with a very disorganized Speedway hike- I’m not sure how it will happen, but I am led to believe it WILL happen and SOON!

Diesel prices around the Midwest should be dropping below gasoline prices in many areas as well. Refiners have already begun to boost gasoline production but it looks like with stronger than average demand, prices will continue to advance higher.

There also continues to be small refinery disruptions nationwide tonight with multiple refineries in Louisiana having issues.

There is also belief that since Oil has broken the 50-day moving average, we are in the beginning stages of a rally in oil prices, which would mean my opinion that we have “rounded the corner” (Spring run up in prices) was correct, but we’ll need to wait and see.

One thing is for sure, if you delayed or forgot to fill up, it is still better to fill up at $1.85 than $2+.

Speedway States prepare for higher prices!

Follow-up on likely gas price hike… “triple whammy”

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As I said earlier today, gasoline prices are likely to jump across all Speedway States as soon as tomorrow to $1.99 or even higher.

I’ll follow up and let you know what’s going on.

As you may know, Midwest prices have been seen as low as $1.59, much lower than the national average today of $1.891 according to AAA’s Fuel Gauge Report. A large reason of lower Midwest pricing as of late is that PADD 2 storage levels have reached high levels, untypical for this time of year. I have said that we’ve recently benefited from this, what I call a "Chicago Discount". The "Chicago Discount" is due to a regional condition causing Chicago "Spot" Pricing to be lower than other areas.

Now onto the bad news.
Yesterday, ExxonMobil reported shutting down a unit at its 238,000 bpd plant just outside Chicago, IL (Joliet), which would cause a large drop in output at Midwest refineries. This, coupled with news from the DOE that regional stockpiles fell last week, as well as a huge nationwide drop in gasoline stockpiles, will cause a large price spike.

Any Chicago Discount will likely "dry up", and with the changeover to the April gasoline contract also adding to a hike. The gasoline contract for March, expiring today, was 8-cents lower than the new April contract, which takes effect tomorrow, causing a "triple whammy": More expensive April contract begins tomorrow, Refinery outage regionally, and a loss in gasoline stockpiles will definitely cause higher prices.

I would be *shocked* if prices don’t rise tomorrow and stations that purchase new fuel tomorrow would lose money if they do not raise prices.

I am unsure about the amount of the hike, but it may be over $2/gal, as soon as tomorrow morning.

Be sure to fuel ASAP.

Price Hike Coming Monday — Maybe Over $2 A Gallon

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Comment on the January 28 posting:  Two days after that posting, some places hiked to $1.95, others didn’t, which I think reflected my ambivalence.  Eventually, everyone went to $1.95, but then prices started going back down.

Saturday, February 7, 2009, 9:30PM:  I have a program on my computer called Kana Reminder that I can set different reminder messages.  An annual message that comes up on February 1 is "Expect two months of gas price hikes", because that is what seems to happen every year.  I am pretty sure we have a price hike coming on Monday, to at least $1.99, but maybe over $2, as NYMEX climbed at the end of the week, and AXXIS did even more, despite a calming of labor tensions with the refineries.  Fill up late Sunday or early Monday if you can.
 

Strike averted, contract reached!

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Late breaking news tonight that will have some breathing a sigh of relief.

The United Steel Workers union and Shell have agreed to a basic contract for refineries and other chemical plants today, averting a strike that could have had a huge effect on U.S. gasoline prices.

We can stop worrying about the strike and focus back on other things. Wholesale gasoline prices should fall after news of this hits the markets tomorrow morning. 

Look for prices to continue their slight downward trend after an oddball hike from Speedway to $1.95.

Nationwide gasoline prices to continue to rise

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With the threat of a large strike being carried out by the United Steel Workers union and a large stimulus bill making its way through Congress, gas prices are going nowhere but up from the current national average of $1.85 per gallon.

Prices have advanced lately because of a growing number of traders who see the new stimulus as a boon for Americans to begin spending, and thus increasing demand for their fuel thirsty vehicles. Traders seem to believe that the stimulus would create demand overnight and somehow dry up the millions of barrels of surplus crude we currently have.

We also have negotiations between the USW and major oil players continuing at this hour, but it seems that talks are far from stopping a strike at 12:01am Sunday morning, and unfortunately, any walkout or lockout will almost guarantee higher gas prices across the country.

Since my last update it has been revealed that even the newest member to the refining industry, Valero, has pledged to idle refineries in the case of a strike. This comes at a huge blow to U.S. consumers who are fed up with prices hikes that have started again to accelerate since gasoline prices hit a low of $1.62 per gallon last month.

Valero joins another large refiner, BP Plc, in annoucing support for the United Steel Workers union, who represents nearly 30,000 workers at roughly half of U.S. refineries. The U.S. would be joining the United Kingdom, who also is dealing with a strike at oil facilities. However, the U.K. seems to have partially dodged a bullet in their worker strike, with enough replacement workers brought in to keep facilities pumping out gasoline for consumers eager for relatively affordable gasoline.

The U.S., on the other hand, does not seem as fortunate if a strike were to be announced here. ExxonMobil seems to be one of the only oil companies with plans to bring in enough temporary workers to keep output on their massive refineries going through the weekend.

The news comes at a terrible time for a U.S. economy crippled by a recession and record unemployment, which may now have to deal with a spike in gasoline prices come Monday if a strike is not averted.

I would recommend that gasoline consumers keep an eye on developments Sunday morning and fill up if necessary before Monday morning, when prices could spike 20-50 cents per gallon nationwide as a result of union workers going on strike and forcing refineries to either find temporary workers, or to shut down their plants, halting all gasoline production.

This strike could also signal the beginning in price hikes expected to last through early Summer as refiners switch to Summer Blend gasoline, a fuel designed to alleviate pollution but costs more to produce.

Fill up and stay tuned!

Patrick

Union authorizes strike Sunday, oil companies making contingency plans

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As I prepare to head to Canada this weekend (and possibly away from the internet) I wanted to update everyone.

The likelihood of a strike by the USW (United Steel Workers), the union that represents 30,000 workers, has risen. Both union officials and refining companies continue to make emergency plans, with union workers voting to authorize an IMMEDIATE strike at 12:01am Sunday morning if a new contract is not made. Oil companies on the other hand have alerted temporary workers and standby workers, with the USW warning that these workers are "minimally trained". No surprise they say that, the USW union has significant interest in worrying Americans so that a contract to their favor will be the result of such action.

The union is NOT in my opinion, in any position to lobby for such lavish benefits at this time. Refinery margins are negative, and will continue to be for some time to come. Union workers seemingly want a "piece of the pie" as oil prices hit records of $147 this summer. Perhaps one should ask if union workers would then mind paying the oil company when the refinery is in the red and losing money.

Many Americans should lobby against the union as their action (strike) would likely cause gas prices to skyrocket overnight, leaving Americans without jobs in a dire situation, and even Americans WITH jobs in a bad situation. Unfortunately for the USW, it seems like Big Oil holds the important cards in this decision, with only BP PLC saying they will shut refineries if there is a strike. ExxonMobil, Shell, Valero, and other players have either publicly stated or signaled they are preparing replacement workers.

If it was you, wouldn’t just having a job in this economy be enough? Apparently not for this union- they are asking for raises for every year until their next contract expires. They also want a safer work place, and I really can’t blame them. To lump a raise from a safety issue? A bit weak.

The actions of 30,000 union workers mainly seeking more pay and benefits has the potential to disrupt millions of American’s stability if gas prices rise as a result of refineries shutting down.

The United Steel Workers Union represents refinery workers at nearly half of U.S. refineries, which refine roughly 17.6 million barrels of oil per day.

Not only that, but it looks like we may have a price hike in Speedway states tomorrow. $1.99 seems the likely target as it seems that the Chicago Premium has dried up (look how low we got! $1.73!) We’ll see.

Watch the news Saturday night and be ready to fill up to avoid any potential gas price increases as a result of the USW union strike.

Patrick

 

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