GasGouge.info

Triple digit oil prices are on the horizon and may be permanent as major oil-producing countries in the developing world reduce exports to meet soaring demand at home, according to a new report by CIBC World Markets.

The situation is intensifying the world’s oil supply gap which shows no
sign of being filled anytime soon by new supplies or by rising prices that
normally choke demand, says Jeff Rubin, Chief Economist and Chief Strategist at CIBC World Markets.

“All of a sudden, major oil-producing countries are becoming major oil
consuming countries,” notes Mr. Rubin. “One has to look no further than price to see why,” he adds, pointing to Venezuela, Iran and other Middle Eastern countries where gasoline is sold at 20-80 cents a gallon, a fraction of the world price. That cheap and abundant gasoline is fuelling “some of the fastest growth in domestic demand anywhere in the world.”

The report states that declining oil production in developing countries
coupled with increased consumption by newly-empowered consumers in those markets is eating into export capacity and will reduce crude oil exports by asmuch as 2.5 million barrels a day between now and the end of the decade.

The report states that declining oil production in developing countries
coupled with increased consumption by newly-empowered consumers in those markets is eating into export capacity and will reduce crude oil exports by as much as 2.5 million barrels a day between now and the end of the decade.

“It’s far from obvious who will fill that supply gap,” says Rubin. “What
is obvious is that if that gap isn’t filled, not only are triple digit oil
prices on the horizon, but even more problematic, are here to stay.”

The report predicts new record highs of US$80 a barrel this year and
reaching as high as $100 a barrel by the end of 2008 as soaring oil demand
outpaces growth in global supply.

Past assurances from Big Oil that technological advances in the oil patch
would help ramp up oil supply and that today’s higher prices would choke
demand and limit price increases are now giving way to warnings of depletion and rising prices as the steady ascent to $100 oil continues.

With the exception of the Western European countries where carbon
conscious economies have successfully reduced oil demand, countries around the world have continued to consume oil at record rates. This is the case not only for developing countries with massive energy appetites such as China, but also for oil producing countries themselves. Together with Mexico and Russia, daily consumption in OPEC countries last year was in excess of 12 million barrels a day, over 60 per cent more than the level of Chinese consumption.

Faced with this evidence, the oil industry admits demand for oil may be
less price elastic than previously acknowledged. “An apparent acceleration in
world oil demand this year in the face of a doubling in prices over the past
three years has left International Energy Agency (IEA) economists scratching their heads,” Rubin says.

The full CIBC World Markets StrategEcon report is available at:
http://research.cibcwm.com/economic_public/download/sjul07.pdf

With fuel prices hovering around $3.00per gallon nationwide, American consumers say they are more concerned about high gas prices than about terrorism or the economy as a whole.

These are findings from the inaugural National Analysts Worldwide “Foods, Fats and Fuels” study completed in March that surveyed a nationally representative sample of 502 consumers via the web.

The survey results showed 83% of respondents were concerned about high gas prices while 62% were worried about terrorism and 69% were concerned about the economy as a whole.

Soaring gas prices, have consumers eyeing alternative energy sources such as biofuels. Among those familiar with biofuels, most (72%) view them as a good way to reduce America’s dependence on foreign oil and generate renewable energy supplies (70%).

However, the National Analysts Worldwide study shows that there is limited consumer understanding about biofuels. More than one in three (36%) consumers says they have never heard of biofuels. And, among those who have, there is uncertainty about the net benefits. Only half (52%) are convinced that biofuels produce less greenhouse gas than fossil fuels and two-thirds (65%) are not sure whether biofuels require more energy to make than they contain.

Consumer demand for biofuels ultimately comes down to cost. Even though 59% of consumers claim to be “very concerned” about the environment, four in ten of those familiar with biofuels say their decision to buy depends on whether the cost is lower than gasoline; only 12% are willing to pay any sort of premium.

“At the moment, consumer demand for biofuels is propelled almost entirely by pocketbook considerations,” notes Debra Kossman, Ph.D., Senior Vice President, National Analysts Worldwide. “With gas prices at an all-time high, large numbers of consumers are prepared to entertain the use of biofuels and other sources of alternative energy but there is little conviction behind those opinions. At the moment, public perception is being shaped in an information vacuum – which means it can be reshaped rather quickly.”

While most consumers are open to the prospect of alternative fuels, 5% of drivers said they would not be willing to purchase biofuel for their own vehicle, even if it cost less per year than gasoline. These respondents voice concern about potential harm to their vehicle’s engine and/or performance, the untested nature of biofuels, and a fear that there will not be enough locations from which to purchase biofuels.

As gas costs rise to $4 a gallon and oil companies earn around $100 billion each year, it’s a good time to question what really goes into the price gas.

read more | digg story

David Olive of TheStar.com poses this question in a recent article and comes up with some interesting reasons behind gas cost hikes.

Mr. Olive concludes that there are three main reasons for high gas prices:

• Geopolitics
• Big Oil
• Consumers

Basically, most of the world’s remaining major supplies of untapped oil are in politically and geographically hostile regions.  The push for biofuels such as ethanol by both Washington and Ottawa has discouraged refineries from adding capacity.

Last year, the  oil industry spent $52 billion  buying back its own stock, an artificial way of inflating earnings per share.   That’s enough to finance the construction of 17 new refineries.  Fewer and fewer dollars are being invested in exploration, development and refining of oil and gas.

Consumers refuse to cut down on consumption and demand.  In the first three months of 2007, as prices were flirting with $4  a gallon in California, U.S. gasoline use climbed 2 per cent, almost double the previous year’s rate.

Even as gas prices rise, we’re using more gas than ever.

Read the full article …

Consumers in Texas are paying the highest average prices ever for a gallon of gasoline this Memorial Day holiday, according to the AAA Texas Weekend Gas Watch.

Texas’ current average of $3.08 per gallon for regular gas is only two-tenths of a cent short of the all-time record high set on May 23.  The statewide average climbed 13 cents this week.

According to the website, Dallas gas prices rose 12.2 cents to $3.06 a gallon, while neighboring Fort Worth went up 12.6 cents to $3.06 per gallon.

Amarillo continues to lead the high-price list, going up 6.96 cents from last week to $3.28., while San Antonio has the lowest price per gallon at $2.99.

The national average is $3.23 a gallon — a new record average and a weekly increase of 11 cents.

“Pump prices set new record highs just about every day this week,” said Rose Rougeau, AAA Texas spokeswoman. “Refiners are stressed, supplies are tight, and demand continues as AAA projects travel this holiday to be about the same as last year when fuel prices were nearly 30 cents a gallon lower.”

Keeping your tires properly inflated is one of the best ways to maximize your vehicle’s gas mileage and save money on gas.  Under-inflated tires reduce average gas mileage by 3.3-percent, and that is huge when gas prices are over $3.00 a gallon.

A reduction in fuel use also means the lowering of greenhouse gases, which are often blamed for contributing to global warming.

Now, there is a new smart system in development that promises to keep your tires at optimum pressue.  MAXAIR is a new “smart” system that not only detects when tires on cars, light trucks and SUVs are under-inflated, but it also automatically fills tires to the right pressure using air from an onboard compressor.

Monitoring systems currently on the market could be off by 20-30-percent and only activating dashboard-warning lights to alert drivers that tire needs air. Drivers then need to find air to fill the tires. With MAXAIR, it’s all done for you automatically and is accurate within 1-2-percent.

Apparently, feature is ready and available and could be on all new automobiles.  It’s a matter of consumers demanding it and auto manufacturers making it available. 

The cost: A lot less than most might think. An automobile parts manufacturer could supply the device to automakers for about $200 a vehicle.

More information can be found at MAXAIR’s web site at http://www.maxairatmi.com/

In order to help Canadians know what they should be paying for gasoline, the Canadian Centre for Policy Alternatives (CCPA) has developed an online gas price gouge meter.

Users type in the price they are currently paying and select the closest city from a list on the site. The meter does the calculations, estimates how much gasoline should cost in the given area, and lets users know how much they are being overcharged.

Read more at … Online Gas Price Gouge Meter Tells It All

High gas prices that curb demand may be a good thing - environmentally speaking - according to the Chigaco Tribune:

“Talk all you want about the need for a national energy policy. Our personal energy policy has been use more of it. The key to reducing U.S. consumption of oil, to stop being held economic hostage to the writhing Middle East, is to have enough incentive to use less gas. Maybe $3.54 a gallon will finally provide the incentive. Maybe it will have to be $3.75 a gallon. Or $4.”

Read more … The good thing about gas prices | Chicago Tribune

Gasoline prices hit their record high for the eighth straight day Sunday, and there are now only a few states left where the average price hasn’t crossed the $3 threshold.

The motorist group AAA said the average price for a gallon of self-serve unleaded hit $3.178 in its latest reading, based on a daily survey of up to 85,000 gas stations. That’s up from Saturday’s record of $3.157.

Read more at CNNMoney.com