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We owe it to our veterans to work toward oil independence
This is the week we show our respect and gratitude to veterans for their service to our country. But that sentiment doesn’t have to be reserved just for Veterans Day.
When we say fuel choice, we mean it
Here at Fuel Freedom Foundation, we talk a lot about “fuel choice.” This is what we mean.
OPEC has set a meeting. Get ready to grab your wallet.
OPEC has cried wolf again, but there’s reason to believe that this time, the cartel is serious about constricting oil production. Which, of course, will send the price — and thus the price of gasoline — upward. And there’s nothing American drivers will be able to do about it.
Predicting oil prices is a fool’s errand
And boy, are there a lot of fools.
Hofmeister: U.S. must not be victimized by ‘contrived’ oil market
The global oil trade is a “contrived market” not subject to the usual laws of supply and demand, and the United States has an “absolute requirement” to use alternatives if it hopes to wean itself off imported oil, former Shell Oil president John Hofmeister said during the keynote speech at the National Ethanol Conference. Read more →
7 ways our oil addiction is hurting the economy
We spend billions of dollars every year on oil that could be spent on cleaner, cheaper, American-made fuels. The impact of this addiction can be seen throughout our economy in a cycle of job and money loss:
- AMERICAN JOBS: When oil prices fluctuate, all levels of the economy are affected. When businesses have to pay more to ship their products because of a spike in fuel prices, they have to cut those costs elsewhere, leading to job loss.
- RECESSIONS: Of the 11 recessions in the U.S. since World War II, 10 were preceded by an oil-price spike. By breaking our oil addiction and investing in fuel choice, we can break this cycle.
- RELIANCE ON IMPORTS: The U.S. imports about 40 percent of its oil, sending money abroad that could have helped our economy at home. Building up the domestic infrastructure of alternative fuels would spur economic activity, instead of siphoning away billions that flow overseas.
- HOUSING: High gas prices hit close to home. As gas prices rise, the value of homes farther away from big cities, according to economist Joe Cortright, begin to devalue as the cost of commuting rises.
- WALL STREET: In July 2008, the price of oil hit $147 a barrel, and two months later Wall Street followed suit. In one day, the DOW Jones Industrial Average fell 777 points, ushering in the financial crisis.
- FLUCTUATING PRICES: When gas and oil costs go up, the cost of other products follows. Suddenly, consumers have to pay more for everyday goods that require gasoline or diesel to be shipped. And when we’re spending more on our everyday necessities, we’re spending less on other things we need — delaying big purchases.
- LIMITED CHOICES: With no other options (unless you’re driving a flex-fuel or an electric car), the fluctuation of gas prices leaves the average consumer a sitting duck — unable to pay the price, but unable to purchase any other fuel. That’s why bringing fuel choice to the pump is so important.
The U.S. is at the mercy of oil companies as prices fluctuate, impacting our economy, including day-to-day prices for consumers and the overall job market. It’s time to break this cycle of dependence by bringing fuel choice to the pump.
Join the movement: http://www.fuelfreedom.org/take-action/
Saudis pay only 45 cents a gallon for gas
The Washington Post has an interesting story about the impact of lower gas prices — meaning the overall price drop since June, taking into account the recent uptick — on consumers in Saudi Arabia. While the government might one day have to make a decision about lowering oil output, thus letting prices climb again, regular citizens aren’t noticing much difference. That’s because Saudis pay about 45 cents a gallon to fill up their vehicles, thanks to government subsidies.
In Saudi Arabia, the general response to the drop in global oil prices by half — from more than $100 a barrel six months ago to around $50 now — is a shrug. Remember all those $60 fill-ups at U.S. pumps when gas was running close to $4 a gallon over the past few years? While your wallet was getting hammered, Saudi Arabia’s was getting stuffed thick. The kingdom has more than $750 billion in cash reserves, which is more than enough to keep the lights on and stave off panic over oil markets.
Not only is the government not sweating the reduced price of oil, it’s continuing with an ambitious program of public works to benefit citizens.
the government could go seven or eight years without trimming back its plans, simply by using its massive reserves, which are equal to 100 percent of annual gross domestic product, to cover budget deficits. More likely … the government would monitor oil prices closely for about 18 months and rethink strategy if they did not rebound.
Saudi Arabia has prospered over the decades thanks, in part, to protection from the U.S., the world’s most prolific consumer of oil. According to this timeline on PBS’s “Frontline” program:
1940-45: Although Saudi Arabia officially maintained neutrality through most of the war, the U.S. began to court the kingdom as it realized the strategic importance of Saudi oil reserves. In 1943, President Franklin Roosevelt made Saudi Arabia eligible for Lend-Lease assistance by declaring the defense of Saudi Arabia of vital interest to the U.S. In 1945, King Abdel Aziz and President Roosevelt cemented the tacit oil-for-security relationship when they met aboard the USS Quincy in the Suez Canal.
Gas prices start to rise again, and drivers notice
Oil Gas prices are on the rise again, and consumers, who barely had time to enjoy their savings over the past few months, are taking notice.
“It’s still low by our standards,” Pete Diaz of San Jose told the Mercury News. “I’m not complaining — yet.”
Diaz paid a little less than $2.20 a gallon when he filled up Friday at an ARCO. That was actually a bargain: On Monday, according to AAA’s Daily Fuel Gauge Report, the average in San Jose was $2.636 for regular gas, up from $2.443 a week earlier.
The national average Monday was $2.177, up from $2.056 a week earlier.
Los Angeles-based Gas Buddy reports that, over the last week, the proportion of stations selling gas for under $2 a gallon has shrunk from more than 50 percent to 27 percent.
Stories are popping up all over the country about rising gas prices: from Maine to New Jersey to Texas to Arizona.
Oil prices dropped by 60 percent between June and January, a trend analysts spectacularly failed to predict. But in a four-day span between Jan. 30 to Feb. 3, oil surged 18 percent.
Gasoline prices, in turn, went up in an instant, a clear example of the market volatility that makes it nearly impossible to plan household budgets, much less a career. The latest round of job cuts was just announced by Weatherford International, one of the world’s largest oilfield services companies. It will lay off 5,000 employees, 85 percent of them in the United States.
Prices might keep on rising. Major media outlets reported Monday that oil was still on the rise, based on OPEC forecasting higher demand in 2015.
Other factors contributing to the price increase include:
- The looming seasonal switch to “summer blends” of gasoline. As Gas Buddy notes: “As air temperatures warm, refineries also begin the progressive switch to cleaner variations of gasoline, which also adds to cost.”
- Refineries are undergoing maintenance to prepare for the summer switch.
- Refinery workers around the country are striking for better health benefits. It’s the largest such walkout since 1980.
Now it’s your turn to tell your story. How does the day-to-day price of gas affect you and your business?
Oil prices dip as blizzard strikes the Northeast
OPEC’s secretary-general, Abdullah al-Badri, said Monday that the great oil price-drop could be over, and that it could start to climb again soon.
“Now the prices are around $45-$50, and I think maybe they reached the bottom and will see some rebound very soon,” he told Reuters in London.
Al-Badri also warned that oil might spike to $200.
That may well occur in the future. But for now, the floor hasn’t been reached. Prices rallied briefly after al-Badri’s comments, but they settled down in Monday’s trading session. Brent, the international benchmark, fell 1.3 percent to $48.16. U.S., or West Texas Intermediate, fell 1 percent to $45.15, but narrowed after the restart of a refinery in Whiting, Indiana.
Some experts had anticipated movement in the markets following the death of Saudi King Abdullah last week. But his successor, half-brother Salman, pledged “continuity in energy and foreign policies on Friday and was quick to retain veteran oil minister Ali al-Naimi, sending a message aimed at calming a jittery oil market,” Reuters reported.
The massive blizzard in the Northeast affected crude prices: The anticipated storm caused prices of heating oil to rise, but jet fuel dropped, in anticipation of canceled flights.
As Reuters reported:
The blizzard will result in canceled flights, less driving and increased use of heating oil, creating mixed indicators for crude oil, Matt Smith, an analyst at Schneider Electric, said.
“We saw this with Hurricane Sandy,” Smith said.
