Gasoline May Rise Above $5 a Gallon

[AndyH]

...WetEV was making a joke but your statement is not. you advocate continuing to do the wrong thing? or just advocating a bigger hole?

a lot of people are in the camp that out debt will never be paid and that we should just "wipe the slate clean" which can be done by cranking up a few planes and guns. its not likely the debt can be negotiated away since we cannot even pay a small fraction of it.

this country runs on oil and it flourished and all things change including this whether it be today or tomorrow; have no doubt. oil is on its way out

Dave, something hit me recently about our money (at least in part, not sure I completely understand it yet). We were once on a gold standard, then brought the Federal Reserve system on-line in 1913. Then President Nixon cut the tie to gold in the early 1970s. It appears that the dollar went to a de facto oil standard. If we're apparently so strongly against Iraq and now Iran's desire to dump the USD, what would happen to the US economy if we moved quickly to replace oil? Anything? A lot?

Iraq sells only in Euros in 2000 (2nd Iraq War starts in 2003...)
http://www.rferl.org/content/article/1095057.html

http://www.energybulletin.net/stories/2006-01-29/trading-oil-euros-–-does-it-matter
http://en.wikipedia.org/wiki/Petrodollar_warfare

Iran shuns both USD and Euro for oil sales...
http://www.bloomberg.com/news/2010-...s-from-euro-for-oil-sales-oil-daily-says.html

 

[TonyWilliams]

We were once on a gold standard, then brought the Federal Reserve system on-line in 1913. Then President Nixon cut the tie to gold in the early 1970s.

The Gold Standard Act of 1900 (31 Stat. 45) was the culmination of an epic political battle over monetary policy in the United States. But it also reflected an age-old debate over whether gold or silver should control monetary measurements. The act set the value of gold at $20.67 per troy ounce (troy weight is based on a pound of twelve ounces). The act further states that:

"the dollar consisting of twenty-five and eight-tenths grains of gold nine-tenths fine ... shall be the standard unit of value, and all forms of money issued or coined by the United States shall be maintained at a parity of value with this standard, and it shall be the duty of the Secretary of the Treasury to maintain such parity."

The gold standard for currency ended in 1933. On August 15, 1971, was when President Richard Nixon ended trading of gold at the fixed price of $35/ounce.

 

[DaveinOlyWA]

therein lies the problem. any money standard should not be traded on the open market. it causes "ghost" inflation and huge transfers of value based on speculation inherent to unseen and for the most part, misunderstood market forces.

now leaving gold valued at 1930 prices was just as idiot but the price should have been controlled by agreed upon adjustments due to inflation.

 

[palmermd]

...WetEV was making a joke but your statement is not. you advocate continuing to do the wrong thing? or just advocating a bigger hole?

a lot of people are in the camp that out debt will never be paid and that we should just "wipe the slate clean" which can be done by cranking up a few planes and guns. its not likely the debt can be negotiated away since we cannot even pay a small fraction of it.

this country runs on oil and it flourished and all things change including this whether it be today or tomorrow; have no doubt. oil is on its way out

Dave, something hit me recently about our money (at least in part, not sure I completely understand it yet). We were once on a gold standard, then brought the Federal Reserve system on-line in 1913. Then President Nixon cut the tie to gold in the early 1970s. It appears that the dollar went to a de facto oil standard. If we're apparently so strongly against Iraq and now Iran's desire to dump the USD, what would happen to the US economy if we moved quickly to replace oil? Anything? A log?

Iraq sells only in Euros in 2000 (2nd Iraq War starts in 2003...)
http://www.rferl.org/content/article/1095057.html

http://www.energybulletin.net/stories/2006-01-29/trading-oil-euros-–-does-it-matter
http://en.wikipedia.org/wiki/Petrodollar_warfare

Iran shuns both USD and Euro for oil sales...
http://www.bloomberg.com/news/2010-...s-from-euro-for-oil-sales-oil-daily-says.html

This article really got my attention. I'm very surprised it has not captured the attention of any mainstream media. The fact that it has not, only shows just how clueless we are as a country.

http://www.examiner.com/article/dollar-no-longer-primary-oil-currency-as-china-begins-to-sell-oil-using-yuan" onclick="window.open(this.href);return false;

 

[WetEV]

china-begins-to-sell-oil-using-yuan

China doesn't sell much oil, if any. China is an oil importer. Why does this mean anything?

 

[palmermd]

china-begins-to-sell-oil-using-yuan

China doesn't sell much oil, if any. China is an oil importer. Why does this mean anything?

I did not write the article title, they did, but they clearly mean that they are purchasing all oil using their own currency and Russia is going to sell it to them in Yuan. It means they don't have to have any dollars on hand to purchase oil, which means they don't have to be a creditor to us, and they can ask for their money back now. We don't have any money to give back to them. That is a problem.

The ramifications of this new action are vast, and could very well be the catalyst that brings down the dollar as the global reserve currency, and change the entire landscape of how the world purchases energy.

Lindsey Williams: "This has never happened in the history of crude oil. Since crude oil became the motivating force behind our (U.S.) entire economy, and everything in our lives revolves around crude oil. And since crude oil became the motivating factor behind our economy... never, ever has crude oil been sold, bought, traded, in any country in the world, without using the American dollar."

"Crude oil is the standard currency of the world. Not the Yen, not the Pound, not the Dollar. More money is transferred around the world in crude oil than in any other product."

"On Friday, Sept. 7, Russia announced, that as of today, we will supply China with all of the crude oil that they need, no matter how much they want... there is no limit. And Russia will not sell or trade this crude oil to China using the American dollar." -Interview with Natty Bumpo on the Just Measures Radio network, Sept. 11

 

[mwalsh]

It means they don't have to have any dollars on hand to purchase oil, which means they don't have to be a creditor to us, and they can ask for their money back now. We don't have any money to give back to them. That is a problem.

I think we should stiff the Chinese. Don't know what the consequences would be, but it looks like a good idea in the thought bubble sticking outa my head.

 

[dgpcolorado]

china-begins-to-sell-oil-using-yuan

China doesn't sell much oil, if any. China is an oil importer. Why does this mean anything?

I did not write the article title, they did, but they clearly mean that they are purchasing all oil using their own currency and Russia is going to sell it to them in Yuan. It means they don't have to have any dollars on hand to purchase oil, which means they don't have to be a creditor to us, and they can ask for their money back now. We don't have any money to give back to them. That is a problem.

That is an oversimplification. The Chinese currency isn't freely convertible (traded on the open market) so it can only be used in these sort of barter arrangements. The Chinese government could open up trading in the Yuan but choose not to because they would lose some control of their economy (they keep their currency artificially low in value to boost exports, to the ire of their trading partners).

While China could stop buying US bonds or sell them to depress prices as an economic weapon, to do so would be shooting themselves in the foot. Since China is a large US bondholder such an action would depress the value of the bonds they own. Also, since China exports more to the USA than they import, they accumulate dollars and those have to be used/invested somewhere. Again, taking actions to depress the value of the dollar would lower the value of their dollar reserves. That isn't to say they would never do it, but it isn't as simple a "weapon" as it sounds to those who haven't thought it through.

In short China, being a major exporter, needs the US for their own economic reasons. We are interdependent and their leadership knows it.

 

[palmermd]

That is an oversimplification. The Chinese currency isn't freely convertible (traded on the open market) so it can only be used in these sort of barter arrangements. The Chinese government could open up trading in the Yuan but choose not to because they would lose some control of their economy (they keep their currency artificially low in value to boost exports, to the ire of their trading partners).

While China could stop buying US bonds or sell them to depress prices as an economic weapon, to do so would be shooting themselves in the foot. Since China is a large US bondholder such an action would depress the value of the bonds they own. Also, since China exports more to the USA than they import, they accumulate dollars and those have to be used/invested somewhere. Again, taking actions to depress the value of the dollar would lower the value of their dollar reserves. That isn't to say they would never do it, but it isn't as simple a "weapon" as it sounds to those who haven't thought it through.

In short China, being a major exporter, needs the US for their own economic reasons. We are interdependent and their leadership knows it.

quite true, but there are other countries who are less interdependent and who don't like us who can now just use Yuan instead of dollars and get oil from Russia. It is a highly complex system for sure but this is a big step in the wrong direction for us, and at a fragile time for our economy. It was probably inevitable, and we should have been prepared for it...perhaps we are and that is not making the news either.

 

[ENIAC]

It means they don't have to have any dollars on hand to purchase oil, which means they don't have to be a creditor to us, and they can ask for their money back now. We don't have any money to give back to them. That is a problem.

If China were to sell their Treasuries ahead of their maturity, they would be selling into the market, not back to the Treasury. So it's not a problem as you state.

 

[AndyH]

The gold standard for currency ended in 1933. On August 15, 1971, was when President Richard Nixon ended trading of gold at the fixed price of $35/ounce.

Thanks Tony

 

[AndyH]

This article really got my attention. I'm very surprised it has not captured the attention of any mainstream media. The fact that it has not, only shows just how clueless we are as a country.

http://www.examiner.com/article/dollar-no-longer-primary-oil-currency-as-china-begins-to-sell-oil-using-yuan" onclick="window.open(this.href);return false;

Whoa... We can push Iraq and Iran to keep trading oil in dollars, but China's another situation entirely.

Thanks everyone - excellent as expected!

 

[Nekota]

Gas prices reported by San Jose Gas Buddy show a rapid increase over the past week. On September 28 the average was $4.14 and now it's gone to $4.54 and the slope is increasing every day.

http://www.SanJoseGasPrices.com/retail_price_chart.aspx?city1=SanJose&city2=&city3=&crude=n&tme=1&units=us" onclick="window.open(this.href);return false;

The local news mentioned some gas stations were not refilling since their prices have increased by $1 per gallon --

http://sanfrancisco.cbslocal.com/2012/10/04/bay-area-gas-prices-spike-overnight-approach-5-a-gallon/" onclick="window.open(this.href);return false;

Maybe this will help some LEAF sales!

 

[cwerdna]

Local news is showing a Uni 76 gas station on 1st and Brokaw (in San Jose) at $4.85/gal for regular and $5.13 for premium along w/a Cupertino gas station at $5.39/gal for regular and $5.59/gal for premium.

The latter prices are similar to what Canadians pay now.

At least they didn't interview SUV drivers. One was a Prius driver who didn't plan well and just needed enough to get home. Another was driving an older Accord.

 

[mikee322]

looks like hanky Panky going again from the energy sector...

Maybe Califrornia should buy its own refinery ... Al least it could stop this crap...

 

[edatoakrun]

http://www.latimes.com/business/la-fi-gas-prices-20121005,0,2326954.story" onclick="window.open(this.href);return false;

October 5, 2012

Skyrocketing gasoline prices caused some local service stations to shut off their pumps Thursday while others shocked customers with overnight price increases of 30 cents or more.

California's fuel industry isn't running out of gasoline — supplies are only 2.5% lower than this time last year — but recent refinery and pipeline mishaps sent wholesale prices to all-time highs this week. As a result, some station owners weren't buying fuel for fear they couldn't sell it. Those who did buy simply kicked prices higher and bet customers would understand.

"If this keeps up, I'll be looking at $5-a-gallon gas by next Thursday," said Ali Mazarei, who owns an Arco station in Riverside County. On Thursday, Mazarei was charging $4.52 for a gallon of regular gasoline, up from $4.27 on Wednesday and $4.21 on Tuesday.

"I really don't have any choice here, and I won't be making money at $4.52 a gallon," he said.

Some fuel stops had already crossed the $5 threshold.

On Thursday afternoon, the Low-P station in Calabasas was selling regular gasoline for $5.69 a gallon in cash, or $5.79 for credit card purchases...

 

[LTLFTcomposite]

I've always thought that as long as the pumps keep flowing, once you get past the technology adopters and enthusiast audience, the interest in EVs will be rate limited by the financial equations, which aren't particularly compelling with gas at $4. People just pay more and go on about their business.

Widespread supply disruptions would be a game changer.

 

[javan]

While I admit I haven't been keeping track of gasoline prices quite so obsessively as I once did since getting my Leaf, the front page of our local newspaper, The Eureka Times-Standard this morning featured a story on yesterday's $4.89.9/gallon gas prices in Eureka. I'm glad I'm not purchasing anywhere near as much gas now, but I have to get some for the backup generator and lawn mower this weekend.

 

[smkettner]

looks like hanky Panky going again from the energy sector...

Maybe Califrornia should buy its own refinery ... Al least it could stop this crap...

That would add to both the CA deficit and the price of fuel :|

 

[Nubo]

The CA market is an island due to the formulation requirements driven by smog issues. One or two disruptions happening while other refineries are switching from summer to winter production, and you get a squeeze.

Whether or not there is collusion is only speculation on my part, but it does sound eerily familiar to the Enron electric power shenanigans when multiple key facilities always seemed to be "down for maintenance" at exactly the worst time.

I've been thinking some kind of strategic gasoline reserve might be warranted for the state for these situations. Though you can't store gasoline nearly as long as petroleum...

They expect the price to keep going up for additional weeks. Glad I got my LEAF, but this will definitely be causing pain to the state's economy.

Makes it easier to bring up EVs in conversation, and for some, this will be the last straw and they will take the leap. If I were a Nissan dealer I'd be putting up the biggest sign I could make right now: "STOP BUYING GAS!!!" I bet a lot of inventory will be cleared in the next month.