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Unreal, 2 weeks ago to the day gas was 2.09 for 87 octane at the station closest to me. This morning....2.43! The stated reason from an article in the paper is that refineries are "gearing up to switch over to the summer gas formula and this is an expensive process."
It's January 12th, 45 degrees outside, and summer is causing this gas price hike?
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Unreal, 2 weeks ago to the day gas was 2.09 for 87 octane at the station closest to me. This morning....2.43! The stated reason from an article in the paper is that refineries are "gearing up to switch over to the summer gas formula and this is an expensive process."
It's January 12th, 45 degrees outside, and summer is causing this gas price hike?
Nope it is slowly creeped up again once the congressional pressure died down.
I heard it's also in part because oil refineries cut production at this time of year "due to less demand" (which could be code for "to keep prices higher in the slow season").
I heard it's also in part because oil refineries cut production at this time of year "due to less demand" (which could be code for "to keep prices higher in the slow season").
Yep, interesting strategy huh? When Supply is tight, raise the price. When the supply is plentiful, raise the price.
Here's my letter to the local paper and his answer explaining the increase.
Q What the heck is up with gas again? From $2.09 to $2.43 in two weeks at my local station. Last I saw, the Mercury News said prices would slowly head up as refineries gear up to switch to the summer formula? Hello. It's January and 45 degrees outside. Don't expect me to believe summer is causing this. . . . Gas is going up again. Why? I will never buy that supply-and-demand argument. Russ Smith, Garry Reese and many more
A The average reached $2.37 a gallon Thursday in the South Bay, up 21 cents from Jan. 2 -- and summer has a lot to do with it. The California Energy Commission says state refiners are well into the annual turnaround season -- the time of year when planned maintenance shuts down some gas and diesel production units. Repairs and upgrades should continue into March, as many refiners retool to meet new federal ultra-low sulfur standards that go into effect June 1.
Other factors are at work, as we reported last week, and it's sending prices soaring nationwide.
• Oil is no longer being pumped from the Strategic Petroleum Reserve, which was used to compensate for supplies lost as a result of the hurricanes in the Gulf Coast.
• Environmental regulations lifted after the storms are back in place in states like California, tightening supplies.
• The price of crude is at a three-month high, hovering above $64 a barrel.
• And California's supply of reformulated gas is slightly below last year's levels, as demand creeps up.
Huge inflation in Iraq, but still looks like a good arbitrage opportunity if you're interested.
Quote:
At Gas Stations in Iraq, Price Hike Fuels Outrage
By Jonathan Finer and Naseer Nouri
Washington Post Foreign Service
Wednesday, December 28, 2005; A15
BAGHDAD, Dec. 27 -- Until recently, Ahmed Taha saw himself as providing a public service, his bustling Abu Qlam gas station dispensing dirt-cheap fuel to Baghdad's growing horde of motorists.
Then one day last week, he said in an interview, the Iraqi government raised gas prices eightfold. Customers already frustrated by strict rationing and mile-long lines were outraged. Station operators got threatening messages to close their doors or else, and several came under armed attack, including at least three in the capital. A gas station run by Taha's brother-in-law was struck by a mortar shell Sunday.
"This job used to be no danger. The only threat we had was fire," said Taha, 31, who boosted his security force in recent weeks from one armed guard to three and started closing an hour and a half earlier, at 8 p.m. Unlike most station operators, he is not a government employee and therefore gets no routine protection from Iraq's police force or army.
"The gas stations had nothing to do with the decision, but insurgents or someone are using it as an excuse to attack the government by attacking us," said Taha, standing in front of his station as a steady stream of drivers filled up and moved on.
The price increase brought the cost of a gallon of gasoline from the equivalent of less than 5 cents to about 40 cents. It is meant to be the first in series of jumps over the next year designed to raise the price of fuel to the average in Persian Gulf states, which a U.S. official said Tuesday was about 93 cents per gallon.
The International Monetary Fund required Iraq to phase out its hefty fuel subsidies as a precondition for forgiving up to 80 percent of its $120 billion foreign debt.
Enacted days after the country's Dec. 15 election, the price increase has sparked large, mostly peaceful protests against the government in several cities. The timing of the decision spared politicians from voters' wrath, and now gas station operators say they have become the targets instead.
In the oil-rich northern city of Kirkuk, the insurgent group Ansar al-Sunna left leaflets at several gas stations warning employees not to charge the higher prices and describing them as "apostates," or lapsed Muslims.
"We have been threatened with kidnapping and death because they think we are serving the government officials, but in fact we are serving the people," said Issa Abdullah Hadidi, who has run the Uqba Ibn Nafi gas station in the southern part of the city for 20 years. He said he has never felt so endangered.
On Monday night, insurgents bearing rocket-propelled grenade launchers and AK-47 assault rifles attacked the gas station, killing one person and wounding four employees. On Tuesday, the same day a gas truck driver died in a roadside bombing outside the northern city of Kirkuk, 12 members of Hadidi's staff stayed home from work, he said.
Also Tuesday, Iraqi police in Baqubah, about 35 miles northeast of Baghdad, broke up what they said was an unauthorized demonstration by about 1,500 students against the rise in fuel prices and alleged fraud in the Iraqi elections. Similar protests have occurred in several other cities, including Hilla and Najaf in the south.
Iraq earns more than $2 billion a month through exports from its vast oil reserves, an amount that funds more than 90 percent of the government's budget, according to U.S. and Iraqi officials. But because of dilapidated refining facilities, Iraq spends about $500 million monthly to import refined fuels such as gasoline, which is sold at a deep discount to consumers. Electricity and food are also heavily subsidized here.
"There's a sense that what the state provides is free, and there's not a sense that the state spends to produce that good. So there's a tremendous problem," a U.S. official told reporters Tuesday, speaking on condition of anonymity. "Most Iraqis don't like to hear that. They say we're sitting on a lake of petroleum. Well, it's a lake, but it's not enough."
The official called the price increases "a necessary step" and said the government would spend the extra money on a welfare system to protect Iraq's poorest citizens. The government has said the price increases were also intended to undermine a thriving black market. An estimated one-quarter of all fuel sold here for domestic consumption is smuggled out of the country to be sold on the black market.
Khalid Rafu, 44, who operates a gas station in Baghdad rented from Iraq's Oil Ministry, said he believes that in the long run raising fuel prices will be "for the benefit of the country." For now, though, the consequences are "very difficult" for his customers and "frightening" for him and his staff, he said.
"If armed men tell us we have to close, what am I supposed to do?" he said, adding that it is especially bad for station operators in the suburbs, where fewer policemen and army patrols are present to deter potential attackers.
His customers share his concern that there is little they can do to avoid the risk.
"I become so nervous every time I get closer in the line to the gas station," said Saad Yaseen, 31, a taxi driver, as he waited outside Rafu's Moussa Bin Naseer station Tuesday morning to fill his tank. "But I have to come here because I cannot afford to buy gas from the black market."
"Even if it is more expensive, we have to get fuel," said Sabeeh Mukhlif, 48, an auto repair shop owner who was also in line Tuesday. "Iraqis are dying every day, and the cause of death does not matter anymore. You either go back home alive or in a coffin. We cannot choose."
Correspondent Ellen Knickmeyer contributed to this report.
Here's my letter to the local paper and his answer explaining the increase.
Q What the heck is up with gas again? From $2.09 to $2.43 in two weeks at my local station. Last I saw, the Mercury News said prices would slowly head up as refineries gear up to switch to the summer formula? Hello. It's January and 45 degrees outside. Don't expect me to believe summer is causing this. . . . Gas is going up again. Why? I will never buy that supply-and-demand argument.
Russ Smith, Garry Reese and many more
A The average reached $2.37 a gallon Thursday in the South Bay, up 21 cents from Jan. 2 -- and summer has a lot to do with it. The California Energy Commission says state refiners are well into the annual turnaround season -- the time of year when planned maintenance shuts down some gas and diesel production units. Repairs and upgrades should continue into March, as many refiners retool to meet new federal ultra-low sulfur standards that go into effect June 1.
Other factors are at work, as we reported last week, and it's sending prices soaring nationwide.
• Oil is no longer being pumped from the Strategic Petroleum Reserve, which was used to compensate for supplies lost as a result of the hurricanes in the Gulf Coast.
• Environmental regulations lifted after the storms are back in place in states like California, tightening supplies.
• The price of crude is at a three-month high, hovering above $64 a barrel.
• And California's supply of reformulated gas is slightly below last year's levels, as demand creeps up.
Sorry Russ,
But this doesn't explain why gas has gone up by roughly the same amount everywhere at the same time.
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