Six Degrees of Lunacy

May 27, 2012

Although recent prices at national gas pumps are down 16 cents from a year ago, there’s no real sense behind it all, as this genius comments: “We might move a little lower, we might move a little higher,” said Tom Kloza, chief oil analyst of the Oil Price Information Service, the firm that compiles the pump price averages for AAA.
Well, that’s some insight, there.

The problem right now, however,  depends on where one lives.

And the AAA reports about 30.5 million US peoples will travel 50 miles or more from home this weekend — a 1 percent rise from last year — visits to the gas pump will depend on where that pump is located; South Carolina has the lowest at $3.34 a gallon, while out here on the Left Coast, we’re choking on it with $4.40+ a gallon, creating an all-time record gap of 61 cents above the national average of about $3.67 gallon.

(Illustration found here).

On Friday, I put another $20 worth of gas in the old Jeep, the pump price still standing at $4.49 a gallon for regular, same as it was the last time, and the time before that, and so forth.
Up here in northern California, we’re still higher than the rest of the state (gas prices, and otherwise, dude!): California’s average price of $4.37 is well above Florida’s $3.59, and higher than any state except Hawaii and Alaska.
Supposedly, the problem out here is supply — problems at West Coast refineries, but is it?

“Our concern is a lack of competition at the refinery level in California,” says Charles Langley, gasoline analyst at Utility Consumers’ Action Network in San Diego.
“We’re not saying there’s a conspiracy.
It’s just that with this few competitors, it’s very easy to game prices by turning off capacity.”

Those most-wonderful oil companies wouldn’t do that, would they?

Oil prices per barrel have remained fairly steady, despite the Iran bullshit: Light, sweet crude for July delivery rose 4 cents to $90.70 a barrel on the New York Mercantile Exchange. Brent crude on ICE Futures Europe rose 16 cents, or 0.2 percent, to $106.71 a barrel. Trading volumes were thin ahead of the three-day Memorial Day holiday in the U.S.
Despite it all, Forbes says a new IMF paper suggests oil prices could double in the next decade, but when looking at the future nowadays, all bets are off.

In the world of fuel, it’s sort of like Tom’s love life in Parks and Recreation — it’s complicated.
From Car and Driver:

It’s easy to imagine oil-company conspiracies when seeing these figures.
But as usual, the truth is a bit more complicated — and less satisfying.

Refiners using WTI crude would charge $3.72. In America, most refiners are stuck paying the Brent price, because the WTI crude tends to pile up in Cushing, Oklahoma, and is only conveniently available for refineries in the Midwest. But if you blend these prices in a ratio of three parts Brent to one part WTI, you get an average projected retail price of $4.06 per gallon. Since gas is selling for about 20 cents less than that, the current price does not suggest price gouging.

The current low margins in the gasoline business reflect soft demand for the product in the U.S.
As of early 2012, we are burning about 8.4 million barrels of gasoline a day (assuming 42 gallons a barrel, that’s about 14.7 million gallons an hour, or 4083 gallons a second).
As staggering as that quantity is, it’s about 13 percent less than the 9.7 million barrels a day we consumed at the peak in July 2007.
A part of the reason for this lowered demand is a reduction in driving.
As a nation, we drove a peak of 3030 billion miles in 2007 and only about 2963 billion last year.
That’s about 2.2 percent fewer miles, and we’re driving those miles in more efficient cars and trucks.
According to a study at the University of Michigan Transportation Research Institute, the cars and trucks sold this year will average about 28.5 mpg by the federal Corporate Average Fuel Economy (CAFE) standards.
That’s up from less than 25 mpg in 2007 and reflects a shift from trucks to cars and the introduction of efficient technologies, as well as a greater preference for smaller vehicles.
Low U.S. demand would suggest a lower price, according to classic economic theory.
But crude oil and gasoline sell on world markets, and global demand is on the rise.
From a low of 85 million barrels a day during the recession in 2009, current global usage is about 89 million barrels.
That exceeds the previous global peak of 86 million barrels in 2007.

The less folks on the road is a good thing, despite the faltering economics of it.
Underneath those gas/oil prices is the horror of climate change, and its spiraling forward is caused by the burning of all those fossil fuels — coal, f*cking, too.
According to the International Energy Agency, last year was bad, but it could be the future.
Via Climate Progress:

Thanks to a huge jump in Chinese emissions, “global carbon-dioxide (CO2) emissions from fossil-fuel combustion reached a record high of 31.6 gigatonnes (Gt) in 2011.”
The worse news is that, “The new data provide further evidence that the door to a 2°C trajectory is about to close,” according to IEA Chief Economist Fatih Birol.

And the worst news, as Birol told Reuters, is that: “When I look at this data, the trend is perfectly in line with a temperature increase of 6 degrees Celsius [11°F], which would have devastating consequences for the planet.”

Birol gave a talk last fall at the Carnegie endowment on the IEA’s 2011 World Energy Outlook and it wasn’t pretty:

Another point on climate change is about the two degrees.
With the current policies in place, the world is perfectly on track to six degrees Celsius increasing the temperature, which is very bad news.
And everybody, even school children, know this will have catastrophic implications for all of us.

In the context of, if you don’t do anything until 2015, 95 percent of the allowed emissions will be locked in.
And if you do not do anything until the year 2017, we are going to use all the emissions which are permitted to us, we are going to consume them by the existing power plants, transmission lines, by the cars and everything.
So therefore, we will lock in our future, which will be impossible to change, and the door to two degrees will be closed.

Watch a National Geographic special here on what a six-degree increase would be like in a few years — the word horrific comes to mind, as the site says, the scenario is  “…something out of a disaster movie.”
The UN target-goal is a 2 degree limit on warming from pre-industrial levels for manageable climate change, but the so-called accord on climate won’t be completed until 2015 and won’t take effect until 2020.

Nearly four years ago, David Letterman delivered a climate-change rant on his show, noted by the continuing phrase of “We’re dead meat,” proclaiming that no matter what we humans do, we’re f*cked — “We’re walking dead.”
I couldn’t located the video anywhere, signs indicate it’s no longer available, but it has got to be worse now.

If a surprise ain’t pulled out of the hat way-soon, we are indeed ‘dead meat‘.
And I can finally park the old Jeep for good.

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