Gas and…ah…Gas

August 29, 2013

07SpgfldGasPumpsThick ground fog this early Thursday on California’s north coast, and quiet, too — can’t even hear the mighty Pacific Ocean only a mile or so away.
The air, though, has that quality of quick burn-off once the sun comes up in an hour or so. And we’re still forecast to continue our ‘heat wave‘ of temperatures in the high 60s and low 70s — nice!

(Illustration found here).

Maybe not so nice way-soon at the gas pumps due to the horror/conundrum bubbling now in Syria. Although President Obama seems poised to blast away, the UK ran into problems on Wednesday within its own government, and Russia with China walked out of a UN Security Council meeting on the mess, and the group broke up without taking any action. No one seems to know what to do about the problem, except Obama, who claims “there need to be international consequences” to Syrian President Bashar al-Assad’s use of chemical weapons, though, the US considers the UN (and world opinion) “irrelevant” in the desire to the bomb the shit out of Syria.
People in the US, however, feel a bit different — in a HuffPost/YouGov poll from this week: To the question, Do you think the United States military should or should not use air strikes to aid rebels in Syria? came the results — 41 percent said “no,” while 25 percent said “yes,” but the big chunk of mystery was the 34 percent who said they’re “not sure.”
A position most the known world takes right now.

An emphasis on underlying factors comes this via the BBC: Angry Bloke tweets: As oil gets harder to find middle east conflicts become more frequent and the western vultures circle overhead, hmmm how odd!
Indeed.

Last week, I put another $20 worth of fuel into my old Jeep Comanche at $4.09 a gallon for regular. Down a dime since the last time. We’re always on the high side of gas prices up here in Humboldt County, always above the state and national averages.
Oil prices have been inching upwards since July when the shit hit the fan in Egypt — on Wednesday US crude rose to $110.34 a barrel — a 1 percent increase — while Brent crude oil was up $1.95 at one point, reaching nearly $116 a barrel.
From the LA Times:

Though Syria is not a large oil producer, the fear is that the conflict could spread across the region.
“The entire Middle East could become involved in this,” said Patrick DeHaan, a senior petroleum analyst with GasBuddy.com.
“The concern becomes that the supply chain could develop a kink.”
DeHaan said higher crude oil prices are expected to translate into higher gas prices for consumers.

However, all that is loosely based upon current events going “ballistic” — from CNN:

But crude has been gaining for weeks as a labor strike in Libya, widespread theft in Nigeria and ongoing problems in Iraq have taken at least a million barrels a day off the world market.
Gasoline prices, however, have been holding around $3.50 a gallon.
While they may tick higher in response to rising oil — AAA’s national average price rose 1.8 cents Thursday to $3.56 — gas prices are on a longer-term, cyclical path down.
The end of summer vacations means fewer American’s will be on the road, cutting demand.
And as cooler temperatures mean less pollution risk, refiners can switch to “winter blends” of gas, which are cheaper to produce.
“If this were April, we’d be going ballistic,” said Tom Kloza, chief oil analyst at GasBuddy.com.
“But there are a lot of things beyond the Middle East that should act to keep gas prices temperate.”
Brian Milne, a refined fuels editor at Schneider Electric, agrees.
Even though paper contracts for gasoline traded on the futures exchange are up 15 cents a gallon since Monday, Milne said the approaching fall should act to keep a lid on the retail cost at the pump.
“I don’t think we’ll see the full 15 cents go into it,” he said.
“We’ll start seeing some relief in the gas market.”

Moreover, gas price increases tend to have an outsized effect on consumer behavior.
Posted in big numbers at every gas station in the country, consumers are keenly aware of every little price change. When they go up — especially when they rise rapidly — people tend to react immediately, and delay buying big ticket items like cars or homes.
Lafakis (Chris Lafakis, a senior economist at Moody’s Analytics) calls the relationship “nonlinear.”
A non-economist might use the term “freak out.”
Fortunately, Lafakis also thinks the recent oil price spike will be short lived.
Of course, if Iran or Iraq actually do get dragged into a broader conflict and oil prices shoot past $120 a barrel, all bets are off.

Yeah, almost everything will then be off.

Dramatic eye on a tinky-little area: The crisis in Egypt has stoked supply worries as the country is home to the Suez Canal and the Sumed pipeline, which together carry around 4.5 million barrels per day of oil between the Red Sea and the Mediterranean.

All kinds of shit gives me gas nowadays — breaking bad wind into a crowded room.

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