It won't be long now before Americans finally wake up and realize the demand for fuel drives the price UP. The ONLY way to drive the price DOWN is to stop using Gasoline.
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Recently in Late February 2012, President Obama cited the growing number of vehicles in China — the world's fastest growing auto market — as a reason that the U.S. can't drill more oil to reduce long-term oil prices.
"Over the long-term, the biggest reason oil prices will rise is growing demand in countries like China, India, and Brazil. Just think — in five years, the number of cars on the road in China more than tripled. Nearly 10 million were added in 2010 alone. Ten million cars in one year — think about how much oil that requires. And those numbers will only get bigger over time," Obama said. "So what does this mean for America? It means that anyone who tells you we can drill our way out of this problem doesn't know what they're talking about — or isn't telling you the truth."
Newt Gingrich had recently in February 2012 also claimed by intensifiying drilling — especially in North Dakota — the United Sates could reduce gasoline prices to $2.50 a gallon. He also called this week for ending fuel efficiency standards.
President Obama then touted the agreement reached with major automakers to nearly double fuel efficiency standards to 54.5 mpg by 2025 — a move that will add about $2,000 to the cost of an average vehicle, or $157 billion for the industry, the Obama administration estimates.
"That means you'll be able to fill up your car every two weeks instead of every week — something that, over time, will save the typical family more than $8,000 at the pump. And it means this country will reduce our oil consumption by more than 2 million barrels a day," Obama said.
Obama rejected the idea that drilling alone will lower gas prices.
"They're already dusting off their three-point plans for $2 gas. I'll save you the suspense: Step one is drill, step two is drill, and step three is keep drilling," he said. Translation - not likely to happened.
A discussion of oil consumption is nowhere near as simple as how you THINK about the gasoline that goes into your car - or where it comes from in terms of oil existing on the planet.
Some of the data here are derived from the U.S. Department of Energy's Energy Information Administration (EIA), which is treasure trove of data on global energy. For example, Libya has the largest proven reserves of oil in Africa.
America's oil consumption, which is 18.8 million barrels per day (MBD), according to the EIA. That usage puts the U.S. atop the list of the world's largest oil consumers by a wide margin. Indeed, U.S. demand is more than that of the next four nations combined: Japan, Russia and rising economic powers China and India:
U.S : 18.8 MBD
What countries are the top producers of oil? The answer provides an important context for any discussion of oil supply:
Russia: 9.9 MBD
Saudi Arabia: 9.7
Surprised that the U.S. is still the No. 3 producer of oil in the world? But, the U.S. still has to import at least 50% of the oil it consumes daily. The U.S. produces roughly the same amount of oil as Canada, Mexico and the United Arab Emirates combined (No. 6, 7 and 8 on the top producers list). That means the U.S. supplies 48.6% of its consumption while it imports 51.4% of consumption, or 9.67 MBD, from oil-exporting nations.
Given that total global production of oil is 85.5 MBD and total consumption is 85.6 MBD, the U.S. by itself consumes 22% of the world's oil supply.
You may have noticed in the above chart that the EIA lists both "crude oil production" and "total oil production" in the U.S. Crude oil production is 5.36 MBD, a number that has remained stable for the past few years. The EIA also has a chart that lists oil production by region and state. The data contain all sorts of interesting tidbits -- for example, crude oil production in North Dakota has risen from 85,000 barrels a day in 2004 to 218,000 barrels a day in 2009. California still produces 567,000 barrels a day, and Texas pumps 1.1 million barrels day, about the same amount the U.S. imports from Saudi Arabia.
The EIA states that total U.S. production is 9.14 MBD, considerably more than the 5.36 MBD listed for crude oil alone. What's the source of the discrepancy? The EIA lists other sources, such as "Natural gas plant liquids."
The U.S. get the 9.67 million barrels a day of oil we import? It turns out our biggest suppliers are North American neighbors.
OPEC: 4.67 MBD
The Persian Gulf: 1.67
Canada: 2 MBD
Saudi Arabia: 1
The U.S. imports oil from a geopolitically diverse array of nations: The Persian Gulf, Africa, South America and North America. Interestingly, the U.S. draws relatively little oil from the world's top producer, Russia.
The silver lining, if there is one, in the trend toward higher oil prices is that America obtains a modest percentage of its imported oil imports from countries, such as Libya, experiencing political turmoil and instability. However, the U.S. relies on other nations for more than half its oil supplies, a potentially unstable dependence in an increasingly unstable world.
For the week eding January 14, 2012, Marathon Petroleum Corp. of Michigan told investors this week it expects to post a small loss for the fourth quarter of 2011 because the prices of its products like gasoline and diesel fuel haven't gone up fast enough.
“Refined product market prices did not increase sufficiently to offset the higher crude oil costs during the fourth quarter of 2011,” the Findlay, Ohio-based company said in its announcement.
Marathon Petroleum has a substantial influence on Michigan’s fuel picture. Industry insiders say the vast majority of gasoline sold in the state, no matter the brand, is refined at Marathon Petroleum’s Detroit facility.
The company’s statement noted that the price of benchmark West Texas Intermediate crude oil increased from $79.20 on Sept. 30 to $98.83 on Dec. 30. That’s a 24.7 percent increase.
The benchmark crude closed Friday at $99.11, down $2.45 for the week.
By contrast, the Michigan statewide price for a gallon of unleaded regular was $3.40 a gallon at the end of September – and $3.38 a gallon at the end of December. Earlier in the year, when crude oil prices also were around $100 per barrel, retail prices were around $4.
The futures prices of gasoline, which often appears to have a direct impact on retail prices, closed unchanged for the week of January 14, 2012 at $2.75.
All of this is because demand for gasoline is WEAK. The oil industry MUST move it to consumers who burn it up, as the refining equation MUST stay relatively balanced - the country MUST consume as must of ALL the refining products made from oil in a just-in-time fashion
Iran exports about 2.3 million barrels of oil per day, mostly to Asia. The world consumes about 89 million barrels a day. The United Statesespecially, consumes roughly 21 million barrels of oil per day - the lions share followed closely now by China at about 10 million. At those consumption rates, sanctions will never stop the export and flow of oil from ANY countty - only perhaps decrease the price it can harge.
On December 4, 2011 CNN reported, "
"""The average price of regular gasoline is $3.29 a gallon, the Trilby Lundberg Survey found.
That's down 9 cents from two weeks earlier, and down a total of 18 cents over the past six weeks, said publisher Trilby Lundberg of the Lundberg survey
While crude oil prices rose $3.55 a barrel over the past two weeks, gas prices fell due to "shrinkage in the profit margins of the downstream portion of the oil industry -- that is, refiners and retailers," Lundberg said. "They were unable to pass through the higher oil prices because American motorists' demand for gasoline continues to shrink due to hard economic conditions."""
If people drive less, the price of fuel drops because they MUST keep making it due to the flip side of a constant Diesel fuel demand.
December and January usually bring the lowest gas prices of the year to states like Arizona, but this year, prices have been rising ahead of the Christmas holiday this time in 2010 because positive economic news in the U.S. and steady global demand have buoyed oil prices.
The average price of regular gasoline in Phoenix was $2.91 in 2010, according to AAA Arizona, about 34 cents higher than a year earlier.
Some stations were charging much more. A Scottsdale Circle K near Hayden Road and Shea Boulevard is selling regular gas for $3.11 a gallon and a Fountain Hills Chevron station is charging $3.10 a gallon, according to Gasbuddy.com where people can report the highest and lowest prices for certain cities. In Los Angeles $3.50 / gallon gas can already be found easily.
The cheapest stations in the area are selling regular gas for more than $2.73 a gallon, according to the Gasbuddy site..
That doesn't bode well for summer prices all across the Nation - it is pre-cursor of what is to come.
The states uses a less expensive winter blend of gasoline. There isn't huge demand." It does not have AS MUCH ethanol in it.
If people take their planned summer vacations and demand rises as usual, spring will bring higher prices. The "summer blend" is more highly ethanol blended because it helps keep down emissions - it burns a bit cleaner.
The improving U.S. economy and demand from China is linked to keeping oil prices high at a time of year they normally fall.
Recent economic news on housing starts, the national tax-cut package and other events have bumped up the price of oil.
China's oil demand was more than 13 percent higher in November compared with November 2009, according to a report from Platts, a division of the McGraw-Hill Company., reaching a new record during the month.
China will now be helping to keep US fuel prices high by it's competition in demand. Gasoline will NEVER go down again to match your salary or pay which is by proxy falling as fuel prices increase.
U.S. oil demand is expected to decline during the next decade with more fuel-efficient cars and increased ethanol use. But U.S. demand will be more than offset by developing countries' growth, meaning prices won't fall because the U.S. uses less.
At some point, the expense of fuel begins to affect the general U.S. economy and the recovery. In fact it has ALREADY happened.
The national average price for a gallon of regular gas Wednesday was $3, according to AAA.
Arizona tends to have prices lower than the national average in winter because it is not as affected by cold weather, which raises demand for heating oil and can pull up gas prices.
But, in summer, with a different fuel blend required in the state, Arizona prices can be higher than the national average.
Arizona has had some relief from that phenomenon in recent years with an expansion of the supply line that brings fuel from Texas to metro Phoenix.
Another line brings fuel to Phoenix from Los Angeles, where prices are higher.
Drivers can take some comfort that, early in 2010, most national experts predicted $3 a gallon gas by summer, and it didn't happen until this week.
The weak U.S. economy kept prices down for the year, but 2011 could see a national average price of $3.30 a gallon, said Phil Flynn, vice president of research at PFGBest futures brokerage in Chicago.
One prominent national expert recently predicted summer highs of as much as $3.75 a gallon, but Flynn said he thinks that is unlikely.
"We expect the economy will get better in 2011 and demand will get stronger," he said. "If the U.S. economy gets better, the value of the dollar gets stronger, and that will put downward pressure on price of crude oil."
He said the current anomaly of rising prices in winter doesn't mean prices will stay abnormally high throughout 2011.
"I know it's winter and we shouldn't be this high," Flynn said. "But we are here because of a lot of refinery problems, and things that will get corrected."
A large storage tank's roof collapsed at an Arco BP tank farm near San Bernardino, Calif., last week, and that could further crimp supplies in the southwestern region for the short term, he said. These kinds of accidents impact an already strained "just in time" delivery system where little of no reserve is kept.
Drivers hardly can keep up with prices as they rise.
Pull you head out of your rear - you cannot win with the Gasoline price game if you keep using it.