North American Fuel Shortage Reports

[Typhoon]

The NYMEX gasoline contract is now trading between $1.93 and $1.94 per gallon, strongly up from yesterday's close of $1.8955.

When you watch futures prices, consider that NYMEX introduced an RBOB (reformulated gasoline blendstock for oxygen blending) gasoline contract since the other one will be phased out due to the fact that MTBE will no longer be used as an additive and will be replaced with ethanol. RBOB has been trading at a significant premium; it is above $2 in the May through September delivery months.

[Typhoon]

25% lower gas then last year makes this year mighty expensive looking

I said that reformulated gasoline inventories are 24% lower than a year ago. Conventional gas inventories, at 112.4 million barrels, are only 3% lower than a year ago, although they are falling quickly. Inventories of blending components are actually almost 11% higher than a year ago. So, total gasoline inventories (a combination of these three) are only slightly lower than they were a year ago. It's the sharp downward trend that worries me, combined with the fact that we're likely to see strong demand this summer.

[FoxV]

RBOB has been trading at a significant premium; it is above $2 in the May through September delivery months.

that premium is from the extra production cost.

Ethanol cost twice as much as gasoline to produce (by current methods). This leads to a very easy calculation that whatever the Percentage of Ethanol is, the mix gas should cost that percentage more.

when it doesn't, its because of subsidies and tax breaks.

Will make for a very interesting situation when E85 becomes widespread and the government can no longer afford to subsidize it (imagine paying $5gln for something that only gives you 75% the milage)

Good plan Bush

[Typhoon]

The NYMEX gasoline contract is now trading between $1.93 and $1.94 per gallon, strongly up from yesterday's close of $1.8955.

When you watch futures prices, consider that NYMEX introduced an RBOB (reformulated gasoline blendstock for oxygen blending) gasoline contract since the other one will be phased out due to the fact that MTBE will no longer be used as an additive and will be replaced with ethanol. RBOB has been trading at a significant premium; it is above $2 in the May through September delivery months.

[TommyJefferson]

Please excuse my ignorance, but how does the wholesale contract delivery price translate to the retail price.

Isn't it about a dollar, ie. $2 June wholesale equals $3 June retail at the pump?

[Typhoon]

Please excuse my ignorance, but how does the wholesale contract delivery price translate to the retail price.

Isn't it about a dollar, ie. $2 June wholesale equals $3 June retail at the pump?

From the wholesale price, you have to add national and state taxes, the delivery cost, the credit card processing fee, the cost of running the gas station, and the net profit that the gas station makes (if any). Generally, the difference between wholesale and retail averages 70 to 80 cents, but it varies. Also consider that it takes time for the retail price to catch up to a rising or falling wholesale price; usually there is a lag of a few weeks.

[TommyJefferson]

Thanks!

[NEOPO]

Not that "we" neccessarily believe everything that the EIA says but here's a good opener to understanding gasoline prices.

Primer on gasoline

[bruin]

A look into our near future:




And the Gas Lines Grow

Monday, Jul. 09, 1979

But the trucker strike wanes

Just a week or two earlier, the gas lines had somehow seemed temporary. It was an irritating inconvenience to spend hours waiting for what used to be taken for granted, but somebody would eventually fix things. More gas would appear, as it had before, and all would be well. Last week it became clear that nobody was fixing things very fast. The lines got longer, and the prices went up.

Most drivers, of course, remained as quietly idle as their engines while they waited as long as four or five hours, at least in the Northeast, to fill their tanks. They read, listened to radios or cassettes, sometimes watched a small TV set installed in their cars. Some chatted with other motorists or bought food and drink from enterprising kids working the lines. But growing anger and frustration all too often erupted in name calling, fistfights, occasional stabbings and shootings. While a gas-station owner in Freemansburg, Pa., rushed to help his bleeding wife, who had been accidentally struck by a car waiting in line, other motorists filled up their tanks and drove off without paying. In Levittown, Pa., in an outbreak originally caused by truckers demonstrating against high diesel fuel prices, some 2,000 motorists and thrill-seekers clashed with the police in three days of rioting. Police arrested nearly 200. Local officials declared a state of emergency and enforced a curfew that prohibited more than five people's getting together on the streets after 9 p.m. Pennsylvania Governor Richard Thornburgh helped restore order by bringing another 500,000 gal. of gas into the area and imposing a statewide odd-even purchase system. Said Bristol Town ship Police Chief Richard Templeton: "We're sitting on a powder keg."

Like the horse rustlers of an earlier era, gas thieves were on the prowl. Usually they siphoned off gas; occasionally they took the whole car. Some resorted to ingenious ruses. Two men were arrested in Miami after police discovered that a floor board had been cut out of their dilapidated van. Underneath was $5,000 worth of equipment, including intake hoses, battery-operated pumps and a 350-gal. storage tank. Apparently the pair would drive into a station, casually park over an unlocked underground tank and help themselves. On a smaller scale, thieves faced another kind of retribution. In the process of siphoning gas, they often ended up swallowing some of the gas that gushed forth. Cases of gas poisoning were up all over the country. In the Houston-Galveston area, they had jumped to ten a day from just one a year ago.

One major element in the public anger was the fact that many gas stations have taken to closing on weekends, and for much of the week as well. These unscheduled and unpredictable closings (involving as many as 90% of stations in the New York City area) added considerably to drivers' anxiety about getting gas, and therefore to the wasteful practice of tank-topping—buying a few gallons to get a full tank. They also added to drivers' suspicion that the industry was manipulating them, their cars and their pocketbooks.

To combat the closings, many states have issued orders to stations to stay open on either Saturday or Sunday, and Gulf Oil Corp. instructed 350 of its 800 company-owned stations to provide gas in 26 states east of the Rockies on Sundays starting July 1. But most owners are reluctant to obey. After they have used up their gas allocation, they say, they see no need to stick around. Besides, if they stay open on weekends, they will be swamped with customers and quickly sell out their allocation, leaving none for regular customers during the week. More repair work also occurs on weekdays. Says Wayne Konitchek, a spokesman for Connecticut's gasoline dealers: "I wouldn't close on a Tuesday to open on a Sunday when I can't subsidize the opening by repair work."

California seems to have solved the problem of gas closings by taking more drastic action than other states. After officials discovered that the odd-even purchase arrangement was not working because 90% of the stations shut down on weekends, they invoked a four-year-old law that gave them emergency powers in case of a severe energy shortage. Said Richard Maullin, chairman of the California energy commission: "It was definitely time to legislate by decree." Stations with odd-numbered pump registrations were required to stay open on Saturday, those with even numbers on Sundays. Police handed out citations to station owners who failed to comply, and a few were given a $500 fine. The weekend openings made the crucial psychological difference. Motorists stopped driving so much to search for gas.

The nation's fuel shortage was partly relieved when the rancorous independent truckers' strike showed signs of waning. Though it continued to cause trouble in some areas, it was apparently running out of gas in others. In Tennessee, truckers making deliveries were still the target of vandals and snipers. One driver was informed over his CB radio that he was losing a right wheel. When he stepped out to have a look, he was shot and wounded. Because of that and other incidents, Tennessee Governor Lamar Alexander declared an energy emergency, put state troopers on a twelve-hour day and ordered them to escort trucks, especially those carrying gasoline and diesel fuel. Troopers forced strikers blocking truck stops to move their rigs.

Elsewhere, the economic facts of life were making it harder for the truckers to stay idle. Monthly payments for their rigs are as high as $2,000, more than the cost of most home mortgages. They stand to lose a lot of money by refusing to work, and they do not have a strike fund. They also ran into a tough reaction from local governments. Admits Mac Vernon, a spokesman for the Independent Truckers Association: "Local officials are getting injunctions to stop picketing and blockading, and some companies are saying, 'You either run or you're fired.' "

The Carter Administration has eased some of the cumbersome federal regulations that discriminate against independent truckers. Last week the Interstate Commerce Commission increased from 6% to 7% the surcharge it requires trucking firms to pay the owner-operators they hire. The Government urged states to allow heavier loads so that the truckers can make more money. Vice President Walter Mondale made a plea to the strikers to "get this country moving again." Scoffed Mike Parkhurst, president of the ITA: "Tomorrow the ice is going to trot out another little carrot on the end of a stick. It will still be unacceptable."

Though the truckers vowed to starve the country into submission to achieve their demands, they so far have fallen considerably short of that goal. By and large, food has continued to roll across the nation's highways, but there have been widespread losses and threats of shortages. In California, thousands of acres of ripe lettuce and potatoes were plowed under for lack of trucks to ship them east, a loss that is calculated at $15 million to $25 million. In Florida some farmers face ruin unless 2,000 truckers can be found to ship $50 million in produce to Northern markets. An estimated 45% of the state's $30 million watermelon crop has been spoiled. Produce brokers are offering up to 35% above normal pay to anyone willing to haul produce, and about 90% of the Southern harvest is being moved. Says Jack Gilchrist of the Georgia department of agriculture: "We were right on the edge of catastrophe when things changed for us. They are improving every day."

Red meat has been held up by a truck shortage in Midwestern beef states like Iowa, Nebraska and Minnesota. In Detroit, Frederick & Herrud, a meat processor, was forced to shut down its hog-slaughtering facility and lay off 900 workers because no hogs were arriving. Normally the plant butchers 16,000 hogs a week. Other meat-plant workers were laid off in Iowa, Nebraska and Oklahoma.

By week's end, however, meat was moving again in most parts of the country.

With President Carter off in Asia all week, Washington seemed a city without leadership, but Congress was anxious to provide some sense of forward movement. When Democratic Representative Bill Moorhead of Pennsylvania introduced a bill last January to produce 500,000 bbl. a day in synthetic fuels by 1985, he won little support; but when the gas lines began to form, as Moorhead put it, they "ignited the bill." Almost overnight, he found he had 170 cosponsors, including many Republicans.

The House Democratic leadership treated the bill as its own. Speaker Tip O'Neill summoned his lieutenants, and they agreed to escalate Moorhead's bill to the equivalent of 2 million bbl. a day by the end of the next decade. In a meeting with Energy Boss James Schlesinger and White House Domestic Affairs Adviser Stu Eizenstadt just before the Tokyo summit, House Majority Leader Jim Wright announced: "We have decided that we're going to promote several energy initiatives. We are going to have a number of arrows in our quiver to get us down the road." At the Tokyo summit, Schlesinger persuaded the President to go along. Then he phoned Moorhead: "The Administration is all for it now. I told them they would be foolish to stand in the way of this because they would be run over." The House then approved the measure, 368 to 25.

Senator Henry (Scoop) Jackson has his own provision for synthetic fuels in his comprehensive energy bill, and the Senate is in almost as much of a hurry as the House. Jackson's bill is co-sponsored by all but five of the 18 members of the Energy Committee and has broad backing in the full Senate. Says Jackson: "We're going to get a bill out and pass it before the August recess commences, even if we have to meet at 5 in the morning."

For all the pressure behind it, the synthetic-fuel program has not won unanimous applause. Badger Energy Inc. of Cambridge, Mass., for example, has spent two years and a $2 million grant from the Department of Energy to produce a design for converting coal into unleaded gasoline, but it puts development ten years away. Under the best of circumstances, a facility that could do this would be capable of converting coal into not much more than 150,000 bbl. of gasoline a day.

There are other problems. Some experts believe that the creation of synthetic fuel would cause large-scale air pollution. Others argue that considerable amounts of energy would be needed for the process of producing new energy.

"There's a tendency to go overboard," cautioned William Proxmire, chairman of the Senate Banking Committee. "I'm concerned about the ultimate cost. I think we have moved much too precipitously without the kind of information that we ought to have."

As gas lines lengthen, as tempers grow shorter, as the economy suffers, the search for alternative fuels seems to promise no remedy soon.

[firestarter]

Memories............

Great post. I was there and don't remember it affecting us locally (Chicago) too much. The scale of life back then (no exurbs) was/seemed a lot smaller than today ,and as such was more a nuisance than anything else.

[some_guy282]

Very good read.

[dhfenton]

I was there and I remember every other day fill-ups depending on your license palte number. But I don't think it really affected that many people's lifestyles, other than giving them something to bitch about.

[IanC]

Great post.

I wonder how different things will be this time, especially with the growing awareness of Peak Oil. It seems like it will be worse when it starts to sink in that there is no replacement for cheap fuel and that things can't just 'get fixed'.

What I'm not looking forward to is experiencing the shrill partisan fingerpointing blamegame. Just suppose we get a visionary president who's on the right track, only to get derailed by talk radio and political expedience for the next midterm election. This is really going to suck.

-Ian

[advancedatheist]

Today by the Costco store in Prescott, Arizona, I saw a guy holding a gas can and a hand lettered sign on a piece of cardboard asking for gasoline. He didn't strike me as homeless.

Have you seen similar people in your communities?

[Novus]

That type of loser is the worst of the worst. Give them nothing. Gas is not a right it is a privilege. Soon we will all be out of gas and there will be many more gas beggers. It is time for people to start trading in their cars for bikes and a good pair of shoes.

[Pablo2079]

Some young guy (20 maybe) came up to me in a grocery store parking lot. He said he was lost and out of gas. He looked pretty freaked out. Either way, I figured it was worth $5. I gave him the money and he took off. Literally ran away.

I wonder how soon this will become commonplace? This was in an area were I've never seen beggars before, so I tend to believe what he was saying. Not sure how $5 will help him "find is way" though.

[willjones4]

the gas can is a front-these are usually crackheads and run of the mill beggars. They figure the gas can makes it look more legit ("just need some money to get some gas to get home, me and my five kids")---funny, the car and kids are usually remotely located, waiting for this guy to return----a guy came to me once with this story and his can-I said "sure buddy, no problem, give me your can and I'll go fill it up, where are you parked?" he promptly remembered he needed to go check on something and left...

[advancedatheist]

the gas can is a front-these are usually crackheads and run of the mill beggars.

In my region, crystal meth seems the illegal drug of choice.

[seven]

This reminds me of a guy I saw begging at a stoplight in downtown Kansas City last year...

His boldly-lettered cardboard sign read:

"The hell with food - I want a beer"

I laughed so hard I almost spilled my coffee - then gave him five bucks for his honesty and adding some much-needed amusement to my day.

[willjones4]

Yeah, I think meth is the "new crack"---at any rate, these people dont give a damn about gas, they want their fix-period. Thats why the guy ran off after getting the fiver--he couldnt wait to get his fix. Where I live, we've had an influx of hurricane evacuees who are also addicts--you cant go downtown without getting hit up by at least three or four beggars-some do a little dance routine or something, some make up lies (including carrying gas cans), whatever it takes to get that hit...I give money to homeless SHELTERS when I can, not homeless people, and when they ask me for a handout I refer them to the shelter...usually that really pisses them off because the shelter doesnt hand out meth...if your heart insists that you help these people, give them food directly or refer them, but DONT give them cash, youll just be helping them supply their habit...