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Title: Gasoline Nears $3 in U.S., Hurting Bush, GM, Helping Refiners
Source:
Bloomberg
URL Source: http://www.bloomberg.com/apps/news? ... .4JwnqLP4&refer=top_world_news
Published: Apr 10, 2006
Author: Bloomberg
Post Date: 2006-04-10 11:06:43 by Brian S
Keywords: None
Views: 62
Comments: 5
April 10 (Bloomberg) -- Gasoline is climbing toward the U.S. record of $3.07 a gallon, and the damage is piling up for President George W. Bush and General Motors Corp. Higher fuel prices may deepen losses for makers of gas- guzzling sport utility vehicles and trim sales for Wal-Mart Stores Inc., the world's largest retailer. Oil refiners such as Tesoro Corp. and Japanese makers of higher-mileage hybrid cars are likely to benefit. Hurricane Katrina in August pushed the U.S. average gasoline price above $3 for the first time. Since then, the percentage of Americans who don't like Bush's energy policies has jumped to 58 percent, according to a Newsweek poll last month. Now prices at the pump are $2.59 a gallon on average nationwide and rising because of crude oil costs, lack of refineries and changes in fuel rules, analysts and industry executives said. ``There's a good chance there's going to be problems'' as refiners try to meet peak U.S. demand this summer, said Tesoro Chief Executive Officer Bruce Smith, who runs six plants from Alaska to North Dakota. A requirement to reduce the sulfur in fuel and a switch to ethanol as the favored gasoline additive ``could be the equivalent of another hurricane,'' he said. White House Press Secretary Scott McClellan said on April 7 that ``there's not a short-term solution'' to ease energy prices. Asked whether energy prices may hurt Republicans in congressional races this fall, he said: ``The price at the pump is too high.'' Bush's approval rating was 36 percent, tying a record low for his presidency, in the Newsweek poll, which was based on telephone interviews with 1,020 adults on March 16 and 17. The percent who disapprove of Bush's handling of energy issues has never been higher, the poll found. `World of Hurt' The average U.S. gasoline pump price jumped 16 percent in the past six weeks, according to weekly data from the U.S. Energy Department. Prices didn't reach today's prices until mid-August last year. Prices often rise in the summer, when U.S. motorists take to the highways for vacations, boosting fuel demand. The pump price has been 12.5 cents, or 8 percent, higher on average in August compared with February over the past five years. Mark Routt, an analyst at Energy Security Analysis Inc. in Wakefield, Massachusetts, said he expects gasoline to reach $3.50 a gallon in some parts of the country. ``We are in a world of hurt on gasoline,'' Routt said, citing the switch to ethanol and other changes in fuel specifications. ``There are all sorts of changeovers that have to happen. It's not good news.'' SUV Sales Falter A shift away from the largest sport utility vehicles and passenger cars led to a $2.2 billion decline in profit from car and truck sales last year at Detroit-based General Motors, the world's biggest maker of cars and trucks. Rising fuel prices were part of the reason sales of the biggest vehicles fell, said Jerry Dubrowski, a General Motors spokesman. Toyota Motor Corp., maker of the Prius that runs on a hybrid gasoline-electric engine, and Honda Motor Co., which also offers hybrids, stand to gain, said Thad Malesh, president of Automotive Research Group in Moorpark, California. ``It's going to hurt GM in the short term,'' he said. General Motors said on Feb. 24 that it would cut spending on the next versions of its mid-size sport utility vehicles, the GMC Envoy and Chevrolet TrailBlazer. The decision was a sign that the company sees diminishing sales potential for those models. Toyota Motor, based in Toyota City, Japan, more than doubled sales of its Prius last year. ``Clearly gas prices can impact car buyers' product decisions,'' said Paul Krell, a spokesman for the United Auto Workers union in Detroit. General Motors will introduce a hybrid version under its Saturn brand this summer, said Sherrie Childers Arb, a spokeswoman for GM on environment and energy issues. ``I don't think volatility in fuel prices is good for anyone,'' she said. Refiners Profit Record fuel prices are affecting Americans in other ways. A Bloomberg poll in January showed U.S. consumers expect to cut spending in other areas as energy bills rise, and retail sales reported last week were below expectations. Bentonville, Arkansas-based Wal-Mart said sales from stores open more than a year rose 1.4 percent, the smallest gain in 11 months. For Sunoco Inc., based in Philadelphia, and Valero Energy Corp. and Tesoro, both in San Antonio, rising fuel prices are a boon. Shares of Valero more than doubled last year, for the best performance in the Standard & Poor's 500-stock index. Valero is the biggest U.S. refinery owner, and Sunoco and Tesoro are second and third among refiners that don't also explore for oil. Tesoro had record profit last year, and analysts forecast the company will earn more this year. Chief Executive Smith said chances are good that the switch to ethanol or breakdowns at refineries running new, more complex equipment for low-sulfur fuel will cause supply disruptions, boosting fuel prices and refiner profits. ``We could be wrong,'' he said in an April 4 interview. ``Maybe everything will work perfectly. I still think it will be an awfully good year.'' He declined to provide a profit forecast. Hurricane Threat Brian Hicks of U.S. Global Investors in San Antonio said $3 gasoline is likely this summer, and prices of $5 are ``a possibility'' in the event of a hurricane as devastating as Katrina or Rita, which shut almost a third of all U.S. refineries in late September. The $1 billion natural resources mutual fund Hicks co- manages had shares of Valero and Sunoco in its top five holdings as of the end of last year, according to Bloomberg data. This is the final year of a three-year transition to tighter U.S. Environmental Protection Agency requirements for sulfur in fuel. Refiners have spent about $8 billion on equipment for low- sulfur gasoline and another $8 billion for facilities that will cut sulfur in diesel, said Bob Slaughter, president of the National Petrochemical and Refinery Association in Washington. Opportunity for Problems ``Everything you do that adds complexity, it's another opportunity for a problem,'' said Joel Maness, executive vice president of refining and supply for Sunoco, which has five refineries. Preparations for lower-sulfur fuels are siphoning off money that might have been used to expand refining capacity, according to Ye-Mon Chen, an analyst at Shell Global Solutions in Houston, a consulting service owned by Royal Dutch Shell Plc. ``All the money is going into new environmental regulations.'' Blending ethanol in gasoline in place of MTBE, a chemical that is being phased out because it contaminated groundwater and spawned lawsuits, poses logistical challenges. Because ethanol is more volatile than MTBE, only about half as much can be blended with gasoline, according to Valero. That means the switch may cut overall U.S. gasoline supplies by up to 145,000 barrels a day, or 1.5 percent of the average 9.7 million barrels of gasoline a day produced or imported in 2005. Liability ``Until you can get more refining capacity on line, the market is going to be tight,'' said Aaron Brady, associate director of research on refining and marketing at Cambridge Energy Research Associates in Cambridge, Massachusetts. Refiners are switching to ethanol from MTBE because of the energy bill that passed Congress last year and was signed by Bush in August. They failed to get the protection they sought from lawsuits related to MTBE, and the bill eliminated a requirement that gasoline contain an oxygenate to make it burn more completely. The oxygenate requirement was the reason MTBE was added to fuel in the first place. ``If your defense for using MTBE is `The government required it of me,' and the government no longer requires it of you, then to be consistent companies each on their own will decide what they're going to do,'' Red Cavaney, president of the American Petroleum Institute in Washington, said last month. Some who work in the fuel business think concerns over the switch to ethanol and other threats to supply are overblown. ``I think there will be plenty of product around and our spike will come early in the spring,'' said William Shireman, executive vice president of Gas City Ltd. in Frankfort, Illinois. ``It is happening right now.'' Bush's Tax President Bush, in a question and answer session last week in Charlotte, North Carolina, said, ``I fully understand the effects of gasoline price rises on people who are working. It's like a tax.'' He said there was no quick fix. ``And the long-term solution is to get off oil.'' Gasoline prices were the most frequent topic discussed among friends and family, according to a poll the Pew Research Center for the People and the Press conducted in December. ``Gas prices are a big deal to Americans,'' said Michael Dimock, associate director of the Washington-based group. ``It does tend to connect to a sense of economic dissatisfaction,'' he said. ``Any time people are concerned about the economy, it's bad news for the president.''
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#1. To: Brian S (#0)
Hurting Bush? My bullsh*t-o-meter just went off.
Here's the thing about the American People. All they have to do is park their car for a week. Not drive it. More importantly, just not buy gasoline for a week. See what happens after that. The problem isn't that the oil companies are gouging us, it's the fact that we continue to pay their prices. There is no shortage of oil, just a shortage of refining capability. If we weren't at war right now, we'd have plenty of gasoline to go around. Who benefits from a war for oil? Well DUH.... The Oil Companies. In 2001, gasoline shot from $1.05 a gallon to $3.00 overnight. It's not come down, but a fucking fraction. Right now, it's $2.70 a gallon here in Minneapolis. It's going to go up to $3.00 a gallon and fucking stay there, because people continue to pay that price. Until the CEO's of these oil companies are publicly flogged, or incarcerated for outright gouging, we'll see $3.00 a gallon, if not higher by summer time. If Hugo Chavez were able to get oil down to $50.00 a barrel gas prices wouldn't change because the oil companies are raking in record profits and they like it that way.
#2. To: Brian S (#0)
 | What's that Mr. Nipples? You want me to ask the nice lady about her rack?. |
#3. To: Brian S (#0)
Putting a map of the US showing different requirements for gasoline formulation will demonstrate the absurdity of the current system. Not building refineries is another. Fuck it all, gas is cheaper here than anywhere else apart from places like Saudi, Iran and Venzela. So, suck it up and stop whining America. Drive a smaller car if it hurts so much. BUT JUST STFU. Poor widdle babies.
If we can impeach a President for lying about a blow job from an intern, the time has come to impeach a President from giving the American people a line of bullshit about Iraq used to justify a war that has left almost 2400 American soldiers dead. George Bush did not leak to protect America. He leaked to cover his ass. That, my friends, is the definition of a coward. -Larry Johnson
#4. To: swarthyguy (#3)
Group: Internal memos show oil companies limited refineries to drive up prices The Foundation for Taxpayer and Consumer Rights (FTCR) today exposed internal oil company memos that show how the industry intentionally reduced domestic refining capacity to drive up profits, RAW STORY has learned. The three internal memos from Mobil, Chevron and Texaco illustrate how the oil juggernauts reduced refining capacity and drove independent refiners out of business in an effort to increase prices. The highly confidential memos reveal a nationwide effort by American Petroleum Institute, the lobbying and research arm of the oil industry, to encourage major refiners to close their refineries in the mid-1990s...........
#5. To: Brian S (#0)
The oil price spike would hurt the GOP even more, if it weren't for the immigration issue being in the news and the voters having it in their face that the Dems are even worse than the GOP on immigration.
I've already said too much.
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