Gas Prices could soon drop 50 cents

10:59 PM, Oct 20, 2012

USA TODAY – Autumn gasoline prices are about to drop faster than fall foliage.

With inventories rising and demand waning, gasoline prices could plunge 50 cents a gallon from October’s $3.86 peak average over the next few weeks, providing a lift for the economy and possibly becoming a factor in next month’s presidential election.

Gasoline, now averaging $3.69 a gallon, is expected to fall to $3.35 or lower by late November. In some regions, prices have already sunk below $3.

“Most of the country is heading appreciably lower the next few weeks,” says Tom Kloza of the Oil Price Information Service, who notes wholesale prices in some key markets have dropped from as high as $4.35 a gallon to $2.71. Pump prices typically lag big wholesale drops. But Kloza expects retail prices to sink five to 15 cents a gallon over each of the next three weeks.

The drop could provide a boost to consumer spending and influence next month’s presidential race, where gas prices have been a hot-button issue for much of the campaign. Several battleground states, including Ohio, Pennsylvania and Wisconsin, are enjoying big price drops.

“Certainly, lower gas prices are helpful in terms of consumer spending by increasing disposable income,” says Brian Bethune, chief economist at Alpha Economic Foresights. “And if prices come down at a rapid rate in the next three weeks, that would tend to help the incumbent. It may not be logical, but if people see problems with the high cost of food or gas, it’s the president who tends to get the blame.”

Gas prices have remained stubbornly high well past their traditional Memorial Day weekend peak, due largely to supply shortages and refinery woes on the West Coast and Midwest. But with oil inventories rising and production issues ebbing, prices have been easing the past week, a trend likely to accelerate. “This is very much gravity at work,” Kloza says. “The faster prices soar, the more prone they are to panic sell-offs.”

Kloza expects prices to bottom in the $3.30 range. Gasbuddy.com analyst Patrick DeHaan and energy analyst Brian Milne of Telvent DTN see a $3.35 bottom. Barring rising troubles in the Middle East or refinery issues in the U.S., prices could remain in that range through early 2013.

On Friday, gasbuddy.com was tracking some central Ohio stations selling gas for $2.97 a gallon. Gas prices remain stubbornly high in California — the nation’s priciest state averaging $4.51 a gallon — although some stations are charging more than $5. Energy experts expect prices to bottom in the $4 range. “California is not completely out of the woods yet regarding supplies, and their refineries haven’t been able to keep up,” Milne says.

54.5 mpg will fuel a national renewal

By ROLAND HWANG  | 8/22/12 4:30 AM EDT  As reported in Politico

With the darkest days of the recession behind us, Americans are looking to  better economic times. They also are looking forward to their politicians  working together to find solutions.

While there are many areas where different sides are far apart, there is a  very good news story expected from Washington this week. It’s an issue that  almost all Americans can get behind: higher fuel efficiency.

An agreement set to be finalized by the Obama Administration as  soon as this week promises that by 2025, new vehicles will get an average of  54.5 miles per gallon. This builds on standards already in place, which by 2016  will raise the average fuel efficiency of the new passenger vehicle fleet to  35.5 mpg.

The standards will be introduced incrementally. For consumers, this means  that in less than 15 years, everything from compact cars to pickup trucks will,  on average, burn about half as much gas as vehicles driven today. This saves  about $8,000 in costs over the life of a new vehicle.

This is Washington at its best, working to move America forward.

Republicans and Democrats, automakers and environmental groups supported the  stronger standard because it redirects hard-earned cash away from the gas pump  and back into your wallet. They also understood that the standard fortifies  national security and protects the environment.

And this agreement puts Americans back to work.

Thousands of new jobs are being created in the automotive industry, the  largest manufacturing employer in the U.S. According to the Bureau of Labor  Statistics, the auto industry has added more than 230,000 jobs since June 2009,  when the industry scraped bottom. Most of these jobs are in the manufacturing  sector, but U.S. auto dealerships are beefing up their payrolls as well.

Stronger standards give automakers a long-term roadmap to improve vehicle  efficiency.

By greening the Rust Belt, the U.S. can seize global leadership in  innovative, fuel-efficient technologies – a market historically dominated by  Europe and Asia.

The jobs that accompany this domestic expansion aren’t outsourced; they  remain at home.

In Saginaw, Mich., for example, a century-old auto supplier called Nexteer  Automotive recently added 650 employees to help manufacture electric power  steering components for pickup trucks. These components replace more  energy-intensive hydraulic systems. Electric power steering is a fast-growing  segment of Nexteer’s business, and automakers who want to squeeze more  efficiency from their fleet are driving the increased demand.

Outside the auto industry, job growth will expand even further – by more than  half a million jobs, many in discretionary sectors like services and retail – because money saved at the pump will be spent on things like tuition, new  clothes, or a vacation.

The benefits don’t stop there. Cutting energy use while driving also reduces  our dependence on oil. By 2030, the 54.5 mpg standard will slash oil imports by  one-third. This enhances national security and strengthens the economy by  investing money in the Midwest – not in the volatile Middle East.

Fuel efficiency standards also protect the environment by reducing carbon  pollution equal to taking 85 million cars off the road. This helps fight climate  change that leads to costly droughts and dangerous heat waves. Less pollution  also means a healthier populace and lower medical bills.

Washington responded to America’s demand for more fuel efficient cars. By  implementing a smart, tough standard, Washington showed that it is committed to  creating good jobs and continuing our economic recovery.

54.5 mpg is a standard that works for America.

Roland Hwang is the Transportation Program Director for the Natural  Resources Defense Council.

Read more: http://www.politico.com/news/stories/0812/79949.html#ixzz24J7UKPjn

What Makes Up the Cost of a Gallon of Gas?

By Chris Persaud | Bankrate.com – Fri, Mar 23, 2012 3:01 AM EDT

 

$4 gas prices got your attention? If the cost of gasoline is already back at that lofty level where you are, or is simply headed in that direction, you’re probably asking where all the gas money you’re shelling out at the pump is going.

View infographic

There are a couple of ways of answering that.
Industry shows how gas price breaks down

The American Petroleum Institute, or API, has a general breakdown for you. According to the trade group’s February estimates, most of what you pay for gasoline — 71 percent — goes to refineries, to buy oil.

API says it takes one gallon of oil to make a gallon of gasoline. The price of oil is determined in commodities markets, where companies and traders buy and sell the petroleum for purposes that can include refining it into gasoline or holding it as an investment. The markets, and the prices they set, are influenced by supply-and-demand factors, such as trouble in the Middle East that could result in less oil coming from that region of the world.

After oil prices, the rest of the price of a gallon of gas comes from taxes (14 percent) and costs associated with refining, moving and selling the gasoline (15 percent), according to API.

At the time of API’s most recent study, in late February, the national average price of regular-grade gasoline was $3.58 per gallon. By the group’s estimates and percentages, about $2.54 of that price covered crude oil costs, 50 cents went to taxes, and about 54 cents went into refining, moving and retailing.
Get geeky for more exact gas cost analysis

If you want to get geekier about where your gas money is going, you can do a more exact and up-to-date calculation on your own.

Here’s how:

• Find the price of a gallon of gas. Go online to AAA’s Daily Fuel Gauge Report. For example, as of March 22, the auto club showed that a gallon of regular gasoline sold for about $3.88.
• Find the price of a gallon of oil. Head to Bloomberg.com’s Energy & Oil Prices page. As of March 22, it showed a barrel of oil selling for about $105.46. There are 42 gallons in a barrel of oil, so divide $105.46 by 42 to get $2.51 as the price of one gallon of oil. Again, a gallon of oil can be refined into one gallon of gasoline, according to API. So, about $2.51 of the March 22 price for a gallon of gas went toward the cost of the underlying oil. That works out to about 65 percent of what you paid at the pump.
• Find the cost of taxes. The federal tax on gasoline is 18.4 cents per gallon. On top of that, there are state taxes and, depending on where you live, local gasoline and/or sales taxes, too. If taxes are typical where you are, the API estimates you’re paying 49 cents per gallon in federal, state and local gas taxes, making up 12.5 percent of the average $3.88 gas price.

View interactive map of gas taxes by state

• Determine the cost of refining, transportation and retailing. The rest of the cost of gasoline goes to turning crude oil into fuel, moving it to gas stations and retail markup. Get this number by subtracting the amounts in steps 2 and 3 from the average price in step 1. In this case, that’s $3.88 minus $2.51 and minus 49 cents, which comes out to 88 cents for refining, transportation and retailing — or about 22.5 percent.

And that’s how you do the math. Keep in mind that taxes and other factors making up gas prices can differ by region, state, metro area and city. Check out our map on gasoline taxes by state to see how much of your gas money is going to federal and state taxes.

If you want more detail about your own local taxes, contact your city, county, and/or state department of revenue, department of finances, or the equivalent.

Gas prices fuel congressional campaign rhetoric

By DARREN  SAMUELSOHN | 3/30/12 5:57 PM EDT

President Barack Obama isn’t the only candidate who has to worry about  gasoline price spikes.

Take a look at members of Congress and their challengers, who are going all  out to express concern about the plight of American motorists — often with  personal stories of their own sticker shock.

Illinois GOP Rep. Bobby Schilling took a page from that  playbook this month when he invited reporters to watch him fork over a C-note to fill up his Chevy Suburban  at a Phillips 66 U-Save Mart in Moline. So did Rep. Judy Biggert (R-Ill.), who  opened a recent weekly e-newsletter by bemoaning her last $58 pit stop.

Others are content just to empathize.

Hence, Republican Jason Plummer — running to replace retiring Rep. Jerry  Costello (D-Ill.) — visited ConocoPhillips’s Wood River refinery outside St.  Louis to slam EPA policies that he blamed for driving up fuel prices. New York  GOP Rep. Ann Marie Buerkle’s YouTube moment came when she gave explicit instructions on  what she wanted Energy Secretary Steven Chu to tell his administration  colleagues: “The American people are hurting. They need you to do something  now.”

Expect to hear a lot of the same until November.

“This train stretches from New York City to Los Angeles with how many people  have jumped on it,” said Patrick DeHaan, a senior petroleum analyst at  Gasbuddy.com., a fuel price tracking website. “Either you are for low gas prices  or you are going to get voted out of office. Everyone running is forced to talk  about it because the other party is.”

There’s good reason for all the gas pump bickering. A Gallup poll in March found that 65 percent of Americans  think Congress and the president can take actions to control gas prices, and  that 85 percent want “immediate actions to try to control the rising price of  gas.”

Blame is also easy to spread around. Senate Democrats tried to put  Republicans on the spot in March with a floor vote to repeal oil subsidies,  while House Republicans see rewards from a legislative agenda heavy on domestic  drilling and embarrassing the Obama administration on the Keystone XL  pipeline.

“I’m certain that with $4 gas, the American people will remember who listened  to them and who didn’t,” House Speaker John Boehner said in May before passing  one in a series of energy bills.

During last year’s price spikes, freshmen fanned out to meet with voters and  hear their complaints about fuel costs. Wisconsin GOP Rep. Reid Ribble’s visit to  an Appleton gas station made local TV newscasts, as did Republican Rep. Robert  Hurt’s stop with Virginia farmers, where he talked up offshore development and alternative energy.

The House websites for Ribble, Scott Rigell (R-Va.) and Indiana GOP Rep. Larry Bucshon all feature gas price surveys asking people to  vote on policy solutions.

Indicative of this year’s political stakes, Senate Republican candidates hoping  to help their party reclaim the majority are being much more aggressive than  their House counterparts with their attacks on Democrats.

Virginia Republicans, for example, have posted a video picking at the opening line of a response from  Democrat Tim Kaine at a town hall event when asked about gas price spikes. “I’ve  got to admit there’s some aspects about the gas price thing that makes me  scratch my head,” Kaine says in the clip — a comment his campaign says was taken  out of context.

Kaine’s likely opponent, former Republican Sen. George Allen,  is also up with a  website that allows visitors to type in the make and model of their car to  see how much more it costs to fill up their tank compared with when Obama came  into office.

California Sen. Dianne Feinstein’s long-shot Republican opponent Elizabeth  Emken features a “#FeinsteinOnEmpty” hashtag on her website. She  also questions Feinstein’s past praise for Chu, who said in 2008 — before  joining the Obama administration — that he supported Europe-style gas prices in  the United States.

Democrats are in on the action too.

Indiana Democrats are squeezing Sen. Richard Lugar with a Web ad slamming the Republican over his support for a gas tax hike of $1 or more.

Sen. Bill Nelson (D-Fla.) sent an email to voters in February talking up legislation he has  co-sponsored that would curb oil market speculators.

He also solicited voters’ ideas on “what else you think we could do to bring  down gas prices.”

Sen. Claire McCaskill’s website tries to bust what she lists as six myths about gas prices (No. 5: “Nothing can be done to  bring down the price of fuel”). The Missouri Democrat also promotes her call for  Obama to tap the Strategic Petroleum Reserve for the second time during his  term.

Democratic candidates for House seats are also going after Republican  incumbents’ campaign contributions from the oil and gas industry, pairing them  with votes against repealing the industry’s subsidies.

Nearly identical press releases came out in late February from New Hampshire  Democratic candidate Annie Kuster, who is challenging Republican Rep. Charlie  Bass; Nevada state Assembly Speaker John Oceguera in his race against Rep. Joe Heck; former New  York Rep. Dan Maffei in his rematch against Buerkle; and Manan Trivedi  in his second attempt to unseat Rep. Jim Gerlach (R-Pa.).

“High gas prices? You can thank Washington insiders influencing Washington  insiders,” Trivedi posted on Twitter, where he linked to a statement criticizing Gerlach for supporting oil and gas  subsidies while taking more than $132,000 in campaign contributions from the  industry.

Outside groups are also weighing in on the gas price debate.

Public Campaign, a group with ties to MoveOn.org and labor unions, sponsored  two weeks of cable  TV ads against Republican Rep. Scott Tipton in his Western Colorado  district, knocking him for taking more than $100,000 in campaign contributions  from the oil and gas industry and questioning his vote against repealing the  industry’s subsidies.

The American Petroleum Institute has already spent generously this cycle,  mostly to help Republicans, including House Energy and Commerce Chairman Fred  Upton (R-Mich.), Natural Resources Chairman Doc Hastings (R-Wash.), Science  Chairman Ralph Hall (R-Texas), Majority Whip Kevin McCarthy (R-Calif.) and  Boehner. The trade group also ran radio and print ads ahead of the Senate  subsidy debate in the Senate and presidential battleground states of Maine,  Massachusetts, Missouri, Nevada, North Carolina, Virginia and West Virginia.

Karl Rove’s American Crossroads is also going after vulnerable House and  Senate Democrats, including $1.5 million spent so far challenging McCaskill. The  attacks include a  website called “The Truth About Claire” that questions her commitment to  lowering gas prices.

The group’s spokesman Nate Hodson said the group “won’t be shy” when spending  tens of millions more this cycle to raise the gas price issue in congressional  races. “It’s what voters are paying attention to right now,” he said.

This article first appeared on POLITICO Pro at 5:41 p.m. on March 30,  2012.

Read more: http://www.politico.com/news/stories/0312/74690_Page2.html#ixzz1r6jsxV7S

Oil Prices Spike Exacerbated By Wall Street Speculation, Federal Reserve Study Finds

As reported by Zach Carter for Huffington Post

WASHINGTON — Two economists at the St. Louis Federal Reserve have published findings that indicate that Wall Street speculation is responsible for 15 percent of the increase in oil prices over the past decade, a finding with significant implications for the recent sharp rise in gas prices.

While politicians have little ability to alter the price swings of commodities like oil, regulators have both the authority and policy tools to do so. The Commodity Futures Trading Commission is responsible for overseeing the financial market for oil. The 2010 Wall Street reform bill gave the CFTC new power to limit excessive speculation, but the rule will not go into effect until later this year.

According to St. Louis Fed economists Luciana Juvenal and Ivan Petrella, speculation in oil markets was the second-biggest factor behind the past decade’s price run-up, behind increased global demand for oil, which accounted for 40 percent of the increase.

“Speculation was the second-largest contributor to oil prices and accounted for about 15 percent of the rise,” the economists wrote. “The effect that speculation had on oil prices over this period coincides closely with the dramatic rise in commodity index trading — resulting in concerns voiced by policymakers.”

Commodity indexes allow speculators to bet on the price of several commodities at once, and have become very popular investment tools for both Wall Street investment companies and pension funds. Between 2004 and 2008, the total volume of trading activity in commodity indexes jumped from $13 billion to about $260 billion, according to research by Michael Masters, founder of Masters Capital Markets and the financial reform nonprofit Better Markets.

Masters and others have noted that speculation can exaggerate price swings otherwise dictated by fundamental supply-and-demand dynamics, and can also force prices to move contrary to supply-and-demand predictions. During 2008, when oil prices soared to their highest level on record, they did so during a period in which global demand was low and global supply was high — what should have been a recipe for lower prices.

The most recent Fed study concludes that economic fundamentals are still the primary determinant, saying only that speculation can “exacerbate” price swings.

“Global demand remained the primary driver of oil prices from 2000 to 2009,” Juvenal and Petrella wrote. “That said, one cannot completely dismiss a role for speculation in the run-up of oil prices of the past decade. Speculative demand can and did exacerbate the boom-bust cycle in commodity prices. Ultimately, however, fundamentals continue to account for the long-run trend in oil prices.”

Fuel prices are currently at the highest level on record for the month of March, a phenomenon upon which presidential candidates are seizing to attack President Barack Obama on the issue at campaign stops. The financial reform bill Obama signed into law in 2010 allowed the CFTC to write its new rule, designed to curb price movements influenced by excessive speculation. The rule limits the size of the bets that individual traders can make on any given commodity.

Toyota to Lease Plug -In Hybrids by end of 2009

YURI KAGEYAMA | June 3, 2009 06:41 AM EST |

TOKYO — Toyota said Wednesday it will start leasing plug-in hybrid cars, that are even greener than its hit Prius, by the end of this year in the U.S., Japan and Europe.

Toyota Motor Corp., the world’s top automaker, will start leasing 200 plug-ins in Japan, 150 in the U.S. and 150 in Europe, mostly for rental, such as through special government-backed programs, it said in a release.

Toyota will for the first time use lithium-ion batteries in the plug-ins. The batteries are already used in some cars but more common in laptops and other gadgets.

Toyota hybrids now use nickel-metal hydride batteries. Using a lithium-ion battery will produce more energy, allowing the car to run more as an electric vehicle, but there have been some technological hurdles.

A plug-in recharges from a regular household socket. When the battery runs low, it will start running as a regular hybrid so drivers don’t have to worry about running out of juice on the road.

Automakers around the world are working on plug-in models. Recharging stations are expected to proliferate in the cities of the future, much like gasoline stands, for recharging.

The booming sales of the revamped Prius, which went on sale last month, have been a rare bright spot for Toyota.

Battered by the global slump and the strong yen, the maker of the Camry sedan and Lexus luxury models recorded its worst loss in its seven-decade history for the fiscal year ended March.

Toyota dealers have received 110,000 orders for the Prius in Japan. Toyota acknowledged this week an order placed this month won’t get delivered until November or later.

Toyota leads the world in cumulative hybrid sales because of the popularity of the Prius, now in its third generation. The first-generation Prius went on sale in 1997.