Advertisement

Archive for Monday, March 21, 2011

Gas stations’ switch to summer fuel could mean a rise in gas prices

Gas prices have dropped recently but are still above $3.00 per gallon. These prices were posted Monday, March 20, 2011, at QuikTrip, 1020 E. 23rd St.

Gas prices have dropped recently but are still above $3.00 per gallon. These prices were posted Monday, March 20, 2011, at QuikTrip, 1020 E. 23rd St.

March 21, 2011

Advertisement

A change in the season could soon result in another increase in gasoline prices.

Gas prices, which are hovering around $3.39 per gallon in Lawrence, could rise another 10 cents to 15 cents when gas stations begin switching out winter fuel for summer fuel, said Jim Hanni, executive vice president of AAA Kansas.

The summer gasoline blend, which produces less pollution but is more expensive, uses different fuel additives. Before each winter and summer, production slows at refineries as the transition is made.

“In some parts of the country, (the switch) has already happened. In other parts it hasn’t happened yet. The general feeling is that it could be a 10-cent to 15-cent shift upwards as blends switch out,” Hanni said.

Last month, gas prices in Lawrence were at $3.03 per gallon, and a year ago they were at $2.66. In the past two weeks, prices have stabilized, but that could change as the summer fuel arrives.

Hanni doesn’t expect Kansas to hit the $4-per-gallon mark anytime soon, but notes that international factors make prices hard to predict.

Along with unrest in Egypt and Libya, the market could be shaken by the earthquake in Japan. Already driving prices upward was an unusually cold winter in the Northern Hemisphere, brisk consumption of oil in China and strong investment in oil futures, Hanni said.

To help ease the pain at having to pay high prices at the pump, Hanni offers some advice on how to conserve gas.

  • Drive more efficiently: Driving less aggressively also means driving more efficiently, Hanni said. Rapid acceleration and breaking uses 33 percent more gas at high speeds and 5 percent more gas while driving in city traffic. For every five miles drivers travel over 60 mph, Hanni said it is like paying an additional 24 cents a gallon. Another tip is to use cruise control, which allows for a constant speed and saves on gas.
  • Maintain your vehicle: For cars that have failed an emission test or are noticeably out of tune, fixing them can improve gas mileage by 4 percent, according to the U.S. Department of Energy. Having properly inflated tires and the right grade of motor oil also helps improve fuel efficiency.
  • Plan combined trips: Driving less is a great way to save on gas mileage. Finding people to commute with or combining errands into one trip helps cut down on gas use.

Comments

corey872 3 years, 10 months ago

Hanni left out one more important tip - keep an eye on E85 prices. The price spread typically widens in the summer - it's usually 25 and up to 30% less expensive around here. This more than offsets the 10-15% drop in mileage seen on most FFV's. So overall, makes a substantial savings...and puts Americans to work vs funding foreign dictators and terrorists!

Steve Jacob 3 years, 10 months ago

Not a big fan of E85, it does not have the "power" of gasoline, (the 10-15% is on the low side of stats) and raises food prices, which is important at the moment, because the possibility of Japan losing many crops and having to import much more then normal. Remember that starting the riots in Egypt, food prices going up.

corey872 3 years, 10 months ago

Not sure what you mean by 'power' - it does have lower BTU's/gallon, but higher octane (105) and burns more efficiently. I have not noticed any loss in engine power using it in my truck and my car absolutely loves it due to the high octane.

Many studies have shown ethanol (which is increasingly coming from non-food items such as cellulose and other waste) actually moderates food prices by reducing the high cost of transportation fuel.

Even today, corn is much less than 15 cents per pound, yet a 1 pound bag of corn chips is about $4.00 on the store shelf. Even if corn were free, we'd still be paying over $3.85 for a bag of nachos...plus probably an extra $2.00 in taxes to help all the unemployed farmers, truck drivers, machinists, plant workers, etc - who are employed by the ethanol industry.

just_another_bozo_on_this_bus 3 years, 10 months ago

The production of ethanol is extremely dependent on the use of vast quantities of petroleum products-- whether it's for the fuel of farm vehicles and transport or the pesticides and herbicides used on the crops. Not to mention all the electricity and natural gas used in the fermenting and distilling processes.

In other words, ethanol is a fraud perpetrated on American taxpayers that doesn't provide any additional energy, but has a profound effect on food supplies and prices.

corey872 3 years, 10 months ago

There is obviously some diesel involved in growing/transport (which could eventually be bio-diesel made from corn oil left over after ethanol production) but the electricity, natural gas, etc most likely comes from other American resources which further puts other Americans to work.

If you look up any modern study, the energy balance is substantially positive due to new crop growing techniques, more efficient harvesting/transporting, better technology in distilling, etc. From memory, the average of some of the more modern studies was about 1.3-1.4x return on energy and of the energy put in 60-70% was from other American resources...coal, natural gas, hydro, etc.

One of the 'cutting edge' breakthroughs is locating ethanol plants near power plants and other large sources of low grade 'waste' heat. What is 'waste' to the power plant is a perfect temperature for ethanol distilling - and essentially 'free energy'.

The big fraud is continuing the 'foreign oil is good and the only alternative' rhetoric while American workers are looking for jobs and foreign dictators are running amock with pockets full of oil money.

just_another_bozo_on_this_bus 3 years, 10 months ago

"The big fraud is continuing the 'foreign oil is good and the only alternative' rhetoric while American workers are looking for jobs and foreign dictators are running amock with pockets full of oil money."

This is a straw-man argument, and it's especially egregious considering the fact that without access to vast quantities of all that evil foreign oil, the ethanol industry would not be able to operate.

corey872 3 years, 10 months ago

As I mentioned above, modern production is substantially energy positive and a substantial chunk of the energy used is domestic, so the whole process requires much less foreign oil than simply running on straight gasoline.

Ethanol has already replaced 10%+ of our transportation fuel and easily has the capacity to do more. Plus produce byproducts which can be used for bio-diesel and dried distillers grains which are excellent livestock feed.

If we had the capacity to round up all the crap we throw out, and run new garbage-to-ethanol plants, that percentage could easily double. I probably wasn't clear, but I never claimed it would replace ALL foreign oil, but the undesirable stuff...mid east, Venezuela, other dictatorships, etc could easily be turned off.

My bottom line is this: put Americans to work first, give me a choice at the pump...if gas gets too high I will simply buy ethanol... and stop buying oil from terrorists and people who want to kill us.

just_another_bozo_on_this_bus 3 years, 10 months ago

If you want to turn bio-waste products into ethanol or biodiesel, there is a legitimate, but limited, case to be made.

But if you want to turn fossil-fueled based corn into ethanol, it's downright idiotic for many reasons, some of which I already enumerated.

But in this economy, much of what we do is pretty idiotic. You should at least do us the favor of letting us know what your vested interest is in this particular bit of idiocy.

Flap Doodle 3 years, 10 months ago

Don't forget, the current regime's good buddy, Richard Trumka, wants you to pay higher gasoline taxes to support public employee unions. http://finance.yahoo.com/tech-ticker/afl-cio-chief-raising-taxes-will-create-more-job-535955.html?tickers=xlf,skf,^dji,^gspc,ge,iyj,xom&sec=topStories&pos=9&asset=&ccode=

MsNubbins 3 years, 10 months ago

Why don't we just take the oil from the middle east? If they don't like it, they can suck it, parden my french ladies and gentledweebs.

just_another_bozo_on_this_bus 3 years, 10 months ago

The facts are that a return to the gold standard would create as many problems as it would resolve, such as deflation instead of inflation, and likely even higher unemployment rates.

But believe whatever you want, and continue to pout when someone fails to buy into your articles of faith.

Janet Lowther 3 years, 10 months ago

Back in the days when the gold standard was taken seriously, deflation didn't seem to bother folks much except for farmers who bought their places on credit.

The farmers found themselves paying back their mortgages with ever-more expensive gold as the weather became less favorable and the price of their commodities declined.

That is what spawned the Populist movement and party.

As near as I can tell, the McKinley-Hobart campain in 1896 was the first and last time they successfully explained the benefits of sound money to the working class.

One of the big differences between here and Europe is that stability of value is the ECB's sole guiding principle. Here the Fed has to ballance inflation and unemployment.

Who loses the most due to inflation? Mostly working folks 'cause prices inevatably go up faster than their wages. In a deflationary scenario, employers rarely cut pay, or at least cut it slower than prices decline, 'cause gains in productivity help keep the cash-value of labor stable.

Who benefits from inflation? Mostly bankers and speculators.

just_another_bozo_on_this_bus 3 years, 10 months ago

Is that why the Fed, who exist primarily to support Wall Street investors, base almost every action on what will limit inflation? Because they are protecting all those poor people so heavily invested in the stock market?

just_another_bozo_on_this_bus 3 years, 10 months ago

The Fed's primary purpose is to limit inflation by increasing interest rates. This also has the secondary effect of increasing unemployment, but that also pleases Wall Street, as it depresses wages.

You and I can agree that the Fed sucks, but the notion that returning to the gold standard will fix anything is pure ideological claptrap.

grammaddy 3 years, 10 months ago

Cus that's what America does, taking what is NOT ours, huh.Good old American Imperialism.

Flap Doodle 3 years, 10 months ago

gram, we'll all come down to the bus station & wave good-bye when you move to Cuba.

CLARKKENT 3 years, 10 months ago

GOOD POST--WE HAVE ENOUGH OIL IN THE GROUND IN THE USA TO LAST 200 YEARS, AND MAYBE 300 YEARS. WHY CAN'T WE USE IT????

Cai 3 years, 10 months ago

@MsNubbins

Short term? Maybe, if we can enforce it (which has an entirely different question of can and/or should we?).

Long term? That still leaves us dependent on someone else's very finite resource. And that's not a recipe for stability.

lionheart72661 3 years, 10 months ago

Oil is at 102.33 a barrell Oil is still below the $106.95-a-barrel high hit two weeks ago, And the price of gas is still 3.39 a gallon. I agree just another excuse to raise the price.We are in a no win situation again. Our so called leaders will continue to lie to us so business as usual. I saw the word inflation. well they need to inflate our wages so we can keep up. i am just thankful we my family doesn't need to drive that often.

slowplay 3 years, 10 months ago

"Our so called leaders will continue to lie to us "....And what exactly are they lying about?

grammaddy 3 years, 10 months ago

It will keep going up until we wean ourselves off foreign oil.When will you people get it?It's all part of learning to live within your means.

slowplay 3 years, 10 months ago

Supply and demand. I was at the gas station a few days ago and the guy at the next pump was really PO'd at the price of gas. He happened to be driving a Suburban. Every couple of years we go through this. Price goes up, we reduce our consumption, price goes down.

slowplay 3 years, 10 months ago

Liberty_One states: "The problem is your government is taxing the heck out of you through inflation.".... This statement is blatantly wrong, misleading and makes no sense. The current tax rate on gas is about .50/gal. The feds take about $.20, the states (which varies) take around $.30. I'm not an economist so I won't make absurd generalizations about inflation (which is actually lower than last year) or the value of the dollar. Suffice it to say, the tax rate was almost identical when gas was closer to $2.00/gal. There are many factors in play here, but the most influential are commodity investors speculating on a price increase due to the unrest in the Middle East (lower production and supply disruption).

atavism 3 years, 10 months ago

Sorry: your case for gold as a macro (or micro for that matter) economic indicator is a bit simplistic. I'm not going to cite any literature on this , but if you're interested do scholar google search.

The value of gold, or silver, or any other commodity (including oil, gasoline/petrol, most currencies -- except the Huan and a few others, coffee, etc), floats based broadly on speculation within and throughout the world's markets. Supply and demand are one factor in cost/price, but certainly not the only one -- ask Goldman Sachs why they were trying to corner the market for rice a few years ago (the answer is it was a hedge against the price of oil -- a price that they were also complicit in establishing).

In fact, its not exactly safe to establish a linear relationship between oil and gold at all. While you might be right in saying that gold today buys more oil than it did 10 yrs ago, both commodities were and are subject to different upward/downward pressures. Same with the dollar for that matter. In other words, it's not possible to directly compare different time periods on a like for like bases. There are too many other variables that impact a daily price for that. In relation, a Bloomberg analyst I know argues that gold is over-valued at the moment (e.g. not a good long-term bet) because of worldwide economic uncertainty -- speculators are flocking to it.

I'd argue, given that oil is a vital commodity and its scarcity is growing, oil is undervalued and the price/b should be much higher. Of course, given the fluctuations, variables and speculations, its impossible to establish a 'real' value for it -- or for any globally traded commodity. In other words, there is no such thing as a real price for anything: just what someone would pay for it...

All of these questions, however, are academic. The simpler solution, if one is concerned about the price they pay at the pump (all of the other relationships not withstanding), is to buy less gasoline, e.g. drive less, drive a smaller, more efficient car, and do all of the things that the DOE recommends (as cited at the bottom of the article). When people complain about the price of gasoline, I'm reminded of I-Banker friend of mine who was complaining about the operating cost of his new Porsche -- e.g. there's an easy way to avoid having to pay for it.

slowplay 3 years, 10 months ago

Excellent post. Liberty has used the "inflation tax" arguement as a catch all for any economic/commodity fluctuations. He basically regurgitates Ron Paul.

frankwiles 3 years, 10 months ago

"Since the creation of the Fed the dollar has lost over 95% of its value." your argument would be true if either I had made all my money prior to 1913 or was still being paid 1913 wages.

just_another_bozo_on_this_bus 3 years, 10 months ago

Jeez, dude, did you fail basic algebra? If not, did you forget about balancing both sides of an equation?

Do you know anybody who works for $5 a day these days?(Henry Ford's bright but revolutionary idea back in those times.)

Kontum1972 3 years, 10 months ago

................................And Thennnnnnnnnnnnnnnnn!

Kontum1972 3 years, 10 months ago

we should Nuke ourselves.....then we can rebuild.......simple!

kernal 3 years, 10 months ago

Or, quit facing to every red light and gunning the motor while inpatiently waiting for the green light. How about taking a list to the grocery store so you don't have to drive there every two days. There are so many ways we can conserve. Our grandparents did it during WWII when gas was rationed.

Hmmm, gas rationing.

melott 3 years, 10 months ago

Slight silver lining (very slight): summer blend gas gets better gas mileage.

Uhlrick_Hetfield_III 3 years, 10 months ago

Strange, I recall being told that the reason gas prices went up in the winter was because of the winter blend gas. Now it's because of the summer blend gas. Let's hope they don't find anymore excuses to blend our gas.

slowplay 3 years, 10 months ago

It didn't go up for either of those reason. Gasoline only makes up for 20% of a barrell of crude.

Olympics 3 years, 10 months ago

I just hope the oil/gas folks can get some additional tax breaks. How will they compete without billions of annual subsidies?

Commenting has been disabled for this item.