Better Fill up today

[Diane Amberg]

We just paid $4.07 for real gas in Wall S.D. The ethanol blend was cheaper but the mileage is worse. There has been some really sneaky advertising up here. They have road signs that say one thing but the pump is something else. They have "super" unleaded which has even more ethanol in it. Some have a discount for cash, but it's at the building, not on the pump.

[frawin]

Crude Oil Drops for a Third Day Amid Economic Slowdown Concern

By Grant Smith

June 17 (Bloomberg) -- Crude oil declined for a third day amid concerns that slower economic growth will curb consumption of oil products.

Oil has retreated more than $7 from yesterday's record of $139.89 a barrel. German investor confidence dropped to the lowest in more than 15 years in June as surging inflation hit Europe's largest economy. The U.K. inflation rate rose to the highest since at least 1997 in May, paving the way for higher interest rates.

``Worries about economic inflation on both sides of the Atlantic are bearish for oil,'' said Rob Laughlin, senior broker at MF Global Ltd. in London.

Crude oil for July delivery fell as much as $2.11, or 1.6 percent, to $132.50 a barrel on the New York Mercantile Exchange and traded at $132.82 at 11:29 a.m. London time. Yesterday, the contract touched a record $139.89.

StatoilHydro ASA, Norway's largest oil and natural-gas producer, said its North Sea Oseberg field may resume operations this week after a fire on platform A halted production June 15.

Brent crude oil for August settlement was at $132.57 a barrel, $2.14 lower, on London's ICE Futures Europe Exchange at 11:29 a.m. local time. Prices reached a record $139.32 a barrel yesterday.

Saudi Arabia, hosting a forum in Jeddah this weekend to address the impact of record prices on importers, will raise output 200,000 barrels to 9.7 million barrels a day next month, King Abdullah told United Nations Secretary-General Ban Ki-Moon, according to a UN spokesman.

`Moving Supply'

``With the pressure OPEC has seen from the Western world that they need to respond, they've been taking the tack that demand is strong,'' said Mark Pervan, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``That gives them a reason to start moving supply upward.''

The kingdom has called a meeting in Jeddah on June 22 to help stabilize prices. Crude oil fell 2.7 percent in New York last week as Saudi Oil Minister Ali al-Naimi described the surge in the commodity as ``unjustified'' and called a meeting of producers, major industrial nations and banks.

U.S. crude stockpiles probably dropped 1.5 million barrels in the week ended June 13 from 302.2 million barrels, according to a Bloomberg survey before tomorrow's Energy Department report. Gasoline stockpiles probably climbed 1 million barrels from 210.1 million barrels the prior week, according to the median of responses.

[Wilma]

The price for crude oil has fallen for several days.  So why is the price of gasoline still $4.04 here in Howard?  It doesn't take that long for the price to go up when crude oil goes up.

[frawin]

Wilma, your price probably won't change until your dealer gets in  a new load of Gasoline, and then the price will go up or down depending on their cost of the new product. Some dealers in our area change it up or down everyday with the wholesale cost that their supply post. This A.M. it is $3.73 in Bartlesville.
Frank

[frawin]

July and August crude are trading down this morning.
Frank

[Wilma]

I think my real question is why does gasoline go up the same day as crude oil goes up, but doesn't come down when crude oil drops?  This happened all the time in Wichita.  Yesterday, Lanning's gasoline was 5 cents cheaper than P & J and we get better mileage from it.

[frawin]

No, from what I have observed the dealers/stations that change daily generally go up or down depending on the Gasoline Markets/Wholesale prices which  generally moves with the crude oil price. Gasoline and Diesel etc do not always move in step with crude oil prices, there are many other factors that are considered. Some dealers only change their price when they get a new load of product and the wholesale price to them is up or down. It stands to reason that the further a station is from the source such as the refinery or storage terminal the higher their cost and as a result the price to you. Gasoilne is not a big money maker for most service stations. 7-11 sells gasoline to get people in to buy high margin items like Cokes, Coffee, snacks etc, and I am sure that is part of PJs program.
Nearly all of the stations here in Bartlesville move with the Futures pricing of crude and products.
Frank

[Tobina+1]

Frank; how does corn prices (corn = ethanol) affect the price of gas?  I've heard that if the price of gas drops a little, it will take the pressure off of corn (not competing so hard against gas), so the price of corn will go down... which will lead to more people being able to use it for feeding cattle... which will lead to food prices going down, too.  Not sure if that's all right or even make sense?

[frawin]

I am not very knowledgeable on Ethanol but have read some on it. I have always been opposed to the use of Food to make Gasoline for people to waste driving vehicles with oversized Engines, when the world has so many hungry people. Right now the Flooding in the Cornbelt is probably driving Corn/Grain futures up more than Ethanol. I do know that Ethanol does not get as good gas mileage as Crude oil derived gasoline and that there are some opinions that Ethanol will damage some engines, Gaskets etc.
If we continue using more feed grains for Gasoline we will push Meat/food prices higher and higher and I think it will have disatorous effects on our economy, crime and population as a whole. Hopefully America will be a leader in Conservation and we will reduce our dependence on oil in the future.  This probably doesn't answer your question very well but hopefully it will help.
Frank

[Tobina+1]

Now, I have heard some interesting things about sugar cane ethanol, though.  (Have we discussed this before?)  They can make ethanol from sugar cane, without decreasing the amount of sugar that's made.  Because sugar cane ethanol is made from the by-product of making sugar from sugar cane.  So, we actually get MORE use from the original sugar cane product; both sugar and ethanol.  And the ethanol-making process is also supposed to be more efficient than corn-based ethanol.
I don't know much about the mileage and the damage to engines for either corn or sugarcane ethanol, but finding another alternative energy source that is American made seems like a good thing to me.  And I still agree that Conservation is still the best method.