More on Regional Disparities in Gas Prices
More on the regional disparities in gas prices from yesterday's NY Times (see previous CD post here):
"The price of gasoline is rising, but the nation isn’t sharing the pain equally (see map above from GasBuddy).
The average price of a gallon of regular was $3.76 a gallon on Friday — up 8 percent in the last month — a tabulation that masks significant regional disparities, said Avery Ash, manager of federal relations for the AAA.
A gallon of regular was only $3.33 in Colorado, for example, and in Wyoming it was $3.28, the lowest in the nation. Along the Gulf of Mexico, the price was a bit higher: $3.59 in Texas, $3.60 in Alabama and $3.62 in Louisiana. For nastier numbers, turn to the Northeast and the West Coast: $3.99 in New York and Connecticut and a whopping $4.35 in California.
Global energy markets determine the national trend for oil and gasoline prices, and those markets have been rattled by tensions with Iran. Yet energy markets are also resiliently local, as the patchwork quilt of gasoline prices illustrates. A flood of relatively cheap oil and gasoline is washing through parts of the American heartland, but it’s barely reaching consumers in the rest of the nation.
The price for Brent crude, widely viewed as the global benchmark for oil, was about $126 a barrel on Friday, far higher than for West Texas Intermediate, often called the American benchmark, which was about $107. The gap has been widening. North American oil “is trading at a discount to world prices, because it is landlocked and can’t easily be transported to world markets” — or to refiners in the Northeast or the West Coast, said Andrew J. Black , president of the Association of Oil Pipe Lines. And East Coast gasoline prices reflect the higher Brent crude price, said Tom Kloza, chief oil analyst for the private Oil Price Information Service.
Crude oil production has increased sharply in Canada and in the central United States in recent years — including initial production from the Bakken Shale, an oil-rich deposit in North Dakota. This has created what the White House calls a bottleneck in Cushing, Okla., the midcontinent storage hub."
18 Comments:
Southern California gas prices pass Hawaii, approach record
March 2, 2012
The average price of self-serve regular gasoline in the Los Angeles-Long Beach area is $4.368 per gallon...“Southern California drivers are now paying more than those in Honolulu...Hawaii’s state average of $4.351.
I can't wait for the Keystone Pipeline to go through, so MY gas prices can go up.
I live in the Mid-south, and we are Loving that "Cushing Bottleneck." :)
One thing I noticed in our travels through Montana, Idaho, Washington, Oregon and region was that "Regular" was often 85 octane while back East, I'm used to seeing 87 octane for "regular".
I would not have even noticed except my vehicle did very much "notice" the 85 octane.
What this post does show well is that it's NOT a "pure" supply/demand commodity situation.
It's almost like a maze of factors that can and do affect supply and price.
A neat map would be a "where does my gasoline come from" map.
Income inequality in California and Colorado are similar (i.e. California's Gini coefficient is 0.471 and Colorado is 0.457).
Yet, the bottom half in California live much worse than the bottom half in Colorado, in both absolute and relative terms, in part, because of higher prices in California.
Prices for almost everything in California are higher or much higher than in Colorado.
If I had to put people in three classes in California and Colorado, in how they actually live, they'd be apportioned this way:
California - Colorado
Upper 20% - 10%
Middle 40% - 80%
Lower 40% - 10%
"What this post does show well is that it's NOT a "pure" supply/demand commodity situation.
It's almost like a maze of factors that can and do affect supply and price."...
You can thank government interference for that...
Denver Post 10/17/2006: Colorado and several other Rocky Mountain states have minimum octane levels of 85 for regular gas, while most states with lower elevations have a minimum level of 87.
Research several years ago from the American Petroleum Institute showed that lower air pressure at higher altitudes allows vehicles to perform as well with 85 octane as they would with 87 at lower altitudes.
Also, I may add, a large proportion of California's population receives some type of welfare, disability, unemployment benefits, social security, or workmans compensation that are easily given away and not monitored closely.
So, the people who work need to work harder to support the people who don't work.
Natural gas is much cheaper in the U.S. than in Europe or Japan:
US natural gas prices fall to decade low
January 19, 2012
US natural gas now costs a third of prices in Europe and a sixth of natural gas in Japan.
Chart from another article:
http://gailtheactuary.files.wordpress.com/2012/03/natural-gas-prices-in-us-europe-japan.png
It looks like a severe E.U. recession from its austerity policies, high oil prices, and high natural gas prices.
Reuters, 2/27/12
Oil rose to a 10-month high above $125 a barrel on Friday in dollar terms, though oil prices remain some $20 a barrel short of their 2008 record of $147.
But in euro terms, Brent crude rose to an all-time high of 93.60 euros last week, topping its 2008 record.
******
Euro zone slips into recession on growth revision
March 7, 2012
The euro zone economy slowed at the end of last year and is now in a "mild recession", EU officials said.
The latest data and comment from the European Union point to a so-called double-dip recession within three years for the 17-nation euro zone, still struggling to overcome the debt crisis.
Europe's in recession,
Japan is contracting,
and we're using the least gasoline we've used since 1997 (demand down 7.8% YOY,) and, yet,
The Price of Gasoline keeps rising.
Supply Problem?
Naw.
Hey, look, a shiny thang,
Over There!
all we have to do is build that keystone pipeline and gas prices for the whole country will reflect the world price for oil...
A factor in the mix is the very high CA gasoline and diesel tax, compared to the national average. That accounts for roughly 20 cents of the difference:
CA has the 2nd highest gas tax (averaging 67.0 cents/gallon) in the nation (January, 2012). National average is 48.8 cents.
http://www.api.org/statistics/fueltaxes/
(also CA has the highest diesel tax – 75.9 cents/gallon. Nat’l average 54.0 cents)
It's interesting on that map to see the clear effect of Canadians. Quebec City drives up prices in the northernmost county of Maine; Montreal in the northern half of Vermont and part of New York. Ottawa and Toronto also drive up prices in the closest US counties. And of course, most dramatic, Vancouver pushes Washington's Whatcom county to be one of the two highest in the nation outside California.
The other reason CA's gas is so expensive is because CA law requires a special blend of gas available nowhere else. That's why the glut of Midwest gas can't help California: it's illegal to sell it in California, and why Midwestern gas gluts can't soften CA gas price spikes.
Btw, why don't I have the option to subscribe to comment threads anymore? There used to be a button to select that next to the "public comment" button.
randian is correct. the special CA gas with oat bran in it is always far more expensive than the rest of the country and god help you if the richmond refiners glitches.
moving from deep red to the dark green has made me feel much better about the 12 mpg i get driving my car hard.
Good short WSJ letter to editor today:
In terms of linear miles, over 99.99% of the Keystone XL pipeline need only be approved by state environmental agencies, while it is only the infinitesimal link at the state borders which require federal approval.
It's like a bad joke:
What's the difference between Solar Inc. and Oil Inc.?
Red and black, respectively.
Bryce Thomas
College Station, Texas
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