A New Gasoline Price Record

Update: I am gasoline-centric like most in the U.S., but as a reader pointed out, diesel prices are way up there as well. Whereas gasoline just barely beat last May’s record, diesel is currently $1.00/gal higher than it was last spring.

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There have been various reports over the past couple of days that we hit a new gasoline price record. The previous record was reached on May 21, 2007 at $3.218/gal. Today the EIA published their weekly gasoline report, and confirmed that we have indeed reached a new retail record in the U.S. of $3.225/gal. This is $0.666/gal higher than the price of one year ago, and we are likely to set additional records – at least for another few weeks.

While last year’s record numbers were on the back of record low gasoline inventories, this year’s climb is on the back of record high oil prices. I think prices will peak short of the $4/gal mark, primarily because inventories are so high. But if oil prices continue to run up, or gasoline inventories start to fall, all bets are off.

Here’s hoping that this encourages people to start changing their behaviors and reduce their consumption. High prices are here to stay, so best get yourself prepared for them.

23 thoughts on “A New Gasoline Price Record”

  3. It looks ugly out there.
    Oil at $107. I sense a speculative bubble, but I thought that 15 months agao.

  4. Off topic, but interesting:

    Enerkem announces progress on construction of Canada’s first cellulosic ethanol plant.

    It’s some sort of liquid fuel from biomass gasification process not enzyme cellulosic ethanol, but it looks like a plausible recycling business. There are a lot of BTU’s in a creosote soaked dried out power pole.

  5. Do you think that the Australia refinery situation is going to affect the gasoline prices in the near future? I am looking for our imports to drop during this week’s EIA report. Robert, can you provide any more insight into this situation?
    Thanks, Phil

  6. 107 / 42 = 2.55

    Considering that about $0.50 of a gallon of gas is tax, I find it hard to believe that the retail price of gas is not going to go up, a lot, pretty soon.

  7. Of course, people need to change their behavior and reduce consumption. I agree. But there’s a big factor that mitigates against that: The economy is structurally dependent on high energy consumption. As I have pointed out before, cutting consumption in many ways hurts others who are dependent on us to consume, consume, consume. Have you decided this this summer you won’t see the USA in your Chevrolet? You’re going to hurt a lot of people by not patronizing motels, campgrounds, tourist traps, restaurants, souvenir shops, theme parks, and a host of others who depend on you to drive long distances. And that’s just the start. Go ahead — sit at home with one fluorescent bulb burning, bundled up with heat turned down, eat the potatoes and carrots from last year’s garden, don’t watch TV, don’t rent videos, don’t drive anywhere, don’t buy anything that isn’t necessary for survival, etc. etc. You’re going to save a lot of energy, but you’re also going to put a lot of other people out of work.

    So, nothing is really going to change unless the socioeconomic system changes to allow it.

  8. Rice Farmer, it’s always possible to conclude that “insane consumption” is necessary for overall USA economic well-being.

    How about 240,000 people employed in automobile repair shops nationwide? I asked my library to get a count, and that is the number they came up with. That is just one instance of the staggering amount of people employed in niche areas of the economy.

    No doubt about it (IMHO), the USA and world economy are about to vibrate themselves into disintegration. And, do you hear any sane talk from any of the presidential candidates. Truly, they are clueless about this, as are their advisers. Terrible, terrible, terrible.

    The problem is, there is no adaptability possible with a large portion of the capital investment in our infrastructure. What is the future usefulness of a 40-story building downtown, when face-to-fact communication becomes uneconomic in such a setting? Or mega-automobile sales complexes? There is one off Highway 50 in Folsom Lake, California, that is probably (no exaggeration) a square mile of parked vehicles, with thousands of poles with lighting, 100% paved, many many “showrooms”, big screen advertising on the highway… who wants the added cost of all that incorporated into their sales price???

  9. So, nothing is really going to change unless the socioeconomic system changes to allow it. & Terrible, terrible, terrible.
    Cut it out guys, before you do something stupid based on our hopeless situation.

    People are adaptable. I suspect we are about to see just how adaptable.

  10. Rice Farmer writes:
    a host of others who depend on you to drive long distances.

    Eh? I don’t have to drive across the USA to buy souvenirs. When the price of gas goes up, we still travel, we just stay closer to home. There are still plenty of places within 100 miles of home that I haven’t visited yet with good restaurants, campgrounds and all that.

    I still plan to buy stuff. I may get a new TV this year, and it’ll probably be more energy efficient than my 20 year old TV, and I will enjoy it because it’ll be HDTV. I can spend money, keep people employed and save energy.

    Then there are the people in the 100-mile-diet movement. They still buy food, mostly only food that has to travel less than 100 miles to reach their dining table. It keeps the local farmers employed, though I guess it may put some truckers out of a job.

    An adaptable optimist is so much cheerier. Gasoline consumption has already decreased in California in the past year or two. The many reasons this article gives have nothing to do with going fewer places.
    http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/03/09/BU6QVEVD3.DTL

    People may go back to carpooling like they did during the ’70s oil crunch.

  12. I am looking for our imports to drop during this week’s EIA report. Robert, can you provide any more insight into this situation?

    Imports from Europe usually fall off about this time as turnarounds kick in over here. Not sure about the Australian refinery situation. We get some imports from SE Asia that may be diverted there if the economics support it.

  13. 107 / 42 = 2.55

    Considering that about $0.50 of a gallon of gas is tax, I find it hard to believe that the retail price of gas is not going to go up, a lot, pretty soon.

    Spot gasoline price has already passed that mark. You are correct, that prices are likely headed higher pretty quickly.

  14. The economy is structurally dependent on high energy consumption. As I have pointed out before, cutting consumption in many ways hurts others who are dependent on us to consume, consume, consume.

    I have been thinking much the same, which has been the reason for a couple of my essays pondering where the economy is headed at these oil prices.

  15. Does the economy actually care about these prices?

    I think oil and gasoline prices would have a higher google-news rank if they did. At this point coverage seems limited to investment pages.

    (Neither have I heard people around me even commenting.)

  16. There’s an interesting graph at calcluated risk. Apparently conditions have led to an ex-oil reduction in trade deficit, but oil imports (flat volume, higher price) have led to a small net increase in the trade deficit.

  17. RF: The economy is structurally dependent on high energy consumption. As I have pointed out before, cutting consumption in many ways hurts others who are dependent on us to consume, consume, consume.
    RR: I have been thinking much the same, which has been the reason for a couple of my essays pondering where the economy is headed at these oil prices.
    EEECH! The economy is dependent on GDP. GDP needs energy to get produced, but there are always ways to do so more efficiently, i.e. to get more GDP per barrel of oil. We are doing much better than during the 70s. These high oil prices will encourage us to do better still. Many tools, such as telecommuting, still remain largely unused.

    There are many recessionary pressures out there. Oil prices, so far, are a minor factor. And a self-correcting one. Once the global economy tanks, demand will fall like a rock and oil prices would follow. But it won’t be a beautiful sight.

  20. GDP needs energy to get produced, but there are always ways to do so more efficiently, i.e. to get more GDP per barrel of oil.

    But you can’t turn that on a dime. A link just posted at TOD:

    Gasoline: Painful, and getting worse

    So gasoline prices are at an all-time high. But after adjusting for inflation, rising incomes and better fuel efficiency, how bad are they really?

    The experts’ answer: Bad. Nearly as bad as they’ve ever been, and not likely to get better anytime soon.

    And none of the presidential candidates seem to have a grip on what to do:

    Presidential Candidates Clueless on Energy

    It is certain that the United States is in for an energy price and supply shock the likes of which we have never experienced or imagined. While high prices, to a reasonable extent can be tolerated, hell will break loose if massive supply disruptions emerge. We are much closer to them than people think. Those who think that we can conserve ourselves to energy independence need not read any further. They are vastly wrong and it is pointless to argue with them.

  21. “EEECH! The economy is dependent on GDP.”

    Come on, Optimist, GDP is not a good measure of economic welfare. It merely represents flows of money, which in turn represent flows of energy and resources. Let’s say there’s a big traffic pileup. Bodies and wreckage everywhere. Hospitals make money. Medical suppliers make money. Funeral homes make money. Body shops and car dealers make money. Big flows of money. GDP goes up. Everybody’s happy. Right? Some will argue that this means “lost productivity,” but the GDP is going up, man!

  22. Let’s say there’s a big traffic pileup. Bodies and wreckage everywhere. Hospitals make money. Medical suppliers make money. Funeral homes make money. Body shops and car dealers make money. Big flows of money. GDP goes up. Everybody’s happy. Right? Some will argue that this means “lost productivity,” but the GDP is going up, man!
    Thanks for the sick example, RF!

    GDP does not necessarily go up. You have to subtract the lost productivity from all those profits you list. And if someone died, you are pretty much guaranteed to come out negative.

    It merely represents flows of money, which in turn represent flows of energy and resources.
    Ah, but you are leaving out the most important part: the value added by the users of the energy and the resources. Without the added value, there is no point to the exercise.

    The experts’ answer: Bad. Nearly as bad as they’ve ever been, and not likely to get better anytime soon.
    People are still spending a smaller part of their disposal income on gasoline than during previous oil shocks.

    Those who think that we can conserve ourselves to energy independence need not read any further. They are vastly wrong and it is pointless to argue with them.
    Crock! There aren’t many who claim we can conserve our way to independence, at least not in the short term. But every gallon saved is a gallon you don’t need to import.

    At these prices we are bound to see the effect of conservation soon…

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