February 28, 2021

Major Surge Is Unlikely for Prices of U.S. Gas

But energy experts say that a major jump is unlikely for the 29.2 million Americans whom AAA expects to travel 50 miles or more on the road this weekend — up from 28 million last year — despite the summer of unrest across the Middle East and North Africa.

In fact, Americans will pay considerably less for gasoline than they did last Labor Day weekend, when refinery shutdowns and Hurricane Isaac, which hit the coast of the Gulf of Mexico, heightened fears of gasoline shortages.

“Gasoline prices are going to be surprisingly temperate,” said Tom Kloza, chief oil analyst at GasBuddy.com. “In California drivers will be spending 30 to 40 cents less than last Labor Day weekend for a gallon of regular and much of the rest of the country will be between 5 and 15 cents lower than last year.”

According to the AAA daily fuel gauge report, the national average price of a gallon of regular gasoline on Friday was just over $3.58, still only 5 cents higher than a week ago and 4 cents cheaper than a month ago. Gasoline prices are just beginning to catch up with the rise in global crude oil prices, which had climbed roughly $6 a barrel in just a few days as the United States and allies prepared to attack Syria in retaliation for what they suspect was a government chemical weapons attack on Syrian civilians.

Oil prices retreated by about $2 a barrel on Thursday and slumped a bit more on Friday. Experts said prices could easily jump back up after an expected attack on Syria.

Oil experts say gasoline prices could rise as much as 10 cents a gallon over the next week or two, as higher oil prices gradually push up wholesale and retail prices. But few expect a big, lasting jump unless there is a major expansion of conflict across the Middle East that seriously threatens oil production and shipments.

The Energy Information Administration projects that the national average price for a regular gallon of gasoline will be $3.59 during the third quarter and $3.52 for the entire year, 11 cents below the average 2012 price. It expects an even lower 2014 annual price of $3.37 a gallon.

“Gas prices are probably going to be spiking over the next few days,” said Michael Green, a spokesman for AAA. But he added: “It’s not horrendous. We’re looking at the lowest Labor Day gas prices since 2010.”

One reason, according to a report by the Energy Department on Wednesday, is a surprise weekly jump of three million barrels in national oil inventories. The report also showed a much lower-than-expected drop in inventories of gasoline, which remained particularly well supplied on the heavily populated East Coast. Several East Coast refineries that curtailed operations last week for unplanned maintenance are expected to be back up in the next few days, which should further increase supplies.

Summer driving normally tapers off after the Labor Day weekend, and that should help keep a lid on prices. Demand for gasoline should drop by about 15 million gallons a day in September from August levels, according to government statistics.

Most important, the country is better prepared for any shocks if the instability in the Middle East and North Africa escalates much further. United States gasoline inventories are up nearly 10 percent from a year ago, while demand is up by only about 1 percent.

Mostly because of a frenzy of shale drilling and expansion of oil sands production, the United States and Canada are producing two million barrels of oil a day more than when the turmoil in the Middle East and North Africa broke out two years ago. That, along with the decline in consumption since 2007, has meant that the Strategic Petroleum Reserve and other inventories now have the capacity to replace about nine months of imports, about 40 percent more than only five years ago.

Article source: http://www.nytimes.com/2013/08/31/business/energy-environment/moderate-rises-in-us-gasoline-prices-expected.html?partner=rss&emc=rss

OPEC Leaves Production Quotas in Place

Members of the Organization of Petroleum Exporting Countries left their 30 million barrel-per-day quota for oil production intact Wednesday, a decision that indicates the cartel’s satisfaction with current crude prices and its reluctance to do anything to further weaken the world economy.

But even though it stuck with the status quo, the group, whose representatives are in Vienna for the meeting, may face serious tests in the near future, as rising production outside the cartel threatens its market share and influence in the world.

So far, OPEC has had an easy year. Crude prices have been stable and within the range the organization favors. Although U.S. oil prices have fallen into a $80- to $90-per-barrel range, the non-U.S. benchmark Brent crude remains well above $100 per barrel. The OPEC basket, which members considers representative of what they receive for their oil, was $104.80 per barrel on Tuesday.

“At these prices no one wants to rock the boat,” said Bhushan Bahree, an OPEC analyst at IHS Cera , who was in Vienna for the meeting.

But the global oil market is going through major changes, led by the surge in oil production in the United States, which reached 6.5 million barrels per day in September, the highest since 1998 and a huge 900,000 barrels-per-day increase from a year earlier, according to the U.S. Energy Information Administration.

Iraq, an OPEC member not subject to the organization’s quotas because the country is recovering from the ravages of war, is also rapidly increasing production and now is at levels last seen in the late 1990s.

OPEC is unlikely to escape being buffeted by these shifts. “More production in the U.S. means there is less available for OPEC,” said Jamie Webster, an analyst for Washington-based consultants PFCEnergy, who was in Vienna observing the meeting.

The cartel’s 12 members — Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela — produce roughly one third of global oil output.

The high oil prices of recent years have led oil companies to invest heavily in exploration and in techniques to extract hydrocarbons that until recently were off limits, such as from the shale formations in North Dakota in the United States. As a result, supply is increasing faster than just about anyone expected, while demand remains sluggish thanks to the tepid world economy.

IHS Cera expects the global supply of oil from non-OPEC producers like the United States, Kazakhstan, and Brazil to grow by 1.2 million barrels per day next year — well ahead of demand, which is only likely to increase by 800,000 barrels per day.

Should this prediction, which is similar to the cartel’s own forecast, prove on the mark, OPEC will need to trim its output, giving up market share. The signs are that it is already doing so. An OPEC report published Wednesday showed that Saudi Arabia, the key decision maker in the group, had already cut output by 200,000 barrels per day in November to 9.5 million barrels per day, the lowest since October 2011.

The cartel’s own report says that demand for OPEC oil will be 29.7 million barrels per day in 2013 — a roughly 1.3 million barrel per day decline from the present.

“If the world ends up with a lot more capacity to produce oil than appetite to consume it, then either OPEC countries have to figure out a way to cut back production or prices will crash,” said Michael Levi, an energy fellow at the Council on Foreign Relations. “Sometimes OPEC doesn’t make decisions, but individual countries do and then others follow.”

Abdalla Salem El-Badri, the OPEC secretary general, acknowledged the possibility of production cuts in Vienna on Wednesday. “Maybe in the coming months we will produce less,” he said.

Recently, OPEC members have not published specific quotas, but the whole organization was supposed to observe a 30 million barrel-per-day ceiling, which it is now exceeding by around 1 million barrels per day. This lack of specific targets allows the Saudis to try to keep the global system balanced by adjusting the amount of oil they sell without the need to haggle over changes.

But if prices look in danger of plummeting, they will ask their Gulf neighbors and the wider organization to help out, possibly threatening the organization’s cohesion.

“It could cause tension in OPEC if they had to cut back substantially to shore up prices; some of the pain might have to be shared,” said Mr. Bahree of IHS CERA.

Article source: http://www.nytimes.com/2012/12/13/business/global/opec-leaves-production-quotas-in-place.html?partner=rss&emc=rss

Heating Oil Costs Surge, and Many in Northeast Can’t Switch

Mr. Harris added a wood stove to help cut costs and now uses only about one-third of the oil the house would otherwise need. But that did not stop a deliveryman for Crowley Fuel from handing him a $471.21 bill earlier this month for a refill that should get him to April.

“You just cross your fingers and hope that it doesn’t get too much worse,” Mr. Harris said.

Actually, it probably will — for him and the residents of the roughly eight million other American homes that use heating oil, mostly in a band from Maine to Pennsylvania.

While natural gas prices have plummeted to 10-year lows, heating oil prices have been steadily rising for years and are expected to reach record levels this winter, precipitated by higher costs for crude oil and the shutdown of several crucial refineries in the Northeast and in Europe. The Energy Department projects a price of $3.79 a gallon over the next few months, more than a dollar above the winter average for the last five years. Analysts do not expect much relief in the longer term, either, because global oil prices are expected to stay high amid political instability in the Middle East and rising demand from developing countries.

With electricity prices also down, utilities are trumpeting that bills will drop this season for customers using gas and electric heat. Con Edison announced this week that residential gas heating bills in New York were expected to drop 11.5 percent this winter, and in New Jersey, PSEG said that it would cut February bills for residential gas customers by an average of $30.

“The people who have been unable to switch off of heating oil will be increasingly penalized in the coming years,” said Jay Hakes, a former administrator of the Energy Information Administration and now the director of the Jimmy Carter Library and Museum. “There’s going to be a continuing incentive to get off heating oil, because every day the headlines and experts say that over the foreseeable future, we will have natural gas at attractive prices.”

Nationwide, the average household using oil spent $2,298 on heat last year, compared with $724 spent by gas users and $957 spent by electricity users, according to the Energy Department.

This year, heating oil users are expected to spend 3.7 percent more than last year, while natural gas customers are expected to spend 7.3 percent less and electricity users will spend 2.4 percent less, according to the department.

Cheap natural gas was part of the appeal for Gus Kontoudakis, who spent about $3,000 to switch from oil at the home he rents out in Plainfield, Conn. The boiler was due for replacement anyway, he said. He already had gas at his restaurant, Gus’s Pub and Pizzarama. “I checked the bill and saw the difference and convinced myself to change it and give a break to my tenants,” he said, adding that the oil heat was costing him about double what he now paid Yankee Gas.

But many oil users — living in places like Alaska, Maine and even affluent parts of Manhattan — do not have that option. Some are simply too far from a pipeline. For others, converting to natural gas is unaffordable, with costs that can run to tens of thousands of dollars for each home. As a result, they are trapped in a cycle of spending more and more for heat while those who use natural gas and electricity are generally spending less and less.

That dynamic is at work in households across the economic spectrum, but the cost gap looms as a crisis for the poor, experts warn, since the federal government has cut financing for energy assistance programs.

“We’re concerned about a public health problem if there isn’t additional money found,” said Mark Wolfe, executive director of the National Energy Assistance Directors’ Association. “We’ve really never been in a situation before where we’re going into the winter with very high prices” for heating oil, he said, adding that the highest prices tended to come near the middle or end of the season.

The use of heating oil, which rose after World War II as a replacement for coal, has been on a long decline. As the use of virtually every other fuel has increased, the number of households that use heating oil has dropped from about 20 percent in 1975 to roughly 7 percent today, spurred by new home construction and population shifts to the West and South, closer to natural gas fields and pipelines. Government incentives for installing insulation also cut consumption of heating oil.

For decades, the prices of oil and gas moved virtually in tandem, but in recent years, vast increases in American gas supplies have made gas decisively cheaper.

Article source: http://feeds.nytimes.com/click.phdo?i=bc4ae8a7dca11c165565ad93bf095bdc

Energy Demand Is Expected to Rise 53% by 2035

China and India will consume 31 percent of the world’s energy by 2035, up from 21 percent in 2008, the department’s International Energy Outlook projected. In 2035, Chinese energy demand will exceed that of the United States by 68 percent, it said.

“Economic growth continues to look good in emerging nations,” Howard K. Gruenspecht, acting administrator of the Energy Information Administration, said on Monday at a briefing in Washington.

Renewable sources will be the fastest-increasing energy category in the next 25 years, said the report, which was prepared by the information agency. Renewable energy demand will climb 2.8 percent a year over the period and will make up 15 percent of the total in 2035, up from 10 percent in 2008.

Crude oil prices will rise to $125 a barrel in 2035 in 2009 dollars, the agency estimated. In May 2010, when it last released an energy outlook, the department projected that oil would climb to $133 a barrel by 2035. Demand for petroleum and other liquid fuels will increase by 26.9 million barrels a day between 2008 and 2035, the new outlook said.

Global consumption of natural gas is forecast to rise 52 percent, to 169 trillion cubic feet, from 2008 to 2035. The growth in natural-gas demand will outpace demand growth for other fossil fuels.

Total energy demand will increase an average 1.6 percent from 2008 to 2035. Strong economic growth in developing countries will drive the gain, the outlook shows.

Energy-related emissions of carbon dioxide will rise 43 percent, to 43.2 billion metric tons, from 2008 to 2035, the report said. Much of the increase will occur in developing countries, it said.

The outlook “may overstate nuclear power’s future role” because it does not account for the reaction to the March disaster in Japan caused by an earthquake and a tsunami that caused meltdowns and radiation leaks at the Fukushima Daiichi nuclear plant, Mr. Gruenspecht said.

The report projected that nuclear power would almost double, to 4.9 trillion kilowatt-hours by 2035, from 2.6 trillion kilowatt-hours in 2008.

After the disaster in Japan, Germany said it would close its nuclear plants by 2022, and the United States Nuclear Regulatory Commission said it would consider new regulations for the 104 American commercial reactors.

Article source: http://feeds.nytimes.com/click.phdo?i=a5ef5b8ddb943a68e6612b258bcd54b6

Wall Street Slips as Oil and Commodities Drop

Demand for gasoline in the United States fell by the largest amount in seven weeks, the Energy Information Administration said, a signal that consumers are conserving money as gas prices near a national average of $4 a gallon. Gas futures fell almost 8 percent. Crude oil fell back below $100 a barrel, a loss of more than 4 percent.

Fewer fill-ups may result in a drop in consumer and business spending as customers forgo trips to malls and restaurants and companies ship fewer products. That, in turn, could lead to lower corporate earnings and halt a stock rally that has sent the stock market up 7 percent this year.

“People are becoming more conservative in their outlook and their spending as oil prices have risen, and that’s making the market become more concerned about growth,” said Quincy Krosby, the chief strategist at Prudential Financial.

The fall in demand for gas means that traders will take a close look at Thursday’s weekly report on first-time applications for unemployment benefits to see if companies are cutting back in other areas as well, Ms. Krosby said.

Stocks fell broadly, with energy and materials companies suffering the worst declines. The Dow Jones industrial average lost 130.33 points to close at 12,630.03. The Standard Poor’s 500-stock index fell 15 points, or 1.1 percent, to 1,342.08. The Nasdaq composite lost 26.83 points, or 0.9 percent, to 2,845.06.

The market’s losses accelerated shortly before noon. The dollar and government bond prices rose as traders moved money into safer assets. The dollar rose 0.8 percent against a group of other major currencies, and the euro dropped 1.5 percent against the dollar.

The yield on the 10-year Treasury note fell to 3.16 percent from 3.22 percent late Tuesday. Bond yields fall when their prices rise.

Energy stocks fell 3 percent, the most of any of the 10 industries in the S.P. 500 index. Cabot Oil Gas fell more than 5 percent.

Materials producers also struggled after metals prices sank. Freeport McMoRan Copper Gold, a miner, fell 5.6 percent. Copper fell 3.2 percent, and silver lost 7.7 percent. Silver fell sharply last week as part of a sell-off in commodities.

Commodities are still more expensive than they were a year ago. High oil prices helped push the nation’s trade deficit up 6 percent to $48.2 billion in March from February. American companies sold more automobiles and other goods and services to customers abroad, but it wasn’t enough to make up for an 18 percent rise in oil imports.

Strong earnings have been carrying the market higher since the beginning of 2011. On Tuesday the SP 500 climbed for the third straight day to within 0.5 percent of its highest close for the year.

“Every time that stocks start to go down a little bit, you’re seeing more selling pile on because people have made so much profit over the past 9 months,” said Uri Landesman, president of Platinum Partners, a New York-based hedge fund.

Walt Disney’s results late Tuesday fell short of expectations, and its stock fell 5.4 percent, the most of the 30 stocks that make up the Dow. The earthquake that struck Japan in March cut into revenues at its theme parks there, and its movie studio profits took a hit from the box-office bomb “Mars Needs Moms.”

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Article source: http://feeds.nytimes.com/click.phdo?i=c350813aca651faabdc13d4a1e43db6d