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$4.50/gallon gas by Memorial Day?

By: Moe Lane (Diary)  |  February 18th, 2012 at 09:55 PM  | 

RESIZE: AAA

When I saw that possibility mentioned in the San Jose Mercury News (gas prices are already topping four bucks a gallon in parts of California), I went looking up some confirmation on this. And yes, it could hit $4.50 a gallon, thanks in large part to the subtly-and-steadily-eroding situation in Iran. The problem, as the Christian Science Monitor notes, is not so much crude production as it is its transportation:

One of the problems is moving [Midwest/Canadian] oil to the Gulf Coast where there is plenty of refining capability. A pipeline that used to move gasoline to the Midwest is now being converted to move unrefined oil the other direction. However, there will still be an need to move oil south, says [analyst Sander] Cohan.

“That’s what the Keystone XL pipeline was all about,” he says. “Bringing oil south, it eases congestion in the Midwest.”

Obama has blocked the pipeline for environmental reasons. On Friday, the House passed legislation to take away Obama’s authority on the pipeline, but the bill’s fate in the Senate was less certain.

Yes, it’s precisely that bad: the CSM apparently actually does have a limit to how much of the administration’s water it will carry. Mind you, if gas hits $4.50 a gallon nationally then it’s going to set a (dubious) new record; and there’s no guarantee that the price will stop there, either. If the administration is not worrying about this, then… well, I hestitate to call that ‘good’ news. I have to live in the country that Obama’s impoverishing through his actions, after all.

Moe Lane

PS: To refresh people’s memories: gas prices hit their previous peak in July of 2008 and didn’t collapse until the economy did in September of that year. Since then, the economy hasn’t particularly roared back to new heights, but gas prices sure have; if only there was a word that could combine the twin concepts of a stagnant government economy [fixed, sorry] and steady inflation…

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  • kindredsoul

    $4.50 a gallon? Hardly a worry for an Obama reelection. After all, it’s because of something George Bush did. And the Republicans stonewalling hope and change. And because of the contraception thing. And, who could forget, Bain. You see, everything is the Republicans’ fault. That’s why we need high gas prices to defeat their evil agenda. Everything will be free, anyway, after the election . . .

  • greyeagle

    This also leads to high costs for clothing, food, all services in general. This includes electric and all energy sources. However, inflation is low according to Obama. However food and energy is excluded. And of course as stated, everything is Bushes fault.

  • acat

    gets more expensive.

    If we get to $5 gas, look for retail prices to go up (or product portions to decrease) as well.

    I noted elsewhere that the local cheap grocery store parking lot, which used to be a solid mix of 10-15 year old cars, has recently been sporting some late-model luxury rides.. it seems people in very large houses are feeling the pinch.

    (cat will resume grocery runs on bicycle once the weather gets a little warmer…)

    Mew

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    be more consequential than anything the Dems come up with to defend Obama…

  • http://boldcolor.blogspot.com/ Paula

    I’m not a frequent flier, so I don’t know if this is normal, but I was checking out airline tickets this week. A ticket price went up overnight from $270 to $450. I can’t help but think the posturing by Iran is going to hit us all really, really hard in the pocketbook a lot quicker than we think.

  • tngal

    controls the universe.

    Not only drilling, but the necessary pipelines, all refineries, etc. Point A to point Z when it comes to fuel. When prices were high we were told to drive less and carpool and we did. And we were told to buy exploding (greeeen) cars, and some did.

    If we did all this, supposedly it wouldn’t matter if OPEC decided to play spin the bottle with the prices. It wouldn’t matter if day traders are betting on higway-heavy family vacations during the holidays, Supposedly our conservation and exploding cars would ensure us plenty of fuel for the future and gas prices would be somewhat stable.

    Obviously, this hasn’t worked. Another holiday, another price hike. This time the reason is because of a directional pipeline. They will find a way to jack up the prices. We, which is to say, this country, needs to control the cost of the fuel it consumes. If it requires a pipeline in a particular direction. We build it. If it requires drilling in an area controlled by this country, we drill it.

    Why is this such a difficult problem?

    He who controls the spice controls the Universe. That is a true Dune narrative. but for some reason everyone else is controlling the the flow of the spice. We need to A) Drill Baby Drill; and B) Use Lego if necesary, but get that pipeline flowing.

  • http://www.AmericanThinker.com Hammer2008

    GOP was over this in 2008 and you’re right GC, they and the candidates need to be again:

    Obama supports High Gas Prices if they are gradually hiked

  • http://www.AmericanThinker.com Hammer2008
  • DerKrieger

    …according to Secretary Chu:

    ?Somehow we have to figure out how to boost the price of gasoline to the levels in Europe.? Where it is now more than $10 a gallon.

    - Deny Chevron’s permit in the Chuchki Sea
    - Stonewall XL
    - Stop all Gulf permitting
    - Sic the EPA on refineries

    They’re figuring it out.

  • charlemagne1979

    unless its a busy holiday weekend which I don’t believe this one counts. There are many different things going up in price almost on a daily basis for the last two weeks. Off course the media will not report it in great length because that would hurt Obama’s chances and they don’t want that. Instead, we are being fed that the economy is getting better because some private sector jobs were created last month while they are ignoring the hundreds of thousands of unemployed that are no longer received unemployment insurance.

    I would worry more about Europe and Greece defaulting then Iran right now. I can not see the US attacking Iran or Israel for that matter other then maybe a covert operation which is also unlikely.

  • charlemagne1979

    was never that luxurious to begin with. I ve traveled all over the continent and have to say that their roads and driving in is general just as dangerous if not more than most of ours. This is true especially in Eastern Europe and the Mediterranean. Their high speed rails are fast but not so luxurious than the ones we have here. I was on a bullet train from Frankfurt to Berlin a few years back and it really stank in there like no one was wearing deodorant.

  • renny

    and trying to figure out any thing else or palm read his various arcane and inscrutable statements or explanations is wasted time and energy.

    Just look at what he does: cripples oil, closes coal, stops drilling, doesn’t approve nuclear (stopped mining uranium on public lands), yadda. And then Cuomo, a seeming reasonable gov., wants to close a major nuclear plant in NY that provides NYC with about 1/3 of its electricitu.

    These people are actively attacking the foundations of the US ec. The only way to stop the insanity is to oust o and elect a Rep. pres., Sen., and House.

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    into denying the reality of wallet Obamaism.

  • http://www.AmericanThinker.com Hammer2008

    however, I will confess the best train ride I took was the I.C.E. from Munchen to Praha

  • http://www.AmericanThinker.com Hammer2008

    and make crap happen like this.

  • http://www.AmericanThinker.com Hammer2008

    renny, exactly.

    It’s taken me a little over a year, but I’m convinced Dinesh D’souza is spot on with his book (and thesis):


    The Roots of Obama’s Rage

  • acat

    Prices that low, I can see why he stopped!

    Mew

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    then you couldn’t get 3 gallons for a dollar.

  • acat

    I’d figured you as more of a Riff Raff.

    Mew

  • Dave_A

    Since there’s no corresponding across-the-board price rise.

    Remember: Inflation – price increases due to a change in the value of money – is generally felt across the entire economy essentially simultaneously.

    Oil going up on it’s own, eventually followed by the prices of other things that are oil-dependent, means a supply/demand issue, not inflation…

    The last oil-spike was blamed on ‘inflation’ by the doomsayers too – but it turned out to be pretty much everything BUT inflation – a hype driven bubble with some supply disruptions – and it rapidly fell to $1.9x/gal in the end….

  • Dave_A

    That, and ads showing the price of gas from 2008 to present, with quotes from Obama and Chiu about wanting higher gas prices….

    Anyone remember when gas went above $2/gal in 2000, and we started seeing ‘Al Gore is a pain in my Ga$$’ stickers?

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    But yes, as per Riff Raff, I am just redneck enough to handle Spartanburg, SC and Tucker, GA…

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    absolutelyNoText

  • acat

    And the references are Wagner’s “Der Ring des Nibelungen” and The Rocky Horror Picture Show.

    Mew

  • toothpick

    Good post, Moe. One minor slip-up, though. You closed your piece with the following:

    if only there was a word that could combine the twin concepts of a stagnant government and steady inflation?

    If ONLY our government were stagnant. Alas, it is all-too-active and growing like kudzu. I suspect you meant “stagnant economy.” At least, that would seem to be a more accurate (albeit depressing) read on the situation.

  • renl57

    Every time the price of gasoline goes up, the Dems dust off their usual ploy: Accuse the “greedy” oil companies of price gouging. And call for a Congressional investigation into said price gouging.

    Even when oil price rises were the direct result of obvious conflict in the Middle East: The 1987 Iran-Iraq War, the 1991 Gulf War, etc.–the Dems always attributed oil price rises to oil company price gouging.

  • languedoctor

    To prevent these sorts of things from happening will take a lot more than Keystone XL. It’ll take controlling the Middle East. It’ll take controlling the weather, so that cold snaps in Europe only happen at convenient times (read: not now). It’ll take waving a magic wand over industrializing countries like India and China, so that their rapidly increasing demand is somehow immune from having price effects.

    The best way to protect against oil price increases is to make more money. It’s a mistake to try to micromanage specific commodities while the economy is still in the crapper. Fix that first.

  • Dave_A

    As you get closer to the date of the flight, prices move up on a sliding scale…

    The airlines do this because they know folks buying tickets ‘right before’ a flight are desperate, and thus willing to pay more…

    Simple capitalism.

  • Dave_A

    Is more domestic production….

    Keystone is great, and Canadian oil is a safe & secure source… But we also need more of our own…

    And THAT is something that can make a good campaign ad.

  • languedoctor

    …the key word is “disruptions.” Not “price.”

    Domestic production makes good sense from a national security perspective. It makes sense from a “jobs” perspective.

    But it’s not a silver bullet from a “gas price” perspective. If prices on global markets are sky high, then there’s only so much government can do – regardless whether the oval office has an R or a D. Because if domestic producers can make more money selling their product on global markets, then they’d be foolish not to do so.

    Unless we pass a law requiring domestic producers to sell only to certain domestic refineries, at prices that the government approves. *shudder* That’s not the answer.

  • glockg22shoots40s

    you haven’t noticed the pricing at the local grocery store??? $150 doesn’t get what it did a coupla years ago…. just sayin.

  • Dave_A

    Inflation is economy-wide, not cherry-picked & price-volitile items such as food & fuel…

    I’ve listened to people beat the inflation drum citing ‘food and fuel’ all through 08… Usually cherry-picking specific food items to illustrate their point…

    The problem?

    First, while some food went up, other food did not… Frozen chicken, for example, stayed constant… So did a box of Cheeze-Its (something I added to my example, because the folks who I was discussing things with complained that my typical grocery basket of ‘meat, some bread, potatoes’ was skewed)….

    Further, the price changes were pronounced at some retailers, but almost non-existent at others… I do my grocery shopping at WalMart, where there was little change – but folks who shopped at SafeWay or Albertsons saw things differently.

    This indicates other economic factors in play, vs inflation.

    When price increases are NOT economy-wide, and NOT even industry-wide, then it’s NOT inflation. It’s something else – supply & demand, substitution (The substitution effect was a big one in 08 – as the economy went down, more people bought generics, and more shopped at WalMart & other bargain-leaders, causing higher prices on name-brand products and ‘higher class’ retailers),

    Fuel?
    Nothing shows how wrong the inflation zealots were, than the price of fuel from 2007 to 2009.

    Why?

    Because if the price of fuel was really being fed by inflation, then we would have seen a MASSIVE rise in the market-value of the dollar in late 2008, as the price of fuel dropped almost 50%. Prices for everything would have collapsed at the same time, by about the same amount.

    But they didn’t… The gold bubble kept inflating even as gas fell… The USD budged a little, but not much… Most prices stayed pretty static…

    The sub-2% inflation numbers are accurate. And that’s not a good thing.

  • APA Guy

    Obama will approve the Keystone pipeline and a whole host of other measures (new drilling leases, etc.) to lower gas prices. It won’t matter that his environmental buddies scream bloody murder…by then, Mitt Romney will be his corporate America-loving opponent, and they will have no choice but to support him.

    It’s ALL planned to make Obama look like the savior of the nation’s economy as the election approaches. He knows better than anyone that no president is re-elected when the voting electorate pays $4.50-5.00/gal for gas.

  • Charles Cianfrocca

    But I don’t. The last thing Obama wants, being who and what he is, is to save anything. He’s not averse to trying to seem to save something, of course, politics being what IT is, but approving XL would ACTUALLY save the economy. Remember, he has said in so many words that he wants oil to “skyrocket”, but not “so quickly” that people will “get upset”. The last thing he wants is to do anything that will make the long term trend go the other way, as XL unquestionably would.

    In any case, it’s somewhat of an academic line of thought to me, since I still hold to my prediction from 2008 that Obama will not be running in November 2012. He will lose his office this summer.

  • skorrent1

    He can jigger the unemployment numbers to try to look good, but people are geting wise to that trick. He could adopt the whole “drill, baby, drill” agenda and it wouldn’t affect the current price at the pump. He could declare war on Iran in hopes of getting a Bush 41 type bump, but that would likely give us $10/gal. An economic relapse might bring the price at the pump down, but that could hardly be sold as the “hope”d for “change”. He’s got a problem.

    Look for him to drain the Strategic Oil Reserve right around Labor Day.

  • bk

    Let’s see if $5/gallon gas in summer ’12 spells doom for Obama.

    I heard a talking head this week say that each penny rise in the price of gas takes $1B out of disposable income across the country.

  • dajeeps

    Or headline inflation, not the stuff from too many dollars floating around. The Fed sterilized most of the expansion of the base with interest on reserves so most of it doesn’t leak out into circulation. It’s a way of boosting bank balance sheets while giving them incentive to hold on to the money.

    And that doesn’t seem to figure into whatever models the Fed/inflation bashers use to show that the sky will start falling at any moment. It really is counterproductive because it masks all kinds of supply side issues that need to be addressed by pointing at the Fed every time they pay $5-10 more for a bag of groceries. The Fed can’t do anything about oil supply issues, the effects of ethanol subsidies, or legacy costs associated with some production.

  • http://stevemaley.com Steve Maley

    Most states have a fixed tax per gallon: the amount of the state & federal take does not go up with the price of the product.

    In CA it’s more of a sales tax; when the price goes up $1 in Louisiana, it goes up $1.08 or more in CA.

    The state, in effect, becomes a greedy profiteer.

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    Horror Picture Show. I wish I could speak German.

  • acat

    those who live and those who die.

    Mew

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    con’t

  • http://www.examiner.com/x-1597-Charlotte-Law--Politics-Examiner Mike gamecock DeVine

    who does? Tim Scott and…

  • acat

    less pro-capitalism.

    Mew

  • mriggio

    especially as regards the Strategic Oil Reserve. Only this time, he’ll tap it until it’s dry.

  • acat

    before or after GOPcon?

    Mew

  • wantthegopback

    … is why we can win with Santorum. Obama will be weak after summer. He’s had a good start to the year, we must recognize, but of someone will get up and articulate the RIGHT agenda while showing character and a clear difference with O, that person can win.

  • Dave_A

    If all inflation is monetary, then any price increase that’s not caused by monetary factors isn’t inflation.

    Defining inflation as ‘an increase in the supply of money without a corresponding increase in demand for money’, excludes non-monetary price changes from being inflation or deflation….

  • bobojake

    NT

  • bobojake

    Why would he spend all week trying, trying to raise money. We need to turn off Brian William Nightly News(I don’t watch MSM) Turn off Brian Williams new Weds Show called Another way to tell a Liberal LIE,
    —- We have obama whupped now we have to whup McCain, Rhinos and the Mainstream Media . Our one job this year is to DEFEAT obama Nov 6,2012 ,Take Back the Senate and pick up another 10 seats in the House.
    Continue winning at the State and Local Level and clean the parasitic leeches out of the Government at all levels.

  • thurman

    In a desperate attempt to keep the economy on life support until election day

    In fact the Dems are already calling to tap it now, after just the slightest uptick in prices the past few weeks

    Skyrocketing oil prices were a huge part of the perfect storm that helped Obama get elected– it would only be fair if the tables were turned and it caused a double dip recession to put the final nail in his coffin

    But expect him to do anything and everything to pull out the stops to juice the economy until November– QE 3/4, tapping the strategic oil reserves, mortgage bailouts, etc etc etc

    The man is a power addicted narcissist of the worst kind

  • acat

    Reuters article indicates Iran have stopped selling oil to “some” Euro firms including Shell.

    The House of Saud seem to be trying to keep a lid on the effects, but .. yeah. If it really spikes, look for Obama to start tapping the reserve.

    Mew

  • Ned Reck

    This is truly sad news?

    Think of all the small employers now dependent on lower gas prices. Locally, I know many of these small employers? the employers who create as many as 80% of all jobs in this great country of ours (according to the NFIB).

    $4.50 gas? will kill jobs?

    For my clients, $4.50 gas will force them to lay off workers. I talked to a trucking-client this morning? a Sunday morning by the way? who was crying at the prospect of higher fuel prices. Gosh? I tried to put a positive spin to it? but found it hard to do so. After the call, I almost succumbed to the profound sadness felt by the client, but?

    I resolved to re-double my efforts to push for conservative-minded, locally-elected legislators in my area? and I began making phone calls. On a Sunday morning.

    At this point in time, we can not stand for any economic RELAPSE.

    If it happens, regardless of the POTUS, Republican or Democrat, may the ALMIGHTY help us through the aftermath.

    Ned

  • Charles Cianfrocca

    The timing and manner of his removal will utterly destroy the Democrats. So many things that were entirely unthinkable before will be on the table that matters like who the GOP just nominated (or was about to) will seem like the component supply chain details of buggy-whip construction by the time August rolls around.

    Yes, we have to behave like it will be an election year not unlike any other, because, well, what else can we do? But while being prepared for the unexpected has always been considered sage advice, that we ever thought that was even possible is about to be made to look pretty darn unrealistic.

  • http://www.skiloveland.com skicougar

    “At this point in time, we can not stand for any economic RELAPSE.

    If it happens, regardless of the POTUS, Republican or Democrat, may the ALMIGHTY help us through the aftermath.”

    Despite the positive economic indicators lately, another recession is comming and it will be not as deep, but longer than the last one.

    the unemployment rate is falling because people have given up and falling off the rolls, oil consumption is declining, people are using credit cards at higher levels because they dont have jobs or are under paid, china and europe’s PMI(industrial output) has been declining and shipping is still at record lows…

    and thats just off the top of my head.

    from what i read, i am speculating the next recession to start in december, regardless of who wins the election.

    i’d recommend reading mike shedlock is you want to keep up with how things really are, and the US is just whistling past the graveyard this year, but next year; the US will be pulled right back in a recession.

  • acat

    and that they’d say it to certain members of Congress…

    and that they’d be heeded.

    Mew

    (by “former bosses” I’m meaning the DoD, the Joint Chiefs, the guys who actually have first dibs on that strategic oil reserve…)

  • lyoneyes

    That’s where the real problems are with the ever increasing cost of gas at the pump. Research how the speculation in commodities game works, and just how many refineries were closed over the past year either by their owners, or because they became obsolete from a technical perspective.

    Follow the money, and the industry…….And not hurtle unsubstantiated accusations without facts.

  • lyoneyes

    Both contribute to the increase in fares. One note, fuel for the airlines is purchased in advance, but is not always reflective in the pricing of ticket prices going either up or down with any logic in the immediate day to day pricing on some destination routes. It’s a market driven industry as most are, and with the travel season coming up, we can all figure out just where the prices will be heading.