Monday, February 27, 2012

Gasoline Prices to Crush 'Blue' States, Dems Call for Strategic Petroleum Reserve Releases

First up, Bruce Krasting:
...The USA has evolved into a two-tier gas market. The supply of crude from Canada and the Bakken fields has created a lower cost of supply for the central portion of the country. This differential is most notable in the market spread between WTI (a futures contract that settles physical delivery in Oklahoma) and LLS (Louisiana Light Sweet Crude) - the pricing of crude for the big Gulf refineries....

Consider this map of the country. The green area is where the Canadian crude is helping to keep prices lower. The dark red areas are those that are dependent on the high-priced, imported crude.

Gas prices are north of $5 in southern California today, but they are as low as $2.95 in Ft. Collins Colorado.

While this may make the folks in Colorado and North Dakota happy, it will crush the national economy. It doesn’t matter what happens in Co. or N.D., they have (relatively) no cars.

A few years ago, the Highway Transportation Department put out a report on registered vehicles by state. The total of all registered vehicles was 244,000,000. Of that total, 33 million were on the roads of California (13%), only 1.8 million (0.75%) were in Colorado, and a measly 700k (0.25%) are in North Dakota. The total of vehicles on the road in the states that are in red in the above map comes to 137 million. Fully 56% of all vehicles are in high cost states. Only 15 million vehicles (6% of total) are registered in the green states!

State GDP is directly correlated with vehicle registrations. The red-colored states, paying the highest prices today, represented 57% of 2010's GDP. Green states, contributed only 8% GDP....MORE 
Due to fears over the situation in Iran, amongst other things, oil prices are at a nine month high, and petrol prices are also at near record levels. These high prices have spurred Democratic Representatives Ed Markey of Massachusetts, Peter Welch of Vermont, and Rosa DeLauro of Connecticut, to write a letter to Obama in order to ask him to use oil stockpiles to help reduce the price of oil in the US. The US holds 696 million barrels of oil, the world’s largest, government owned stockpile, to be used in times of low oil supply.

“This most-recent run-up in prices is primarily the result of fear driving oil markets,” Markey, Welch and DeLauro wrote to Obama. “We urge you to consider again deploying oil” in the reserve “to combat the rapid price escalations resulting from speculation.”...MORE