xcel
07-08-2006, 08:45 AM
Aging refineries and global politics push fuel cost to an average 74 cents per gallon higher than last year. (http://www.detnews.com/apps/pbcs.dll/article?AID=/20060708/AUTO01/607080359/1148)
Jennifer Youssef - The Detroit News - July 8, 2006
http://www.cleanmpg.com/photos/data/501/3_00_Gasoline.jpg
Ricardo Thomas - The Detroit News
Lonzo Reeves, 33, of Detroit, a home loan account executive, estimates he spends up to $300 a week on gas as he commutes around Detroit and as far away as Grand Rapids.
Rising oil prices are quickly making $3-a-gallon gas a fact of life in Metro Detroit - and it might get worse before it gets any better.
Up 17 cents in the past two weeks, the average for self-serve regular in Metro Detroit hit $2.98 per gallon Friday, according to AAA. Metro Detroit motorists, though, are lucky to find the rare station selling for less than $3. The average statewide is $3.01.
Overall, gas is 74 cents per gallon higher than this time last year.
That kind of price hike is to be expected with all the problems with aging refineries and political problems in oil producing countries, said Mike Evans, executive vice president of business development at Taylor-based Atlas Oil Co.
Although the price around Detroit Friday was 13 cents less than the record high of $3.11 for September of last year, it was still too much for Lonzo Reeves of Detroit, who drives his 2000 Chevrolet Tahoe 300 to 400 miles a week for his job as a home loan account executive.
He spends between $200 and $300 each week for gas and doesn't get reimbursed by his company for mileage. Reeves, 33, considered getting a smaller car or something more drastic.
"It the price goes up any more than it is now, I'll have to change jobs," Reeves said.
It may just come to that, Evans warned.
The price of crude oil now is about $75 per barrel and Evans said he expects the price to eventually hit $90 or $100 per barrel.
If that happens, $4-a-gallon gas may not be far behind.
"The analysts we follow believe it will go higher," he said, "but nothing says it will go down."
The ongoing nuclear standoff between the West and Iran is keeping a high floor beneath prices because of fears that sanctions imposed against Iran could prompt OPEC's No. 2 producer to withhold its crude from the market.
Other geopolitical factors include the war in Iraq, which has hindered output there, and instability in Nigeria, which has forced the shutdown of some 500,000 barrels a day of oil production.
On top of that, demand is still strong.
In its weekly inventory report, the Department of Energy said Thursday that U.S. gasoline consumption over the past four weeks averaged 9.5 million barrels a day, or 1.4 percent more than a year ago.
Oil companies are pumping about 85 million barrels a day to meet the rising demand.
U.S. refineries that have been running at near maximum capacity are getting old and are in need of repairs and new equipment, Evans said.
"We've been going gangbusters for many years and parts are going to break down," Evans said.
On top of that, he added, as of June 1 of this year, oil companies are required by the Environmental Protection Agency to reduce the level of sulphur in 80 percent of the on-road diesel fuel they produce.
Oil companies must dig into their corporate wallets to buy additional parts and equipment to make cleaner fuel.
"All those little things contribute to drive the prices up," Evan said.
Sumeet Gopwani wouldn't be surprised if fuel costs more the next time he has to fill up his 2002 Chevrolet Malibu. The 22-year-old medical student drives from his home in Rochester to school in Detroit to his jobs in Ann Arbor and Royal Oak each week, but he does less leisure driving now that the price of gas has topped $3.
"If it reached $4, I would definitely consider another mode of transportation," Gopwani said.
Any miscalculations or errors in production could cause real or feared disruptions to push prices even higher, analysts say.
Judy Sparling of Royal Oak hopes that won't be the case.
The 45-year-old nurse at Beaumont Hospital has already backed off on some errands that require her to drive and canceled a couple of trips.
"I can only change so much," Sparling said of her daily routine.
Chris Sheets considers himself lucky.
Sheets drives a 1991 Dodge Ram pickup truck that gets 12 miles a gallon, but he only drives about 12 miles a day.
The only reason the cabinet maker drives the truck is because he has to carry lumber and other materials he's using to build a house in Hazel Park.
"This is a necessity," said Sheets, 37.
"I wouldn't drive it if I didn't have to."
Jennifer Youssef - The Detroit News - July 8, 2006
http://www.cleanmpg.com/photos/data/501/3_00_Gasoline.jpg
Ricardo Thomas - The Detroit News
Lonzo Reeves, 33, of Detroit, a home loan account executive, estimates he spends up to $300 a week on gas as he commutes around Detroit and as far away as Grand Rapids.
Rising oil prices are quickly making $3-a-gallon gas a fact of life in Metro Detroit - and it might get worse before it gets any better.
Up 17 cents in the past two weeks, the average for self-serve regular in Metro Detroit hit $2.98 per gallon Friday, according to AAA. Metro Detroit motorists, though, are lucky to find the rare station selling for less than $3. The average statewide is $3.01.
Overall, gas is 74 cents per gallon higher than this time last year.
That kind of price hike is to be expected with all the problems with aging refineries and political problems in oil producing countries, said Mike Evans, executive vice president of business development at Taylor-based Atlas Oil Co.
Although the price around Detroit Friday was 13 cents less than the record high of $3.11 for September of last year, it was still too much for Lonzo Reeves of Detroit, who drives his 2000 Chevrolet Tahoe 300 to 400 miles a week for his job as a home loan account executive.
He spends between $200 and $300 each week for gas and doesn't get reimbursed by his company for mileage. Reeves, 33, considered getting a smaller car or something more drastic.
"It the price goes up any more than it is now, I'll have to change jobs," Reeves said.
It may just come to that, Evans warned.
The price of crude oil now is about $75 per barrel and Evans said he expects the price to eventually hit $90 or $100 per barrel.
If that happens, $4-a-gallon gas may not be far behind.
"The analysts we follow believe it will go higher," he said, "but nothing says it will go down."
The ongoing nuclear standoff between the West and Iran is keeping a high floor beneath prices because of fears that sanctions imposed against Iran could prompt OPEC's No. 2 producer to withhold its crude from the market.
Other geopolitical factors include the war in Iraq, which has hindered output there, and instability in Nigeria, which has forced the shutdown of some 500,000 barrels a day of oil production.
On top of that, demand is still strong.
In its weekly inventory report, the Department of Energy said Thursday that U.S. gasoline consumption over the past four weeks averaged 9.5 million barrels a day, or 1.4 percent more than a year ago.
Oil companies are pumping about 85 million barrels a day to meet the rising demand.
U.S. refineries that have been running at near maximum capacity are getting old and are in need of repairs and new equipment, Evans said.
"We've been going gangbusters for many years and parts are going to break down," Evans said.
On top of that, he added, as of June 1 of this year, oil companies are required by the Environmental Protection Agency to reduce the level of sulphur in 80 percent of the on-road diesel fuel they produce.
Oil companies must dig into their corporate wallets to buy additional parts and equipment to make cleaner fuel.
"All those little things contribute to drive the prices up," Evan said.
Sumeet Gopwani wouldn't be surprised if fuel costs more the next time he has to fill up his 2002 Chevrolet Malibu. The 22-year-old medical student drives from his home in Rochester to school in Detroit to his jobs in Ann Arbor and Royal Oak each week, but he does less leisure driving now that the price of gas has topped $3.
"If it reached $4, I would definitely consider another mode of transportation," Gopwani said.
Any miscalculations or errors in production could cause real or feared disruptions to push prices even higher, analysts say.
Judy Sparling of Royal Oak hopes that won't be the case.
The 45-year-old nurse at Beaumont Hospital has already backed off on some errands that require her to drive and canceled a couple of trips.
"I can only change so much," Sparling said of her daily routine.
Chris Sheets considers himself lucky.
Sheets drives a 1991 Dodge Ram pickup truck that gets 12 miles a gallon, but he only drives about 12 miles a day.
The only reason the cabinet maker drives the truck is because he has to carry lumber and other materials he's using to build a house in Hazel Park.
"This is a necessity," said Sheets, 37.
"I wouldn't drive it if I didn't have to."