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257 comments on DrumBeat: April 29, 2008

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eastender on April 29, 2008 - 9:45am Permalink | Subthread | Comments top

What do you guys think of this?

In the table below I’ve calculated the nominal and inflation adjusted price increase % of various fuel types, using www.fuelgaugereport.com data and official inflation numbers from US Gov and alternate inflation numbers from www.shadowstats.com

The table shows today’s prices, the prices one month and 365 days ago, respectively, and the nominal increase % over the last month. As for YoY increases I calculated nominal, ‘US Gov inflation adjusted’ and ‘shadowstat inflation adjusted’. I felt no need to create a graph, but I think you can get a hunch.

(Naturally, using the lower US Gov inflation data, the YoY price increase % is bigger than using the higher inflation numbers the kind folks at shadowstats are showing)

All in all, depending on the inflation number one adjusts the data to, you can observe a 'real price increase' of 10-17% for gas and 30-40% for diesel. In my opinion, the US Gov data is too low for inflation, and while the shadowstats data may be correct, it is largely influenced by fuel prices. So for determining the price increase % or the 'real value'of oil we should used 'mixed inflation data', somehwere between US Gov and shadowstats data. I'd say around 7-8% inflation if you exclude oil (fuel).

That would result in an 'mixed inflation adjusted price increase %' of roughly 14-15% for regular gas and 35% for diesel year on year.

Here are the tables and the inflation graph. ('Mixed inflation' not shown, as that's my 'intuitive invention', as of now. ;-))


Average price increase % of various fuel types


Fuelgaugereport data


Inflation data

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londanium on April 29, 2008 - 10:43am Permalink | Subthread | Parent | Comments top

Considering that spot crude costs have risen by about 83% y-o-y, I would think that diesel and gasoline prices are likely to continue to rise for quite some time to come as the current spot crude price has yet to fully work its way into the refinery complex. If spot prices sustain above $115 per barrel over then prices are going to continue their upwards trajectory for at least 8-10 weeks.

The really interesting things to note about US prices are the following:

Retail/distribution margins for gasoline and diesel have fallen by about 20-25% since the same time last year - considering that operator costs have risen quite sharply over that time-frame, then that sector of the market has gotta be hurting..badly.

According to EIA data, the refining margins in March for gasoline were 8%, and for diesel they were 20%. A year ago gasoline and diesel prices were at parity, but have now decoupled.

Methinks that there is an element of cross-subsidy from diesel to gasoline going on. Not surprising as it is an election year, and the big oil companies all have an interest in innoculating themselves from political scrutiny as much as possible.... a losing battle perhaps, but that doesn't mean that they won't pull every trick that they can find up their immaculately-tailored sleeves.

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mcgowanmc on April 29, 2008 - 10:52am Permalink | Subthread | Parent | Comments top

420 000 bbls per day of ethanol.

Diesel can't be "blended" with ethanol.

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Will on April 29, 2008 - 11:59am Permalink | Subthread | Parent | Comments top

????

Without diesel to sow, to harvest and to transport corn to the distillery (and transport ethanol to market) you don't have 420,000 barrels of anything.

Show us a piece of farm equipment that burns ethanol...

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m005e on April 29, 2008 - 3:08pm Permalink | Subthread | Parent | Comments top

I live in an out of the way place. I have various diesel and gasoline burning pieces of equipment.Last week I cleared a spot for a solar greenhouse with a masonry heater. I had to take down about 10 trees and stump it too. Alone, I was able to get all the trees down and stumps up, wood bucked and split and begin preparing for the foundation in just about 4 days. All the while I was thinking about where I'd be in the project without my backhoe, chainsaw, tractor and wood splitter. Maybe have the first couple of trees down. Life will be different when fuel is scarce.
When petroleum fuels begin to really get short will there be enough allocated to us hicks out here to process firewood or will cities and towns be favored at our expense?

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karlof1 on April 29, 2008 - 3:29pm Permalink | Subthread | Parent | Comments top

Sounds like you have a large enough spread to grow your own biodiesel feedstock and won't need to worry whether "us hicks" get some or not when events get to that point.

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mcgowanmc on April 30, 2008 - 10:01pm Permalink | Subthread | Parent | Comments top

You know I'm a farmer, eh?

I said diesel is higher because it can not be blended with ethanol.

Gasoline is lower in price because it can be blended with ethanol.

And, yes, "Without diesel to sow, to harvest and to transport corn to the distillery (and transport ethanol to market) you don't have 420,000 barrels of anything.

Show us a piece of farm equipment that burns ethanol..."

I've said from Day 1 here that ethanol is negative EROEI.

But that's why diesel has gone over $4.

It more accurately reflects the supply bottleneck.

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KAYAKGUY on April 29, 2008 - 12:37pm Permalink | Subthread | Parent | Comments top

Not true...Diesel can be blended with many things. The engine it is used in, must be modified a bit.

BZ

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mcgowanmc on May 3, 2008 - 12:11pm Permalink | Subthread | Parent | Comments top

But not ethanol.

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tstreet on April 29, 2008 - 10:50am Permalink | Subthread | Parent | Comments top

Conceptually, I have a problem with data that is adjusted because of the rise in the very commodity that is being measured. Adjusting the data is cold comfort if one's income can't keep up with inflation. For me, all of the increase in gas prices are "real". Reality bites.

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eastender on April 29, 2008 - 12:06pm Permalink | Subthread | Parent | Comments top

Sure. If your income didn't increase (or even decreased) in the period (say, over the last year) then you are experiencing the nominal price increase of 22% for gasoline and 45% for diesel (or even more if your income decreased / other expenses of yours incresed).

The table itself contains all the numbers, so you will find the nominal price increase there. It's just a question of which way you want to look at it.

If you look at it through the glasses of a US Gov inflation 'analyst', you will find an increase of 17% for gas and 35% for petrol. Should you be as 'optimistic' as to rely on shadowstat inflation data, you will arrive at a 10% for gas 30% for diesel figure, and if you go nominal it becomes 22% and 45%. You feel it even more if you earn less now than you did a year ago.

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eastender on April 29, 2008 - 11:18am Permalink | Subthread | Parent | Comments top

Conceptually, I have a problem with data that is adjusted because of the rise in the very commodity that is being measured.

I may not understand fully what you are trying to say. If that's the case, please let me know. It may be my fault. However, I think I've answered your 'conceptual problem' here in the original post:

In my opinion, the US Gov data is too low for inflation, and while the shadowstats data may be correct, it is largely influenced by fuel prices. So for determining the price increase % or the 'real value'of oil we should used 'mixed inflation data', somehwere between US Gov and shadowstats data. I'd say around 7-8% inflation if you exclude oil (fuel).

Did I get it right?

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tstreet on April 29, 2008 - 1:28pm Permalink | Subthread | Parent | Comments top

Eastender

I have no problem with what you have done and my conceptual problem has nothing to do with you or your analysis. I just think that the traditional focus on "real" increases can distort the reality to "real" people with incomes which are not keeping up. People look at "real" price increases and might think things aren't so bad after all. In addition, a lot of incomes are tied to the official CPI which apparently can't be trusted.

In fact, I think that the graphs you have put together over the last few days hae been great and provide a great service to those who read the comments on this board. Keep up the good work.

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r4ndom on April 29, 2008 - 1:45pm Permalink | Subthread | Parent | Comments top

Sounds to me like you might be happiest with a chart normalised to mean or median income rather than "inflation". Certainly I would like to see more analysis based on the income side.

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eastender on April 29, 2008 - 2:11pm Permalink | Subthread | Parent | Comments top

Good idea. I'm not sure where to find the correct data though. Any suggestions?

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r4ndom on April 29, 2008 - 2:21pm Permalink | Subthread | Parent | Comments top

I'd use this:
http://www.census.gov/hhes/www/income/histinc/incpertoc.html

Nice tables that include both baseline and "Inflation corrected" income numbers. I think the baseline numbers are the most interesting for this purpose.

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eastender on April 29, 2008 - 3:04pm Permalink | Subthread | Parent | Comments top

Thanks, I'll check it out. But I won't publish the results today, I have no intentions of hijacking this thread. ;-) I'll post the new numbers in a day or two, OK?

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r4ndom on April 29, 2008 - 3:10pm Permalink | Subthread | Parent | Comments top

No rush on my account, you're doing the work here.

Thanks for pulling these numbers together. Similar work has been done before, but each new visualisation gives a fresh opportunity for new ideas and insights.

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GreyZone on April 29, 2008 - 3:43pm Permalink | Subthread | Parent | Comments top

I would suggest that you post it on your blog then post a link to the relevant blog article here but TOD seems to vary widely on whether posting a link to your own writings is what TOD calls "blog whoring" or not. (NOTE: Researching the term "blog whoring" reveals that the apparent definition used by TOD is unique and not consistent with other use of the term.)

However, you really should get some feedback from the TOD "gods" as to whether you should do that or not.

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Joseph Somsel on April 30, 2008 - 2:56pm Permalink | Subthread | Parent | Comments top

I've read on Energy Outlook (http://energyoutlook.blogspot.com/) that the relative rise in Diesel fuel price at the pump is largely the result of new federal regulations that require a much lower sulfur content. This requires more intensive refining and more feedstock per gallon of output.

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257 comments on DrumBeat: April 29, 2008

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