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May 29, 2011
“There’s less money this summer for hotel rooms, surfboards and bathing suits. It’s all going into the gas tank.
High prices at the pump are putting a squeeze on the family budget as the traditional summer driving season begins. For every $10 the typical household earns before taxes, almost a full dollar now goes toward gas, a 40 percent bigger bite than normal.
Households spent an average of $369 on gas last month. In April 2009, they spent just $201. Families now spend more filling up than they spend on cars, clothes or recreation. Last year, they spent less on gasoline than each of those things.
Jeffrey Wayman of Cape Charles, Va., spent Friday riding his motorcycle to North Carolina’s Outer Banks, a day trip with his wife. They decided to eat snacks in a gas station parking lot rather than buy lunch because rising fuel prices have eaten so much into their budget over the past year that they can’t ride as frequently as they would like.
“We used to do it a lot more, but not as much now,” he said. “You have to cut back when you have a $480 gas bill a month.”
As Memorial Day weekend opens, the nationwide average for a gallon of unleaded is $3.81. Though prices have drifted lower in recent days, analysts expect average price for 2011 to come in higher than the previous record, $3.25 in 2008. A year ago, gas cost $2.76.
The squeeze is happening at a time when most people aren’t getting raises, even as the economy recovers.
“These increases are not something consumers can shrug off,” says James Hamilton, an economics professor at the University of California, San Diego, who studies gas prices. “It’s a key part of the family budget.”
The ramifications are far-reaching for an economy still struggling to gain momentum two years into a recovery.
The median household income in the U.S. before taxes is just below $50,000, or about $4,150 per month. The $369 that families spent last month on gas represented 8.9 percent of monthly household income, according to an analysis by Fred Rozell, retail pricing director at Oil Price Information Service. Since 2000, the average is about 5.7 percent. For the year, the figure is 7.9 percent.
Only twice before have Americans spent this much of their income on gas. In 1981, after the last oil crisis, Americans spent 8.8 percent of household income on gas. In July 2008, when oil price spiked, they spent 10.2 percent.
Average hourly earnings, meanwhile, have risen just 1.9 percent in the past year. That’s only just enough to keep up with inflation.”
– Jonathan Fahey, Associated Press http://www.msnbc.msn.com/id/43197904/ns/business-oil_and_energy/
May 6, 2011
From CNBC
Goldman Sachs, which in April predicted this week’s major correction in oil prices, said on Friday oil could surpass recent highs by 2012 due to supply tightness.
The Wall Street bank, seen as one of the most influential in commodities business, said it did not rule out a further limited decline in oil prices [CLCV1 97.80 -2.00 (-2%)] in the short term.
News of Goldman’s [GS 150.10 -0.31 (-0.21%)] mid-term outlook on Friday helped oil prices pare some earlier losses and move higher, though the unexpected jump in US payrolls for April also helped.
“It is important to emphasize that even as oil prices are pulling back from their recent highs, we expect them to return to or surpass the recent highs by next year,” Goldman Sachs’ analysts said in a research note.
“We continue to believe that the oil supply-demand fundamentals will tighten further over the course of this year, and likely reach critically tight levels by early next year should Libyan oil supplies remain off the market,” it said.
It said it believed that this week’s correction in oil prices, which fell from over $125 per barrel of Brent crude [LCOCV1 109.63 -1.17 (-1.06%)] to below $106 on Friday, was sparked by disappointing economic data releases and U.S. oil inventory data.
“The sell-off yesterday (May 5) has likely removed a large portion of the risk premium that we believe has been embedded in oil prices, which could suggest further downside may be limited from here.”
“However, we remain wary of potential further downside should economic data releases in coming days continue to disappoint, with the focus now turning to today’s (May 6) non-farm payroll report in the United States.”
Good Buying Opportunity?
Goldman rocked markets in April by calling a nearly $20 fall in Brent, saying speculators had pushed prices ahead of fundamentals.
Goldman was one of the first banks to predict $100 oil last decade, in 2005 when prices were closer to $50 a barrel, but it stayed bullish for some time after oil peaked at $147 in 2008.
“In terms of timing, Goldman got it (the crash) right this time. Well done,” said an oil trader with a major rival bank.
“It (this week’s fall) was a move driven by macro funds after U.S. and German data disappointed and (European Central Bank President Jean-Claude) Trichet did not deliver on yet another rate rise,” he said.
“With Asian funds having liquidated some of their position today I think we will now see prices stabilising and even if U.S. jobs data is poor this afternoon, I don’t think it will turn as horrible as yesterday,” he added.
Another major commodities player among banks, Barclays Capital, which also predicted prices could correct but not as steeply as Goldman, said on Friday the current levels already represented a good buying opportunity.
“While further downside from potential weaker macro releases cannot be ruled out, the general trend from here should be higher, rather than lower, in our view,” said Amrita Sen.
She added that worries about tight supplies and unrest in the Middle East will outweigh concerns about U.S. gasoline demand destruction or slower Asian demand due to inflation.
Colin O’Shea, head of commodities at Hermes, who helps manage over $2 billion, also said the correction was a good opportunity for investors to get into the market if they missed out on the previous rally.
“Fundamentally, in the energy space and in crude oil, not a lot has actually changed. We have got diminishing spare capacity, globally demand is picking up, we have got some supply-side issues — so the factors that caused the price rises right throughout 2010 are still there,” he said.
May 4, 2011
Jotul has determined that the following wood burning stoves qualify for the new 10% Federal Tax Credit:
F50 TL Rangely
F 3 CB
F500 SE Oslo
C 350 Winterport
C 550 Rockland
F 100 Nordic QT
F 400 SD Castine
F 600 Ver 3 Firelight
C 450 DD Kennebec
C 550 CF Rockland
F 118 Black Bear
F 500 Oslo
F 602 CB
C 450 SD Kennebec
The Manufacturer Certificate’s can be found on the Jotul website.
April 25, 2011
From the Associated Press
SINGAPORE (AP) — Oil prices rose to near $113 a barrel Monday in Asia after Libyan rebels said they won’t produce crude for at least a month as they repair fields damaged in fighting.
Benchmark crude for June delivery was up 52 cents at $112.81 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange.
Oil markets were closed Friday for the Easter holiday. The June contract last settled up 84 cents at $112.29 on Thursday.
In London, Brent crude for June delivery was up 37 cents to $124.36 a barrel on the ICE Futures exchange.
Fighting between forces loyal to Moammar Gadhafi and rebels has shutdown almost all of the OPEC nation’s 1.6 million barrels a day of oil output and contributed to a 34 percent gain in crude prices since mid-February.
Rebels said Sunday that they will need at least four weeks to fix equipment at the key Messla and Sarir oil fields in the rebel-controlled east.
Rising crude prices have pushed gasoline above $4 a gallon in some U.S. states. On Saturday, President Barack Obama said the U.S. must develop alternatives to fossil fuel and renewed calls to end $4 billion in subsidies for oil and gas companies.
Traders are also closely watching this week for comments by the Federal Reserve at its Wednesday meeting and the latest U.S. gross domestic product figures scheduled to be released Thursday.
Last week, signs of growing oil consumption in China and an unexpected drop in U.S. crude supplies helped lift prices to near two and a half year highs.
“We continue to note demand strength out of the emerging economies and a gradual tightening in U.S. petroleum balances,” Ritterbusch and Associates said in a report. “We expect a run at the $114 level (this week) with the market ultimately pushing up to around the $119 area within about one month.”
In other Nymex trading in May contracts, heating oil rose 2 cents to $3.23 a gallon and gasoline was flat at $3.31 a gallon. Natural gas futures were up 1 cent at $4.43 per 1,000 cubic feet.
April 13, 2011
From the Alliance for Green Heat:
“The Renewable Energy Act for All,” HB 829, that would have provided grants for wood stoves in rural areas and pellet stoves in more populated areas stalled in the Economic Matters committee of the Maryland House of Delegates. Despite widespread support for the program, some members were not comfortable with the financing.
The initiative galvanized widespread support in Maryland government, non-profits and businesses to add thermal biomass to the state’s residential renewable energy incentive programs. The bill set strict emission limits, gave a larger percentage rebate to lower income families and was supported by the Maryland Energy Administration, who would have implemented it. Their statement said:
“MEA believes that with a Maryland grant to help offset those costs of biomass heating systems for Maryland residents, it will create a greater incentive to use cleaner, cheaper heating sources. As a result, this would also assist in meeting Governor O’Malley’s energy goals reduce per capita electricity consumption in Maryland by 15 % by 2015 and increase Maryland’s Renewable Energy Portfolio (RPS) by 20% by 2022.” For more
Several of the mainstream regional renewable energy groups also supported the bill including the Maryland Clean Energy Center and the Metropolitan Washington Council of Governments.
The initiative made the point that residential wood heat, and the low and middle-income families who use it deserve a place at the renewable energy table in Maryland. A coalition of groups came together to support a bill that balanced key issues, such as emissions, poverty alleviation, renewable energy and jobs.
“I want to thank everyone in this extraordinary coalition for giving a voice to ordinary Maryland families who want to responsibly use renewable fuel from their backyards instead of coal, oil and gas,” said John Ackerly, President of the Alliance for Green Heat. “We also would like to thank the Maryland Energy Administration, Delegate Heather Mizeur and her staff and other delegates who cosponsored the bill and supported it.”
The bill was in part an outgrowth of a Maryland thermal biomass working group that was convened by Jonathan Kays of the University of Maryland Extension Service. This working group consisted of representatives of several Maryland government agencies (MD Energy Administration, MD Department of Environment and Department of Natural Resources), non-profits and businesses.
April 7, 2011
Oil continued its upward spiral with no end in sight. U.S. crude oil prices moved above $110 today. Brent crude oil prices moved above $122 today. Prices are expected to continue to rise. It may seem a bit early to think about heating season but with oil and propane prices skyrocketing it is definitely the time to consider alternative heating sources such as clean burning pellet and wood burning stoves. New Hampshire and New England sustainably produce large amounts of firewood and wood pellets. Additionally, zone heating to supplement your current system is always a good idea. Gas heating appliances such as stoves, fireplace inserts and fireplaces are great supplemental heating sources that are all available in LP and natural gas versions.
Fireplace Village is the largest full service alternative heating supplier in New England.
April 5, 2011
From Reuters:
LONDON, April 5 (Reuters) – Oil prices could rocket to $200- $300 a barrel if the world’s top crude exporter Saudi Arabia is hit by serious political unrest, former Saudi oil minister Sheikh Zaki Yamani told Reuters on Tuesday.
Yamani said he saw no immediate sign of further trouble following protests last month calling for political reforms but said that underlying discontent remained unresolved.
“If something happens in Saudi Arabia it will go to $200 to $300. I don’t expect this for the time being, but who would have expected Tunisia?” Yamani told Reuters on the sidelines of a conference of the Centre for Global Energy Studies (CGES) which he chairs.
“The political events that took place are there and we don’t expect them to finish. I think there are some surprises on the horizon,” he said in a speech.
Saudi King Abdullah offered $93 billion in handouts in March in an effort to stave off unrest rocking the Arab world.
So far, demonstrations in the Kingdom have been small in scale and police were able to easily disperse a Shi’ite protest in the oil-producing eastern province last month.
But Yamani said that the reluctance of people to participate in popular protests was merely concealing underlying discontent.
“Some people relax about the situation in Saudi Arabia because the Saudi Islamic brand prohibits people to go to the street and to talk,” he said in a speech.
SAUDI TIME BOMB
Oil traded at two-and-a-half-year highs above $121 a barrel LCOc1 on Tuesday. Libya’s rebellion has shut its oil exports, stoking fears of disruptions in other major producers.
February 24, 2011
From the Financial Times
Thursday 16:00 GMT. Oil’s grip on global investors gets ever tighter, earlier crushing risk appetite with another sharp move higher.
However, a Financial Times report that Saudi Arabia would try to make up the shortfall from any disruption to Libyan supplies has knocked crude off its highs and helped equities pare losses.
The S&P 500 on Wall Street, which had looked set to open down nearly 1 per cent, is off just 0.1 per cent, helped by an improved reading for US weekly initial jobless claims.
Brent crude had breached $119 a barrel during a period of frantic trading around 0745 GMT as industrial needs were hedged and traders exploited an explosion of upside momentum.
Worries that reduced supplies from Libya may be replicated in other regional producers facing potential political turmoil has led to the world’s oil benchmark jumping almost $17 this week. Brent is trading at $114.06, up 2.5 per cent, as fear delivers extreme volatility to dealing desks.
The scramble to secure output is shown by a steepening “backwardation” futures curve, where contracts for immediate delivery command higher prices than more distant ones.
The spike in crude increases costs for companies and consumers and threatens to dislocate the global economic recovery, pessimists reason.
Stocks and commodities, which have had a good run over recent months, are thus suffering as traders take profits.
The FTSE All World equity index is off session lows but still down 0.2 per cent, its fourth consecutive session of declines that leaves the gauge lower by 2.6 per cent from Friday’s two-and-a half year peak.
February 23, 2011
From CNBC
The events unfolding in Libya mark the first uprising in a major oil producing country this year, giving energy traders their first indication of where crude could climb if Mideast turmoil were to spread to Saudi Arabia or Iran.
“Pricing in Libya supply disruptions is one thing, but what if this social unrest spreads to Saudi Arabia, which holds 20 percent of the world’s oil?” said David Rosenberg, chief economist and strategist for Gluskin Sheff. “Do the math: we’d be talking about $200 oil.”
Without taking into account the collateral effects of such a strategic part of the Middle East falling under siege by its own people, a simple production comparison gets the price to at least $140 a barrel.
West Texas crude oil for April delivery, the benchmark for the U.S., rose as much as $8.44 a barrel in trading today to $98.48 on Libyan Leader Muammar Gaddafi’s defiance in the face of the uprising.
Saudi Arabia produced 9.8 million barrels a day of crude oil in 2009, 5.4 times more than Libya, according to the U.S. Energy Information Administration. Multiplying $8.44 by 5.4 equals a $45.95 jump in the price of crude.
“Oil would go parabolic,” said Joe Terranova, chief market strategist for Virtus Investment Partners and former energy trader. “The Shiite population (compared to the Sunni ruling family) is more concentrated in the oil producing region. The workers could strike.”
Technical analysts studying the charts see a steady trend upward right now, potentially to the 2008 high above $140. A successful breakout at about $140 gets you to Rosenberg’s $200 next, they said.
Prince Abdulaziz bin Salman Al Saud, Saudi Arabia’s Deputy Oil Minister, said that the country could unleash a large amount of supply to relieve any spike in price. His comments Tuesday sent oil off its high for the day. Still, the seeds of the current Middle East revolution remain present in his country: unemployment and a youthful population.
February 21, 2011
(Source: United Press International)
Crude oil prices jumped above $93 per barrel in New York Monday while tensions persisted in the Middle East, giving rise to concerns of a supply disruption. Anti-government protests in Libya prompted the latest surge in prices after the oil markets settled down, briefly, following President Hosni Mubarak’s recent resignation in Egypt.
On the New York Mercantile Exchange, oil climbed 8.3 percent or more than $7 over the weekend to $93.47 per barrel. Home heating oil prices added 6.83 cents to $2.7811 per gallon. Reformulated blendstock gasoline prices added 5.24 cents to $2.7425 per gallon. Henry Hub natural gas prices added 4.5 cents to $3.917 per million British thermal units.
At the pump, the national average price of unleaded gasoline climbed to $3.171 per gallon from Sunday’s $3.168, AAA said.
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