Oil, gas prices continue their downward slide
Published Saturday, October 11, 2008
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Stumble It!FAIRBANKS — Oil prices maintained a downward spiral Friday, closing the week below $80 per barrel as prices at Fairbanks-area pumps reflected the slide.
A barrel of light, sweet crude for November delivery closed at $77.70 on the New York Mercantile Exchange, down 10 percent Thursday and about 47 percent from an all-time high of $147.27 per barrel on July 11.
As of late afternoon Friday, home heating oil was priced at $3.35 per gallon at Alaska Petroleum.
Office manager Lisa Sundborg said refinery prices were expected to drop more at the week’s end, a break that could be reflected by retailers as early as Monday.
“We have people that call every day to see what the price is,” Sundborg said. “They’re watching the price per barrel drop, if they have time to wait.”
It’s something of a risky game, she acknowledged, but one that’s paid off for some. Prices neared $5 per gallon this summer and were nearly $4 per gallon only a few weeks ago. This week, prices for all products have dropped considerably, shedding 10 cents on Tuesday and five cents on both Wednesday and Thursday.
Consumers may perk up at pump prices under the $4 mark, but a long-term, continued slide could put a dent in state revenues.
That’s not a scenario of great concern at this time, said Jerry Burnett, acting deputy commissioner at the Alaska Department of Revenue.
“It’s too early to be concerned,” he said, adding that the department is watching prices and will offer some analysis in the fall forecast, due in December. “You would have to see, really, extreme falling prices. I don’t think that’s an issue that we’re really horribly worried about yet.”
Through the first quarter of the fiscal year, oil prices have held a high average.
But, oil prices and state revenues are more complicated than a price-per-barrel analysis, Burnett said. Alaska’s progressive tax means companies could face a different tax rate each month, with higher rates for high production.
Sen. Joe Thomas, a Fairbanks Democrat, serves on the House finance committee. He said he’s keeping an eye on oil prices, which would have to fall precipitously and stay rock-bottom to skew a fiscal year average that’s already benefited from record high prices since July.
State economists offered $83 per barrel as an average that would meet the state’s approved budget and preserve more than a $1 billion committed to reserves.
“We have to look at the average, and of course, no one can predict an average,” Thomas said.
The state has some room to breathe. Government has been proactive in recent surplus years by paying back a constitutional budget reserve and adding a soft cushion.
John Boucher, an economist for the Alaska Office of Management and Budget, said the state is monitoring the falling prices.
As long as oil averages $83 per barrel through the fiscal year ending in June, Alaska should realize “a pretty handsome surplus,” he said.
And if barrel prices fall enough to affect that average, reserves are in place to offset revenue declines, the state economist said.
“Uncertain oil prices have been a fact of Alaska budgets for more than just the last six months,” Boucher said. “That’s why we have significant reserves in place, to weather these types of fluctuations in prices.”
During the past several sessions, legislators have set aside a good chunk of high revenues, building the constitutional budget reserve to a $7 billion balance and feeding about $1 billion into the state’s forward fund for public education, he said.
“We’ve saved a tremendous amount for uncertain times, like these,” Boucher said. “There is always that uncertainty when your economy is tied to a commodity price.”
Community Discussion
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Hopefully GVEA realizes this and drops there fuel surcharge down so i'm not paying more for that than the actual electric usage.
Fairbanks low price for unleaded $3.88
Oklahoma low price for unleaded $2.35 (with .16 cent fuel tax)
Fairbanks price last year when oil was $85/bbl. $2.90
How is $1-$1.50 more per gallon than parts of the US a reflection of falling crude prices? Let's not forget that Palin suspended the fuel tax. The US average, which is $3.29 today, includes an average state fuel tax of 21 cents. This puts the real US average right at $3.08 a gallon when compared to our prices.
www.fairbanksgas.com
What ever happened to the investigation into the price gouging?
With lower oil prices we may have to cut back on the state budget pretty soon.
I've been tired of the monopoly fuel pricing we've had in the interior for decades.
Thanks Fairbanksgas for that. I was wondering what the stats were myself. I would love to hear more about the price gouging investigation. I am appaled at the amount of gas. Why is it that we dont use CG like other nations?
I hear that most of the added cost of gasoline and diesel are due to the low sulfur requirements. The refinery at North Pole decided not to add the sulfur reduction unit. Instead they buy ultra low sulfur gasoline from Nikiski and mix it here to get into compliance. And all the low sulfur diesel comes from Kenai. Also all the diesel that is used on the slope will come from Nikiski as well. Conoco Philips decided not to add a low sulfur topping unit at Kuparuk. This was in response to the change in the tax structure on the North Slope producers. I have also heard that there are not enough feed stocks in the Cook Inlet fields to feed the Tesoro refinery so they have to get some shipped in from Valdez. This shipping shell game costs big money. And we are paying for it at the pump.
Gas and fuel have horizontal demand curves, meaning the demand doesn't increase or decrease due to retail price. Our "neighbors" who own and operate the refinery out in North Pole can charge whatever they want because the demand will not be affected. Therefore they bilk us for all they can and sit out there like fat cats counting their green. I'll be out on the old rich, in front of the refinery, with my protest sign every Wednesday afternoon (my day off). Come join me if you like.
Let's see then. Jay Ramras said the reason our fuel prices were so much higher than everywhere else was because the refinary uses crude to refine gas. So, by his statement I guess our gas prices should have went down by 1/2.
He never did mention what all of the other refinaries use to refine their gas. Nor did he mention that only the value of crude was affected not the cost of producing that commodity.
Des Moines Iowas gas price in the $2.70 area today...I wonder where their refinary is located? Could it be as close as ours?
I understand why Oklahoma's gas prices are so low - they have refinaries in their back yards, just like us!
What does that tell you we should be paying?
Where's Sarah in investigating this?
Lakloey: We might be getting our diesel from Kenai, but the North Slope gets it from the refineries up there. Most of the diesel used on the slope is regular low-sulfur not ULSD. The fuel is not used on public roads, so it can be off-highway fuel, which is also non-taxed.
Many places in the upper mid-west, lacking in nearby refineries as well, are paying right at about $3.00/gallon (+/-).
Yes, the low sulfur requirements have likely added some costs. But not THAT much.
Flint Hills, when buying the Williams Refinery with the blessings of the sociopath Frank Murkowski, promised that they wouldn't gouge us. They lied.
Sourdoughdiablo; where and when?
Perhaps if folks seriously start to car-pool, turn their thermostats down to 60-65 f., burn alternative fuels, and some significant group of folks maintains a vigil at the refinery gates, then MAYBE, just MAYBE, the vultures and vampires will cease sucking quite so much of our blood.
I've got some excellent moose pepper sticks and some moose bratwurst I can bring, along with a small grill, but I'm involved in some construction projects on my home for the next week-and-a-half or so.
Enough is enough. This is getting to be like the small group of energy auditors who've tripled or quadrupled their originally-quoted fees, and the high-efficiency boiler installers who're averaging $300.00-$400.00/hour on a boiler swap-out (billing by the job, rather than by the hour), just because 'we can,' once they saw the $300 million in AHFC money rolling in.
Vampires, Vultures, & Thieves, one and all!!
How many acres of land in North America does BigOil & KingCoal use in their operations to produce hydrocarbons?
http://cc.pubco.net/www.valcent.net/i/mi...
Can these massive corporations produce 20,000gallons of highly refined carbon-neutral hydrocarbons and plenty of extra nutritional-foodstock per acre/yr ??
Hydrocarbon = hydrogen & carbon
water & carbon = hydroxycarbon
Just like there's more than one way to drill a hole..
http://www.potterdrilling.com/technology...
..there's also more than one way to cook a catalyst
http://globalresourcecorp.ir.stockpr.com...
http://www.peswiki.com/index.php/Main_Pa...
.....cash/fumble
When oil prices per barrel were this low last fall, heating oil was $2.70/gallon. So it is still higher than the price of oil suggests. I'm glad to see it down. Heating oil is a major expense in this state.
Be sure and check you GVEA bill for the enclosed 13% increase notice. You can tell the APUC NO!Thanks.
You must say so in writing.
I can't see GVEA has made a visible effort to cut costs such a eliminating their useless pr guy.
GVEA has urged us to cut consumption. OK we have, now they want a rate increase to make up for LOST sales. In my case I cut close to 50%
It looks like my Oct. bill went down $15 bucks!
Because the less you use the more you pay!
We have all ready been soaked with 2%, 2%, 3%,2% etc which adds up over the last few years to about 30%(?) total.
We just recently found out Anchorage has electricity at 10c per KWH and we are stuck with 19.5c!
I try to not snivel about such things. However, the freight on a kilowatt is way way out of hand.
I understand that under English law, a failure to object constitutes CONSENT!
That idea always pops in to my mind. Every time my billfold complains about being raped.
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1AkFox,
Ask the GVEA how much their board members get paid to attend a board meeting. Far more than any board that I ever served on, most of which were volunteer, for the community's/members' benefits, as opposed to my own direct benefit.
Vampires, Vultures and Thieves, one and all!!
PS.. on the notice.. there are instructions on 'How to make your comments by email' be sure to follow them exactly!
Help your friends send in comments?
Actually the refinery is less than 15 minutes from my house sambre and the pipeline is in my neighbors backyard, literally.
To have any less transportation cost you would have to be fueling up at the wellhead and running crude oil in your car. The crude goes into the refinery directly from the pipeline and all the waste goes out back into the pipeline. The only thing leaving the refinery is fuel that is overprice by over $1 a gallon.
1AkFox said:
"GVEA has urged us to cut consumption. OK we have, now they want a rate increase to make up for LOST sales. In my case I cut close to 50%
It looks like my Oct. bill went down $15 bucks!
Because the less you use the more you pay!"
This is true, Catch 22, the less you use the more you pay!!!
I about fainted when I saw that listed on one of their included handouts when a bill was sent out several months ago listing the reason for wanting a rate increase.
To paraphrase... it said something to the effect that since consumption was down, they needed more bucks to counter the loss of revenue.
They must have a lot of fixed cost over there. Like the free electricity that Kelly allegedly gets for life as part of his retirement package.
dog
I agree with all of these comments and re itterate the question; Where is Sarah on this one? GVEA is ripping folks off. Plain and simple. Fuel prices in this state and especially in this borough are ridiculously overpriced.
Fairbanksgas, I am impressed with the website and documentation on it.
Henry...sorry but ULSD is required for use on the slope starting this winter. In fact there will be so many tankers heading north it will look like a caravan. One troubling thought is that most of the truck drivers in this fuel lift will be new to the haul road.
sherry29...the N.P. refinery burns crude to heat the feed stock to distill out the components that we use. Most refineries use natural gas.
I remember watching the gasoline prices jump a few times a week as the oil prices jumped. Now that the price of oil is falling just as fast, don't see the gas prices falling. Funny how that works and wish I could do the same with my checkbook!
I'm sure we won't hear anything out of the investigation as the Federal Government did the same thing how many times. They are all swimming in the same pool.
I guess with the falling fuel prices, GVEA won't need their latest price hike, right?
NOT!
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