YOU HOW THESE TWO CONNECTED AND THE MENTORSHIP THAT’S HAPPENING. STITCH BY STITCH. ALRIGHT
PRIYA MANN WASHINGTON, A GROUP
OF OIL EXECUTIVES TESTIFIED
BEFORE A HOUSE COMMITTEE TODAY
ABOUT THE HIGH PRICE OF GASOLINE
. WE’VE WATCHED IT JUMPED SO
DRAMATICALLY, AND IT’S PUTTING A
REAL PINCH ON SO MANY AMERICAN
FAMILIES, BUT THERE’S MORE THAN
JUST THE PRICE OF OIL THAT
FIGURES INTO THE PRICE AT THE
PUMP. DEVIN SCILLIAN IS HERE
WITH A GAS PRICE PRIMER IF YOU
WILL BE LOOKING INTO A VERY
COMPLEX RECIPE. NOW IT IS ALL
BUILT ON THE SIMPLEST, MOST
TIMEWORN THEORIES OF ECONOMICS,
BUT AT THE MOMENT SOME BIG
COMPLICATING FACTORS ARE TESTING
THE GAS PRICE CALCULATOR. I HAVE
TWO WIVES, SHERPAS TO GUIDE ME
ALONG ON HIS WINDING JOURNEY.
TOM KLOZA, HEAD OF ENERGY
ANALYSIS AT OPUS, YOU NEED TO
ADD 10% ETHANOL TO IT. ETHANOL
IS CHEAP, RIGHT? RANA ALSO AT
OPUS, HE’S THERE CHIEF OIL
ANALYST AND THAT’S JUST THE
MOVEMENT OF IT. WE HAVEN’T EVEN
GOTTEN INTO THE REFINING OF IT.
THE PRICE YOU PAY AT THE PUMP
HAS A LOT TO DO WITH THE VERY
LONG JOURNEY THAT IT TAKES FROM
CRUDE OIL TO END UP AS A GALLON
OF GASOLINE IN YOUR CAR. LET’S
GIVE IT A GO. WE’LL START WITH
WHERE THE WHOLE EQUATION BEGINS
. AND THAT’S WITH CRUDE OIL.
IT’S BEEN RUNNING OVER $100 A
BARREL NOW ONE BARREL OF CRUDE
OIL, BY THE WAY, TURNS INTO
ABOUT 42 GALLONS OF GASOLINE. IF
CRUDE OIL MAKES UP THE LION’S
SHARE THE COST OF GAS. WHY NOT
JUST PUMP MORE OF IT BECAUSE
THAT’S EXPENSIVE AND THE
PANDEMIC AS THE OIL COMPANIES ON
EGGSHELLS? A LOT OF C. E. O. S
AT THE END OF 2000 AND 21 SAID
WE NEED TO EXERCISE DISCIPLINE.
WE SHOULDN’T INCREASE DRUG
BECAUSE WE’LL HAVE ANOTHER BUS.
SO YOU’VE GOT THIS CRUDE OIL.
NOW YOU HAVE TO MOVE IT THROUGH
PIPELINES AND TANKERS TO
REFINERIES, WHICH ARE OFTEN A
LONG WAY FROM THE WELLS.
TRANSPORTATION COSTS HAVE GONE
WAY UP TO. SO WHAT, OF DIFFERENT
MOVING PIECES INTO YOU KNOW,
GETTING FROM POINT A TO POINT B
FROM A BARREL OF CRUDE OIL TO A
GALLON OF GASOLINE AT YOUR LOCAL
STATION. PRICES ARE MOVING SO
QUICKLY THAT WHEN YOU SEE A
TANKER TRUCK RIGHT NOW THAT
TRUCK IS FOLLOWING ABOUT 8000
GALLONS, AND WHAT WE’VE SEEN
THIS YEAR HAS BEEN INCREDIBLE.
THE TRUCK MIGHT PICK UP PRODUCT
FOR ABOUT YOU KNOW $4 IN THE
MORNING $32,000, AND BY THE TIME
IT GETS TO THE STATION, IT MIGHT
HAVE A REPLACEMENT VALUE OF
SOMETHING LIKE 35 OR 36. $1000
SO WE’VE NEVER SEEN VOLATILITY
LIKE THIS. TAXES NEED TO BE
FIGURED INTO. THERE’S A FEDERAL
TAX AND LOCAL TAXES ON TOP OF
THAT, BUT WE’RE NOT DONE WORLD
EVENTS, THEN COME INTO PLAY, FOR
INSTANCE, A WORLDWIDE PANDEMIC
THAT TURNED DEMAND WAY DOWN. BUT
NOW A WAR INVOLVING ONE OF THE
WORLD’S BIG OIL PRODUCERS THAT
AFFECTS SUPPLY. SO IT’S THE
OLDEST EQUATION OF ECONOMIC
SUPPLY AND DEMAND, AND THAT’S
WHY OIL ANALYSTS DON’T FALL FOR
POLITICAL ARGUMENTS. WHATEVER
ADMINISTRATION IS IN THERE,
WHETHER IT BE THE TRUMP
ADMINISTRATION TO BIND
ADMINISTRATION ON THE OBAMA
MINISTRATIONS, THEY GET TREATED
UNFAIRLY AND BLAMED FOR HIGH
PRICES OR YOU KNOW THEY HAD THE
VIRTUE OF LOW PRICES THAT
HAPPENED ON THEIR WATCH. IT
WOULD SEEM TO ME THAT THE MOST
DRAMATIC IMPACT THAT HAS A BEEN
PLACED ON THE OIL INDUSTRY AND
THAT EXISTS TODAY IS STILL
TRYING TO RECOVER FROM THE ALL
OF THE CHANGES THAT THE PANDEMIC
BROUGHT ABOUT MY RIGHT
ABSOLUTELY. I THINK THAT’S
THAT’S A BIG ISSUE. HOW BIG
DEMAND FOR OIL WAS SO RAVAGED BY
THE PANDEMIC IN APRIL OF 2020,
IT DROPPED TO A MINUS $37 A
BARREL. THAT’S A LITTLE LIKE
MCDONALD’S PAYING YOU TO TAKE
HAMBURGERS OFF THEIR HANDS.
GOVERNMENTS AND CENTRAL BANKS
STARTED POURING MONEY INTO THE
ECONOMY THAT BROUGHT THE PRICE
BACK UP. BUT THEN THIS YEAR
SWOOSH COVID FADES AND OIL IS
JUST THE MOST VISIBLE SUPPLY
THAT CAN’T KEEP UP WITH DEMAND.
NOW THE DEMAND FOR GASOLINE, OF
COURSE, ALWAYS GOES UP FOR THE
SUMMER DRIVING SEASON. AND
THAT’S GOING TO BE A PROBLEM
TOO, BECAUSE GETTING GAS FROM
THE REFINERY TO THIS PUMP IS
ABOUT TO GET REALLY TRICKY.
BECAUSE OF A LACK OF DRIVERS.
ONE THING THAT IS NOT BEING
TALKED ABOUT IT WAS LAST YEAR,
BUT NOT THIS YEAR AS MUCH AS WE
STILL HAVE A DRIVER SHORTAGE.
YEAH IN FACT, DIDN’T BELIEVES
THE DRIVER SHORTAGES COULD LEAD
THE GAS SHORTAGES IN PLACES THAT
ARE PARTICULARLY TOUGHER TO
SERVICE LIKE, SAY, AREAS IN THE
ROCKIES OR NEAR NATIONAL PARKS,
WHICH COULD COMPLICATE THE
SUMMER TRAVEL SEASON. QUITE A
BIT OF THE BIG RIGS. YEAH
EXACTLY EXACTLY TRYING TO GET IT
TRANSFERRED. SAME THING THAT THE
PRESSURE ON THE JOB MARKET BY
THE WAY, I DIDN’T EVEN MENTION
AIR TRAVEL DOMESTIC AIRFARES NOW