Autoblog

The price of crude oil dropped below $100-a-barrel yesterday (its lowest level since February) as the slowing economy -- bringing with it a reduced demand for oil -- raised concerns. Interestingly enough, the drop in crude didn't affect the price of gasoline as it rose 16 cents per gallon due to refinery closures from Hurricane Ike. The storm only caused moderate damage to oil platforms, but more than a dozen Texas and Louisiana refineries were shut down or idled ahead of the storm. It was just July when crude oil prices peaked at just over $145 per barrel, and gas prices neared $5 in many parts of the country. The high cost of fuel over the summer stymied drivers, who cut back on consumption forcing the price of oil to slowly retreat. Analysts who predicted doom ($200-a-barrel by the end of the year) are now scaling back their forecasts, and some have even predicted crude may eventually drop to $70-a-barrel. While we obviously welcome any drop in the price of crude, it's the volatility -- the sharp fluctuations as a result of market conditions -- that we would also like to see addressed.

[Source: New York Times, Photo by ADEK BERRY/AFP/Getty]

The Detroit Free Press is reporting that the national average for premium gas is now $4.48 a gallon, some 40 cents more than regular, and that drivers are just refusing to buy it.

Truth be told, most people who've been buying premium probably don't need it at all, but even among those whose engines specify 91 or higher, demand is way down. The Freep says it's actually at its lowest level since 1984. The higher-octane fuel accounted for 16% of gas sales at the height of its demand in 1997. Last month it was half that at 8%. Demand for premium is so low that in some areas it takes gas stations 3 or 4 weeks to sell out a shipment of premium compared to just a couple of days for regular.

Experts say that demand is dropping for a number of reasons. People are switching from luxury and performance models to more efficient cars that only require regular. Many owners of premium-only vehicles are just driving less. And some people who choose to buy premium despite their cars and trucks only requiring regular are just wising up. When looking at the situation, Consumer Reports has gone so far as to say that "many cars that are supposed to only use premium perform just as well with regular." So keep those extra bucks in your pocket and go with the 87 for now. Just don't yell at us if something starts knocking underhood.

NOTE: This picture was taken on March 3, 2007... in Nevada.

[Source: Detroit Free Press]

Don't like the weather? Just wait, it'll change. Don't like gas prices? Just wait, they'll change, too. But if the weather brings a hurricane, some experts say gas prices could hit as high as $6 a gallon.

NOAA has predicted as many as nine named storms this season, with five of those possibly reaching major status. One expert in a CNN story says that a typical hurricane will shut down an off-shore oil rig and interrupt supply lines for as long as two weeks. If even one of those damages Gulf of Mexico drilling rigs, you can bet the crude markets will go nuts, and today's black gold and $4/gallon gas will seem like a bargain.

The good news? Hurricane season ends Nov. 30. If we make it to December with no major hurricanes, we might see oil and gas prices fall. Maybe.

[Sources: CNN, NOAA]

With the cost of gasoline skyrocketing, thieves in Hawaii -- where the average price easily exceeds $4 per gallon -- have taken extraordinary measures to steal fuel. Only mildly deterred by locking gas caps, bandits have been cutting fuel lines to circumvent the common preventatives. With nothing more than a straight edge blade, a piece of garden hose, and a bucket, the lawless make easy work of the plastic fuel lines under cars as they cut them to gain simple access to the tank and its flammable yet valuable liquid contents.

So far, most of the victims have been businesses or commercial ventures with several large trucks in their fleet. Parked unattended in lots overnight, their 20-30 gallon fuel tanks and raised ride height make them easy targets with larger yields than the average passenger vehicle. To deter the theft, business owners have installed sophisticated video surveillance cameras on their property and outfitted some vehicles with steel gas lines. "If they're crazy enough to go cut a steel line to steal the gas, they should be welcome to it," says George Nitta, owner of Nitta Auto Repair. "All they need is one spark from that saw and that's it, you're done." Thanks for the tip, catgirlshyla!

[Source: Honolulu Advertiser, photo by Justin Sullivan, Getty Images]

In a sign that the high cost of gasoline has finally struck a central nerve, car shoppers today are reportedly more concerned about fuel economy than they are about the brand of vehicle when shopping for a new car. In addition, consumers want more government control over fuel economy. This startling news, and a reversal of consumer trends two years ago, is the result of a new AAA survey which studied consumers' attitudes towards fuel prices.

It appears that consumers were getting used to the cyclic fluctuations of gas prices. Prices shot up based on market conditions, supply and demand, and season increases. However, they always seemed to drop back to more palatable levels... at least they used to. Today, according to leading economists, consumers are finally catching-on to the idea that $4 a gallon gas might be the norm. This reality-check of fuel costs will lead to downsizing, and a focus on vehicle efficiency. Have we finally found the Achilles heel of the SUV?

[Source: The Detroit News, photo by Justin Sullivan/Getty]

click above to view more images of the Tata Nano

A report at CNN kinda states the obvious, that if the $2,500 Tata Nano proves as popular in India as most people think it will be, there will be a huge increase in demand for gasoline there. And if worldwide demand for oil goes up, the price of gasoline here will go up. Basic economics, right? Well, CNN looks a little deeper, and gets into why we're likely to see higher pump prices soon.

The target market for the Nano in India is people who do not currently own cars. That means droves of fuel-efficient scooter drivers will trade two wheels for four. And even though the Nano gets 54 mpg, that's still not as good as most of the scooters sold there.

And the second reason is that Tata sees the Nano as a "gateway" car. Get 'em addicted to the cheap stuff, then move 'em up to bigger, more profitable, less fuel-efficient cars later.

Combine these two reasons with the fact that the Nano will likely be sold in China as well, and you potentially have hundreds of millions of newly licensed drivers in line at the pump. The CNN story quotes one oil analyst who says we're likely to see gas prices near $4 or $5 well before 2015.

[Source: CNN]

John McElroy is host of the TV program "Autoline Detroit". Every week he brings his unique insights as an auto industry insider to Autoblog readers.

WHEN THE OIL BUBBLE BREAKS

In 1995, way back in the days of print, I was doing research for the 100th anniversary of a magazine called Automotive Industries. It actually started out in 1895 as a magazine called The Horseless Age, a much more romantic name for a publication, don't you think? It was fascinating to go through all of the back issues and watch how the auto industry evolved literally each time I turned a page.

In the course of my research I started to notice a pattern. Starting in the late 1920s, the magazine ran an article warning that we were running out of oil. And once a decade or so after that there would be another article, written by a different editor, interviewing a different expert who predicted essentially the same thing--that we'd be running out of oil in the next 15 to 20 years.

We're certain that we're not the only ones that shake our heads in disgust when we roll by a gas station (and bow our heads in shame when we actually have to fill up). With the price of gas starting to come down, we certainly all are a little puzzled about what influences fuel prices. Howstuffworks.com comes to the rescue with a overview about what factors control the price of gasoline and the price of oil. While this is far from an exhaustive analysis at the elements that influence energy prices, the article does provide more in-depth analysis about the hot button topics in the economics of fuel.

The only explanation that we did not see is how oil companies are making record profits with oil AND its derivative product, gasoline, at such high prices. We want to see a step by step look at each stage in the process from well to wheels, and where each side takes its cut. Otherwise, the howstuffworks.com article does give more time to the subject than we typically see in other media outlets. So get going and find out what goes into making a $3.00 gallon of gas.

Every driver  is feeling the pinch at the pump these days, but the skyrocketing cost of gasoline is affecting more than just your commuting habits. Ordering out for pizza? You might want to reconsider the pepperoni. Having flowers delivered to your sweetie? Might want to switch the roses for carnations. Need a landscaper? Take a look in the mirror-- because the rise in oil prices is leading service-based businesses of all stripes to ratchet up their prices or lose revenue.

While many are resisting adding a dollar or two to the costs of their goods and services, if pump prices continue to trend upward as expected, fewer will be able to avoid passing the buck to consumers. For many, a slight surcharge to account for gas premiums won't curtail their spending habits, but for some, it may mean the difference between ordering-in or cooking at home. Regardless, it's another way in which the high cost of filling up is affecting local and national economies.

Have you noticed an increase in costs attributable to gasoline prices? Sound off in 'Comments.'

[Source: The Daily Breeze; SushiCam.com]