Tag: Chevron

Volatility of Gas Prices in California

On By Norbert HauptIn Economy, EnergyLeave a comment

I drive by two adjacent gas stations every day on my way to work. There is a Chevron station right next to a Shell station. I can never figure out how that works for either of them. Why are there two stations on that corner where one would be just fine?

As I drive by, I can monitor the price of gas as it fluctuates. Usually, the two stations are within a penny or two of each other, which makes sense.

In the last few days I noticed a huge shift, illustrated in this chart:

Gas Price Volatility

How can the price of a commodity like gas jump 20% overnight, as it did from Wednesday to Thursday at Chevron? Then you can see how Shell caught up, but not quite, on Friday. Needless to say, the Chevron station was completely empty on Thursday. After filling up a tank at Shell vs. Chevron, the difference in price would be about $8, enough for a lunch special at Pickup Stix.

My question is: What kind of market is this, where a commodity like gasoline can jump 20% in a day? Isn’t the market intended to buffer us from these kind of fluctuations? Something makes me suspicious that we’re subject to some kind of manipulation.

I still remember those days when Enron manipulated the power market and we experienced brown-outs and enormous price spikes for no discernible reason in California. We later found out that some of the “smartest guys in the room” at Enron manipulated the market and duped us all, millions of us. They sucked money out of our wallets while the sucking was good. In the aftermath, one person committed suicide (Baxter), a few people (Skilling) went to jail and none of us got our money back. Thousands of shareholders lost their life savings. That was Enron.

What’s going on with the gasoline market in California?

Chevron CEO Watson in AP Interview

On By Norbert HauptIn Business, Climate Change, Energy2 Comments

Climate change activists decry Chevron CEO Watson’s statements in an interview by AP for shirking responsibility for climate change:

AP: Do fossil fuel producers bear the responsibility for curbing greenhouse gas emissions?

WATSON: We have the responsibility to deliver our energy in an  environmentally sound fashion. The greatest advancements in living  standards in recorded history have taken place in the modern hydrocarbon  era.  I don’t think that’s coincidental. Our leaders have to make a  decision. Do they want that to continue or do they have a better  solution for us? So it’s not my call.

I tend to agree with Watson. It really ISN’T the responsibility of the oil companies to do something about climate change. Their job is to maximize shareholder return by exploring and selling petroleum products to retail customers. What makes us think that Chevron or the other oil companies are going to take steps that will erode their business?

It’s a silly thought.

It is the responsibility of all of us, and our political leaders eventually, to find scalable and effective alternative energy sources. In the same interview Watson also states that the only other scalable energy source is nuclear. That may be the case right now, but it will change, as pressure to find other sources increases. It’s a copout to just say nothing else is scalable. Oil wasn’t scalable either when it was first found. Governments subsidized oil heavily in the early years, just like they subsidize wind and solar now.

Many years ago, when the tobacco companies were still a strong in the U.S., and smoking ads were still allowed, it wasn’t the tobacco companies that curbed smoking in our country. Their job was to produce and sell tobacco. It was the public, it was public education and health awareness that curbed smoking. If somebody had told us then that smoking would not be allowed in any public building or work place anymore, we would not have believed it. But it happened, because it was healthy and good.

Curbing the use of fossil fuel will also happen, and it won’t be initiated by the oil companies. Get used to that.

Chevron is not shirking responsibility for climate change. It’s not responsible for it. It’s just that its product has many problems, including generation of greenhouse gases as it gets burned, but last and not least, that there is only a limited amount of it on earth. Despite Watson’s statements that oil will be around for generations, it is going to run out, we just don’t know exactly how soon.

It is we, the people, that are responsible.