When the benchmark NYMEX RBOB gasoline blendstock price drops as precipitously as it has recently, it's always interesting to check in and see what's happening with wholesale gasoline rack prices. Critics of the industry have a term they like to use: "up like a rocket, down like a feather," describing how (according to their view) retail prices soar when NYMEX RBOB prices rise quickly, and come down slowly as it falls at a rapid pace.

Retail prices are declining more slowly than the NYMEX contract. The EIA average national retail price for gasoline published April 9 was $3.99/gal; a week later, it was $3.98. The AAA daily average on April 18 stood at $3.89.

Large marketers, like major companies or large refiners, don't set the retail price. So judging oil company responsiveness to NYMEX declines needs to be done with rack prices.

Rack prices are going to move mostly with changes in the NYMEX RBOB price, but also with shifts in the local differential, e.g., the price of spot US Gulf gasoline relative to NYMEX. But Platts' editors who cover those markets say there's been no significent movement in those differentials since March 29, when the NYMEX RBOB price hit its recent high settlement of $3.4455/gal. So differentials shouldn't be much of a factor in different rates of race price movement since that date.

Without interpetation, here are some recent changes: 

NYMEX RBOB: April 18 settlement of $3.2027/gal, down approximately 24.28 cts/gal from March 29 close of $3.44455/gal. (On April 19, it dropped a further 4.8 cts/gal, approximately, to settle at $3.1541/gal.) 

Rack moves, taken from completely random cities across the US: All the prices are for unbranded product except where noted, are in cts/gal and reflect declines in the rack price between March 29 and  April 18. The prices were supplied to us by our partner DTN Energy:

Marathon Orlando, down 22.15; Valero Orlando, down 17.8; Conoco Phillips Long Island, down 8; Valero Chicago, down 19.55; Citgo Chicago, down 9.4; Chevron Dallas, branded, down 4.55; ExxonMobil Dallas, branded, down 15.74; ConocoPhillips Denver, branded, up 1.48; Chevron Los Angeles branded, down 13; Tesoro Los Angeles, down 10; Shell Phoenix, down 26.45

So rack prices in reaction to recent NYMEX declines are like they usually are: all over the place. It's tough to draw any conclusion from them.

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This piece in The Wall Street Journal by US Senator Lisa Murkowski (Republican-Alaska) set The Barrel to looking for decade-old quotes that could back up her charge that a decade ago, when a vote authorizing the opening of the Arctic National Wildlife Refuge went down to defeat--another in a long line of "no" votes--that ANWR critics were noting that no oil would flow for ten years. It was in our memory, but those recollections can be fuzzy.

What was surprising was how many subsequent searches turned up what was either clearly an organized campaign on the web to highlight the 10-year anniversary of that vote, or simply a lot of sympathizers who saw Sen. Murkowski's piece and added their analysis on their own blogs.

The search did turn up this highly partisan video. But looking past the politics, what's significant about it is that it proves the Senator's point: that an argument often heard in 2002 was that one reason to reject ANWR was that the oil wouldn't reach markets for 10 years.

So it is 10 years later. Nobody will ever know what ANWR would be producing today. The most optimistic forecasts were for 1 million b/d.

We wouldn't want to make a price prediction. But if world capacity were otherwise the same, and then you throw in 1 million b/d from ANWR, the world would be able to snub Iranian oil with a lot more ease than significant parts of it will attempt to do in the coming months. 

As the July 1 deadline nears for an EU embargo of Iranian oil, it remains to be seen whether that embargoed oil can find new homes, given Iran's increasing pariah status. If it cannot, then  the world will effectively experience a reduction in supply to markets. (On Wednesday, NIOC international affairs director Mohsen Qamsari told reporters in Tehran that Iran's oil exports have "definitely" been affected by EU sanctions but that it was too early to say how the ban on imports of Iranian oil into Europe starting July 1 will affect overall volumes.)
 
The geopolitical implications of what a 1 million b/d flow of ANWR oil would mean in 2012 are pretty interesting to consider in that light.

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For E15 to get into the marketplace, one key area where it needs to overcome obtsacles is at the retail level.

Retailers looking to add E15 to their product line need to do a few things: they need to build separate tanks to hold it; they need to keep the E15 pumps away from the E10 tanks, to avoid older cars putting E15 into engines that can't handle it; they need to mark very clearly to certain people to please, please don't fill up from that pump; and they need to hope those signs are obeyed.

As Platts Gary Gentile reported Thursday:

Representatives from refiners, retailers, ethanol and consumer groups testified in front of a House Energy and Commerce subcommittee on a bill that would provide liability protection for anyone making or selling the 15% blend, known as E15, as long as they complied with government rules.

Such protection is considered mandatory before companies will risk introducing E15 into the US fuel supply.

The bill, sponsored by John Shimkus, Republican-Illinois, would protect makers and marketers of EPA-approved fuels and fuel additives from liability if a consumer mistakenly, or intentionally, misfuels, as long as federal regulations concerning the proper storage and labeling were followed. A similar bill has been introduced in the Senate.

The Environmental Protection Agency last year approved a new gasoline blend consisting of 15% ethanol, up from the 10% currently allowed. But it will only allow its use in conventional vehicles manufactured after 2001, and it has not approved the fuel for use in small appliance or marine engines.

But at least one car manufacturer, Nissan, already is taking things into its own hands. Check out this new fuel cap. (Though presumably if you have this cap, it's on a new car, and by definition can take E15. Yet the cap warns against it.)

If you are an owner of a Nissan that can't take E15 or E85, and you look past the cap, and you look past the fact that the E15 or E85 pumps are off in a corner at the retail station, like bad kids being punished in a "time out," and you fill up there anyway when you're not supposed to...the fact people like that exist is presumably why a federal law is desired.

 

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