http://www.zerohedge.com/news/2012-10-04/wholesale-gasoline-shortage-california-causes-gas-stations-shut-down-hoarding-next
Submitted by Tyler Durden on 10/04/2012 14:54 -0400
and.....
http://www.zerohedge.com/news/2012-10-04/got-milk
Submitted by Tyler Durden on 10/04/2012 15:18 -0400
Wholesale Gasoline Shortage In California Causes Gas Stations To Shut Down: Hoarding Next?
"The squeeze is on, and people are doing desperate things," is how one independent described the situation in California. As Bloomberg reports, a shortage of supply along with drastically higher wholesale prices of gasoline has caused 'mom-and-pop' gas stations to close down as their margins are destroyed. Even larger firms, such as CostCo, are closing sites due to the shortages as Los Angeles and San Francisco gas prices jump 30-45c in a few days.
As one owner noted: "I can get gas, but it’s going to cost me $4.90 a gallon, and I can’t sell it here for $5," and another added that "we’re going to start shutting pumps Friday, as gas is costing me almost $4.75 a gallon with taxes. There’s no sense in staying open. The profit margins are so low it’s not worth it."
The problem is likely a short-term one according to some as the temporary shutdown of local refineries (after Chevron's Richmond refinery fire) and maintenance is completed but it is clear that even a short-term blip in wholesale prices (whether driven by local supply or global geopolitics) causes pain as it would appear we are close to 'inelastic' levels of demand.
- *VALERO SAYS SUPPLY IN CALIFORNIA HAS TIGHTENED
- *VALERO SAYS IT HAS TEMPORARILY HALTED SPOT SALES IN CALIFORNIA
California gas has not fallen as the national average has...
Via Bloomberg:Gasoline station owners in the Los Angeles area including Costco Wholesale Corp. (COST) are beginning to shut pumps because of supply shortages that have driven wholesale fuel prices to record highs.Costco’s outlet in Simi Valley, 40 miles (64 kilometers) northwest of Los Angeles, ran out of regular gasoline yesterday and was selling premium fuel at the price of regular, Jeff Cole, Costco’s vice president of gasoline, said by telephone. The company hasn’t been able to find enough unbranded summer-grade gasoline to keep its stations supplied, he said....Prices JumpGasoline at the pump gained 8.3 cents to $4.315 a gallon in California yesterday, according to AAA.com, 53.1 cents more than the national average of $3.784. In Los Angeles the price was $4.347. Gasoline futures for November delivery on the Nymex rose 11.15 cents to $2.911 a gallon at 1:35 p.m. today, after falling yesterday to a 10-week low. Retail price movements tend to lag behind those of futures....“I can get gas, but it’s going to cost me $4.90 a gallon, and I can’t sell it here for $5,” Ravi said. “If you come here right now, I’ve got some diesel left. That’s all. My market is open, but no gas.”A Chevron Corp. (CVX) oil pipeline shut down last month, an Oct. 1 power failure at Exxon Mobil Corp. (XOM)’s Torrance refinery and units down at other plants have cut supplies in the market.Spot California-blend gasoline, or Carbob, in San Francisco surged 30 cents to $1.40 a gallon over futures, also the highest level since at least 2007, at 1:12 p.m. New York time.‘Not Worth It’“We’re going to start shutting pumps Friday,” Sam Krikorian, owner of Quality Auto Repair in North Hollywood, said by phone yesterday. “Gas is costing me almost $4.75 a gallon with taxes. There’s no sense in staying open. The profit margins are so low it’s not worth it.”Exxon’s 150,000-barrel-a-day Torrance refinery may flare gases for a week as it restores production after a power failure that shut some units and slowed output from others, Gesuina Paras, an Exxon spokeswoman in Torrance, said by e-mail Oct. 2.Chevron’s Kettleman-Los Medanos pipeline, which carries crude from Kern County to Northern California refineries operated by Royal Dutch Shell Plc (RDSA), Tesoro Corp. (TSO) and Valero Energy Corp. (VLO), remained shut after elevated levels of organic chloride were detected in the oil.Phillips 66 (PSX) is also scheduled to perform maintenance on process units at its Rodeo and Los Angeles refineries this month, people familiar with the schedules said.Chevron’s 240,000-barrel-a-day Richmond plant, the largest refinery in Northern California, has been running at reduced capacity since a fire Aug. 6.’Squeeze is On’“The squeeze is on, and people are doing desperate things,” Bob van der Valk, an independent petroleum industry analyst in Terry, Montana, said by e-mail yesterday. “The mom- and-pop gas stations are having to close down from either not being able to obtain gasoline from their regular distributor or cannot afford the break-even price of almost $5 per gallon.”...Short-Term ProblemVan der Valk called the price surge a “a short-term problem.” Wholesale costs should start falling as Exxon’s refinery returns to normal operations and other plants finish maintenance....“Everybody is concerned about what might happen,” he said. “The real question is: How long is this going to last and what can the state do?”...The independent gas station owners are typically the first to run out of fuel and shut their pumps when spot prices surge because they often lack long-term contracts to buy from fuel suppliers at set prices, McKeeman said.Via Contra Costa Times:"It's a combination of low inventories and multiple California refinery problems," said Tom Robinson, head of Robinson Oil Corp. "Really since the Chevron Richmond fire, inventories have been tight. As other refinery problems occur, there isn't much or any available inventory."Retailers are not yet reflecting the wholesale price increases they have experienced, so unless supply problems improve quickly, retail prices will definitely be going up."
and.....
http://www.zerohedge.com/news/2012-10-04/got-milk
Got Milk?
As corn prices have rolled over and even the World Bank worries over the impact of financial crises and food prices, we present, with little comment, one of the more staple sustenances - now trading at record high prices... transitory we presume?
Seems like milk is oddly correlation to periods of (actual or anticipation of) central bank largesse (green arrows)...
Spot The Deflation...
Cue gratuitous Got Milk image...
Food Prices Jump to Six-Month High as Dairy Costs Rise
By Rudy Ruitenberg - Oct 4, 2012 6:30 AM ET
World food prices rose in September to the highest in six months as dairy and meat producers passed on higher feed costs to consumers, the United Nations’ Food & Agriculture Organization said.
An index of 55 food items tracked by the FAO rose to 215.8 points from a restated 212.8 points in August, the Rome-based agency reported on its website today. Dairy costs jumped the most in more than two years.
Livestock breeders and dairy farmers are passing on the higher cost of feed, after grain prices jumped in June and July, according to Abdolreza Abbassian, an economist at the FAO in the Italian capital. Higher prices don’t mean a food crisis is imminent, he said today by phone.
“Despite a very difficult market, the fundamentals that suggest a food crisis are just not there,” Abbassian said. “Market sentiment is now accepting high prices more as a rule than as an exception.”
The FAO dairy-price index jumped 6.9 percent to 187.7 points from 175.6 in August, the biggest advance since April 2010, the data showed. The index for meat prices rose 2.1 percent to 175, climbing for a second month.
The world cereal-price index rose to 262.6 points from 259.9 points the previous month to reach the highest level since April last year. The index for grain prices in July surged 17 percent, the biggest jump since February 2008.
“We expected this for both meat and dairy, you have a lag with this big increase in input cost from the grain sector,” Abbassian said. “There will be a limit to how much it goes up. By how much you can raise prices without consumers cutting consumption remains an issue.”
Milk Futures
U.S. Class III milk futures gained 5.6 percent in Chicago last month after climbing 7.9 percent in August, rising for a fifth month. They’re up 23 percent since the start of the year.
The FAO had no reason to expect a food crisis, Director- General Jose Graziano da Silva said last month, after food prices leveled off following a 6.2 percent jump in July, the biggest gain since November 2009. The food index last month was little changed from the start of the year, and has dropped from a record 237.9 points in February 2011.
High food costs last year contributed to civil unrest across the Middle East and North Africa, toppling governments in Tunisia and Egypt. The U.S. State Department estimates that surging food prices triggered more than 60 riots worldwide from 2007 to 2009.
“Obviously costs are going up, and for some of the poorer countries this is always a problem,” Abbassian said. “Domestic prices have not gone up anywhere as fast as in international markets.”
Grain Production
The FAO forecast world grain production will fall to 2.29 billion metric tons this year from 2.35 billion tons in 2011, cutting its expectation by 8.8 million tons from a month ago on lower output of coarse grains, the agency wrote in a separate statement today.
“The cereal situation seems to have become more predictable than it was over the summer period, so hopefully that means less instability in cereals in coming weeks,” Abbassian said.
and.....
World food prices rise, stay close to crisis levels: FAO
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By Catherine Hornby
ROME (Reuters) - World food prices rose in September and are seen remaining close to levels reached during the 2008 food crisis, the United Nations' food agency said on Thursday, while cutting its forecast for global cereal output.
The worst drought in more than 50 years in the United States sent corn and soybean prices to record highs over the summer, and, coupled with drought in Russia and other Black Sea exporting countries, raised fears of a renewed crisis.
Grains prices have retreated in recent weeks due to rapid harvest progress and concerns about weak demand in a slowing global economy.
But the FAO Food Price Index, which measures monthly price changes for a food basket of cereals, oilseeds, dairy, meat and sugar, rose to an average of 216 points in September after remaining stable at 213 points in August, the FAO said in its monthly update.
The rise reflected mainly higher dairy and meat prices, with more contained increases for cereals, it said.
"Prices are remaining high... prices are sustained, it's highly unlikely we will see a normalisation of prices anytime soon," FAO senior economist Abdolreza Abbassian told Reuters in a telephone interview.
He added however that it was not clear whether the small increase in September meant prices were now on an upward trend, but he expected volatility in markets could intensify in coming months.
FAO's index is below a peak of 238 points hit in February 2011, when high food prices helped drive the Arab Spring uprisings in the Middle East and North Africa, but current levels are very close to those seen in 2008 which sparked riots in poor countries. Continued...
Despite the rise in food prices, the United States Mission to the UN Agencies in Rome released a statement on Thursday saying it had agreed with other countries that a meeting of the emergency Rapid Response Forum under the G20 agriculture body AMIS was not necessary at the moment.
"Agricultural commodity markets are functioning," the mission said.
Abbassian said a ministerial meeting that goes beyond the G20 to discuss food prices was still planned for Oct 16.
French President Francois Hollande has launched a global campaign to win support for strategic stocks of agricultural commodities, but EU development Commissioner Andris Piebalgs said this week that was not the best way to tame food prices, advising a focus on agricultural investment to boost production.
Today gas rate will become more and more high, so many people are suffered with this problem. Middle class families are not in the position of to buy and cook the food on gas. Thanks for sharing such an useful information with us.
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