5

The

XCIV Edition May 2007

Gasoline Retailers Association of Florida

214 Stevenage Drive Longwood, Florida 32779

http://www.flagas.com

e mail

407-774-9700

Fax 407-788-3860

Pat Moricca President SSDA / NCPR-AT

Member Service Station Dealers of America

INDEPENDENT BRANDS

VISIT OUR WEB SITE FOR THE LATEST GASOLINE

INDUSTRY INFORMATION AND BENEFITS

www.flagas.com

Gasoline Retailers Association of Florida is a non-profit association representing Independent Gasoline Retailers, Convenience Stores, Gasoline Service Stations, Repair Shops, Tire Retailers, Truck Stops and Associates throughout Florida. Our goal is to improve the interests of these independent businesses and the motoring public. Cooperation with insurance companies provides benefits for our members. These benefits include money-saving programs for group health, workers' compensation, casualty, property and gasoline tank liability insurance. Benefits also include financing to purchase your gasoline station property and much more.

Join the Gasoline Retailers Association of Florida and help in the fight to keep the

Motor Fuel Marketing Practices Act of Florida (Below Cost) law.

Make an important investment in your business future for less than $1 a day.

As Pump Prices Rise, Drivers’ Reactions Mild
During the late 1970s, most Americans sacrificed some of their pleasure jaunts in their cars in the face of OPEC oil shocks and lines at gasoline stations. But today, as Americans start the sixth year of increasing oil and gasoline prices, their driving habits have not been markedly changed. What’s somewhat surprising is that, in recent weeks, gasoline consumption has increased.

Pat Moricca

A recent study that Christopher Knittel, an economics professor at the University of California, Davis, helped write revealed that each time gasoline prices jumped 20 percent during November 1975 to November 1980, motorists changed their driving behavior by decreasing gasoline consumption by 6 percent per capita nationwide, the newspaper reports.

However, when prices rose 20 percent during March 2001 to March 2006, drivers cut consumption a mere 1 percent. While prices swung up and down seasonally during both periods, Knittel said the two periods were comparable because regular gasoline prices increased in both periods by about 66 percent, to $2.50 from $1.50 in real terms, set at 2000 dollars.

“One would think that with prices up over the last few years, people would drive less, but that’s not the case,” Aaron Brady, an expert on gasoline refining and consumption at Cambridge Energy Research Associates, told the newspaper. “Demand is up over the last year.”

“Our preferences have changed over the years and we are much more willing to continue our driving habits in the face of price increases,” said Knittel, who studies driver response to gas price increases. “Unlike the 1970s when people did drive less, data shows people now are not taking the extra step to conserve.”

The consumers have to conserve gasoline for prices to stabilize or come down. As long as the consumer is willing to pay the increases; the oil companies will continue to increase gasoline prices; (conserve, conserve, conserve).

The volatile conditions are the most important reason why we need to reduce our dependency in the Middle East and more aggressively change to alternative fuels.

Wholesale gasoline prices increased (spiked) approximately 82 cents a gallon from January 30, 2007 to April 30, 2007! At the same time crude oil prices averaged approximately from $57 to $66 a barrel during the same period. On April 30, 2007 NYMEX Light Sweet crude oil opened at 66.46.

For every $1 increase or decrease in crude oil prices represents approximately 3 cents a gallon to the price of wholesale gasoline. Gasoline prices have increased disproportionately in comparison to the price increases per barrel of [crude] oil. Record profits are being made at the expense of American consumers with skyrocketing prices.

ConocoPhillips Reports Gains on Asset Sales
Houston -- First quarter net income rose 7.7 percent for ConocoPhillips, the third largest U.S. oil company, due to gains on the sale of assets balanced lower energy prices and rising costs, Bloomberg News reported. Earnings for the company reached $3.55 billion, compared to the $3.29 billion seen a year prior.

Gasoline demand is rising at a faster pace than it has in the past couple of years, and that's obviously going to benefit the refining margins as well.

ExxonMobil 1Q profit rises 10 percent

New York -- ExxonMobil Corp., the world's largest publicly traded oil company, said Thursday its net income grew 10 percent in the first quarter.

The earnings of $9.3 billion on revenue of $87.2 billion were the company's highest ever for the first quarter.

Last year, the Irving, Texas-based company posted the largest annual profit by a U.S. company $39.5 billion. That result topped the previous record, also by ExxonMobil, of $36.13 billion set in 2005.

Chevron Exec: Ethanol Means No New Refineries
Washington - A top Chevron Corp. executive recently told The Associated Press that the push to displace as much as a fifth of the country's gasoline with ethanol will make it less likely the industry will build new domestic refineries, which will contradict the goal to gain greater energy independence from imports.
"We'll take all the ethanol that corn grower’s produce. We'll use that enthusiastically" as a 10-percent blend with gasoline, Peter J. Robertson, Chevron's vice chairman, said. But he questions whether a 20-percent reduction in gasoline use, largely by substituting ethanol, can be achieved by 2017.
The push for greater use of ethanol now made from corn, but presumed to be produced from switchgrass and other cellulosic sources in the future has been framed largely in the context of a need for greater energy independence from imports. But so has the need for more domestic refineries.
Some lawmakers have cited the shortage of U.S. refining capacity as one reason for high gasoline prices, and the recent run-up in gasoline costs has been partly linked to unexpected refinery shutdowns, according to the AP.
No new U.S. refinery has been built since the 1970s. U.S. demand for gasoline consistently requires some imports.
When asked if the company might invest in a new U.S. refinery, Robertson answered: "Why would I invest in a refinery when you're trying to make 20 percent of the gasoline supply ethanol?" and less gasoline will be needed.

It took alternate fuels and 30 plus years for the oil companies to realize that new refiners were needed to increase the capacity of available fuel$?

High Cost of Gasoline

Consumers shop around sometimes to their detriment to save a couple pennies per gallon sometimes turns into a more expensive proposition. To travel 10 minutes to save three cents per gallon and approximately spending $2 to save 50 cents in gasoline. You are spending money to save money.”

Drivers say they are more likely to purchase fuel with credit/debit cards to delay the psychological sting of a costly fill-up. If you miss a payment or don’t pay it off, a $2.50 gallon of gasoline can become a $3.50 a gallon with credit card late fees.

Gas prices traditionally start going up as we head toward summer. A lot of that has to do with consumption and supply and demand as people start driving more.

People may complain about gas prices when they fill up, but they continue to fill up and the oil companies will continue to increase gasoline prices until the consumer starts to conserve. The consumer should complain about high gasoline prices to their elected officials.

The credit card companies are making more money than the people selling the product. Tack on credit card fees, and it's not unusual to see losses selling gasoline. It cost more to sell gasoline on credit/debit card for the gasoline station with the bank card company’s surcharge. At $3 a gallon, approximately 9 cents a gallon goes to the credit card companies. Gasoline retailers dislike higher prices as much as their customers’ do, as margins decrease while costs particularly credit card fees increase.

The oil companies and banks are making record profits on the backs of the consumers’ and the independent gasoline retailers.

U.S. Gasoline Pump Price Up

The U.S. gasoline price at the pump rose during the early weeks of April to an average of $2.79 a gallon the highest price since early September. "The main cause of this hike has been reduced refining-capacity use due to maintenance, unplanned and planned, at a time of strong gasoline demand. Wholesale gasoline futures traded in New York rose on March 30 to the highest price since August amid declining inventories and strengthening demand for the motor fuel. Also, Iran's capture of 15 British sailors and marines on March 23 drove prices higher on concern tensions might lead to disruptions of Persian Gulf crude oil supplies, said the Bloomberg report.
Additionally, U.S. inventories of gasoline fell for an eighth consecutive week in the week ended March 30, the lowest in more than three months, the Energy Department reported on April 4.
Demand for gasoline in the last week of March was 4.7 percent higher than a year earlier, according to the department, and consumption averaged during the past four weeks was 1.7 percent higher than the same period a year earlier, the report stated. Gasoline demand usually peaks between Memorial Day in May and the Labor Day holiday in September. And refinery problems also have kept inventories from increasing.
Valero Energy Corp., the largest U.S. refiner, announced on March 28 that it won't be able to fully restore production this year at its fire-damaged McKee refinery near Sunray, Texas.
The highest price for self-serve regular gasoline was $3.30 a gallon in San Francisco, Lundberg said in the report.

Isn’t it amazing (by design?) how the oil companies refinery maintenance, planned and unplanned is scheduled for one of the strongest gasoline demands of the year.
I’ve reported many times that one would think after 100 years in business; that the oil companies would have plans to compensate for interruptions and schedule maintenance!

Congress Seeks Answers to High Gasoline Prices
"As we approach this year's peak driving season, my subcommittee endeavors to know how the actions of the major oil companies play a role in raising the price of gasoline," Kucinich said in a written statement. "We seek to learn how the realities of decreasing refinery capacity, decreasing gasoline inventories, rising oil company profitability and increasing market concentration in the oil industry may be the root cause of new record-high gasoline prices."

Gasoline prices are stealing away the little discretionary income available to many Americans in this distressed economy.
The letter states that refiners, especially those on the West Coast, have seen margins jump, and are currently making profits of up to $39 per barrel, from the $17 average seen over the past five years.
"The subcommittee wishes to know how these factors of decreasing capacity, decreasing supply, rising profitability and increasing market concentration may be related to cause new record highs in the price of gasoline," the letter stated.
To that end, the letter asks major refiners including BP, Chevron, ExxonMobil, Tesoro, Valero ConocoPhillips and Shell CEOs a number of questions on their plans:

“Congress can no longer sit on the sidelines and watches as escalating prices continue to take a heavy economic toll on consumers and risk further harming our economy.”

* "What is your strategic plan to raise the supply of gasoline for the onset of the peak driving season, which is only weeks away?
* "What steps are you planning to take, and when do you plan to take them, to bring back online refining capacity that you have removed from production? When do you plan to have attained maximum refining capacity?
* "What steps are you planning to take, and when do you plan to take them, to find supply other than your own production to bring your inventory to the national average of up to a 30-day supply. Current inventory supplies may have fallen to only 17 days.
* "What are you projecting your refinery margins to be during peak driving season?"

The letter also asks oil companies on their restrictions on retail dealers that make E85 and other renewable fuels economically infeasible to sell.

The letter was signed by the chairman of the subcommittee, Ohio Representative Dennis Kucinich.

ExxonMobil Chief Gets $18.4M Package

ExxonMobil Corp. Chairman and Chief Executive Rex Tillerson, whose company's $39.5 billion profit last year was the largest ever by a U.S. company, received a compensation package for 2006 valued by the oil giant at about $18.4 million, according to an analysis of a proxy statement filed Wednesday.

The Texas native also received $4,530 in above-market returns on deferred compensation and $482,238 in "other compensation" that included $214,863 for personal security, $102,587 for personal use of company aircraft and $6,659 for club memberships.

Tillerson made more last year than two of his oil-patch counterparts - ConocoPhillips Jim Mulva ($15 million) and Halliburton Co. Dave Lesar ($16.5 million.)

ExxonMobil earned the largest annual profit ever recorded by a U.S. company--$39.09 billion excluding special charges, up 15% from 2005 levels. The previous U.S. record also by ExxonMobil of $36.13 billion set in 2005. Record 2006 earnings reflect a year of unusually high energy prices.

The company's revenue rose to $377.64 billion for the year, surpassing the record $370.68 billion it posted in 2005.

Government Reports Larger Crude Inventories
Crude oil inventories in the U.S. continued to build, according to a government report released Wednesday March 14, but gasoline inventories dropped faster than analysts expected, sparking a jump in prices.

The Energy Information Administration said in its weekly report that U.S. inventories of crude oil rose by 4 million barrels in the week ended March 16. Analysts polled by Dow Jones Newswires expected a slimmer build of 1.4 million barrels.

Gasoline inventories plummeted for the sixth straight week, dropping by 3.4 million barrels. Analysts estimated a smaller decline of 1.6 million barrels of gasoline inventories.