Monday, January 26, 2015

U.S. gas prices at April 2009 low, bottom in sight: Lundberg survey



(Reuters) - The average price of a gallon of gasoline in the United States fell 13.3 cents in the past two weeks, falling to its lowest level since late April 2009, but the end of a months-long slide may be near, according to the Lundberg survey released Sunday.

Prices for regular grade gasoline fell to $2.07 a gallon in the survey dated Jan. 23 from the previous survey on Jan. 9.



The recent drop has taken prices down more than $1.24 a gallon from the same period a year ago, a decline driven by losses in the crude oil market from its June peak.



However, survey publisher Trilby Lundberg noted that the drop in pump prices was less steep than it had been in previous periods and that the price many wholesale customers paid for gasoline rose in the past 10 days, suggesting a bottoming-out or increase in retail gasoline prices could be looming.



"The street price crash is either coming to an end or is already at its bottom," Lundberg said, noting that it would take another substantial slide in the price of oil to reverse the gains in wholesale prices.


Both U.S. CLc1 and Brent LCOc1 crude futures continued their decline in the past week, after finishing the week ended Jan. 16 up slightly. These shallower price losses were part of the reason why the gasoline price drop was less steep this week and contributed to the gains in wholesale prices.

On Friday, Brent crude closed up at $48.79 a barrel, while U.S. crude settled down 72 cents at $45.59.



The highest price within the survey area in the 48 contiguous U.S. states was recorded in San Francisco at $2.54 per gallon, with the lowest in Albuquerque, New Mexico at $1.73.




(Editing by Eric Walsh)

The Gasoline Storage Tanks

The gasoline sold at service stations is stored underground in buried tanks. Each holds several thousand gallons of gas. There are at least two of these tanks per station and each tank usually holds a different grade of gas. Having the gas tanks underground presents an obvious problem: If the gas must get to a dispenser (and your car's gas tank) located above ground, it has to defy gravity in order to get there -- like a waterfall flowing uphill. But moving the gas from its subterranean hideaway up to street level isn't as difficult as you might think.

Most service stations do the job using one of two types of pump -- a submersible pump or a suction pump:
  • A submersible pump, as its name implies, is submerged below the surface of the liquid, where it uses a propellerlike device called an impeller to move the fuel upward. Slanted blades on the rotating impeller push the water the way the blades on an electric fan push air.
  • A suction pump moves the gas using the principle of unequal pressure. A pipe is inserted in the water. A motor above the fluid level removes enough air from the pipe to decrease the air pressure above the gasoline. The motor continues to remove air until the air pressure above the gasoline is lower than the air pressure pushing down on the gas outside the pipe. The weight of the surrounding air forces the gas inside the pipe upward even as gravity tries to pull it back down. When the air pressure inside the pipe is low enough, the gas simply climbs up into the aboveground dispenser.
The major advantage of a submersible pump over a suction pump is that the impeller can push water over longer vertical distances. However, because the gas tanks at most service stations are located only a few feet below the dispenser, a suction pump is usually more than adequate for the task at hand. There's more to this process, though, and we'll explore it further on the next page.

The Check Valve

The route that the gas takes from the tanks to the aboveground dispenser isn't terribly complicated, though it may take a few minor twists and turns. When pumping is complete and the pump motor is turned off, the gas inside the pipe doesn't simply fall back into the tank. Instead, it's held inside the pipe by a check valve. The check valve, which is located above the gas inside the pipe, creates an airtight seal above the fluid. Although the bottom of the pipe remains open, the vacuum pressure created by the check valve holds the gas in place. This is a process known as keeping the prime.

Using a check valve to hold the gas inside the pipe prevents unnecessary wear and tear on the suction pump and assures that a supply of gas will remain in the pipe so that the next customer won't have to wait for it to be drawn all the way up from the tank. It may not seem like a big deal, but the process can take 10 to 15 seconds. That isn't a very long wait by any means, but it can be an eternity when you're waiting for gas to be pumped.


The power that drives the pumps usually comes from the same electric grid that powers the lights and appliances in your home, though a few states require that service stations maintain a backup power supply in case of power failure.

Now that the gas is on the way to the car and it's time for the customer to start pumping, how does the dispenser know just how much gas the customer has pumped? Considering the volatility of gas prices these days, that may be the only thing the customer may care about. Find out the key to this mystery on the next page.

The Flow Meter

As a driver, your primary objective at the pump is to get your tank filled so that you can get your car back on the road. The goal of the service station owner and the company that supplies the gas, however, is to know just how much gas you've pumped so they can properly charge you for it. That's where the flow meter comes in.

As the gasoline travels upward into the dispenser, it passes through a flow control valve that regulates the gasoline's flow speed. It does this via a plastic diaphragm that gets squeezed more and more tightly into the pipe as the flow of gas increases, always leaving just enough room for the proper amount of gasoline to get through. If you've set a predetermined amount of gas to be pumped, the flow of gas will slow down as you approach the limit.

This pipe also contains the flow meter, which is a cast iron or aluminum chamber containing a series of gears or a simple rotor that ticks off units of gas as they pass through. Information about the gas flow is passed on to a computer located in the dispenser, which displays the metered amount of gas in tenths of a gallon. As the temperature of the gas changes -- on particularly hot and cold days, for instance -- the density of the gas may change, causing an error in the amount of fluid measured by the flow meter. The computer compensates this error by taking the gas temperature into account as it records the flow and adjusts the price accordingly.

Wear and tear on the meter may degrade its accuracy over time, which is why periodic inspections are necessary. Typically, inspectors will use a container of a certain volume, pump gas into it and compare the amount in the container with the amount metered on the dispenser. If the amounts don't match, the flow meter will need to be recalibrated and possibly refurbished or replaced. Although regulations for pump calibration come from the National Institute for Standards and Technology (NIST), the actual inspections are performed locally, usually by a state's Department of Weights and Measures.

Now that the gas is flowing and the amount of flow has been measured, there's only one step left: getting the gas into the customer's car. But that's a trickier process that you might think. For instance, what if the customer doesn't know when to stop pumping? Will he or she get soaked in a potentially lethal eruption of runaway fuel? Let's find out on the next page.

The Blend Valve

One of the first things that a customer will notice at the pump is the variety of choices offered. In most cases, a dispenser will offer several grades of gas -- sometimes as many as five -- each with a different octane rating. The desired octane rating is usually chosen simply by pushing a button. Does this mean that there are five different underground tanks feeding into that dispenser, each offering a different grade of gas? That's not usually the case. In fact, the dispenser can produce as many grades as it wants from as few as two underground tanks, as long as one tank contains the highest grade of octane available at that station and the other contains the lowest. The grades are blended together at the pump -- not unlike the way you'd blend gin and vermouth to make a martini -- producing a kind of octane cocktail. The precise proportion in which the grades are blended determines the octane of the gas that enters the customer's tank.

This feat of gas pump bartending is performed by something called a blend valve. This valve has inputs consisting of two grades of gasoline, each from different tanks. A single, moveable barrier called a shoe is connected to both in such a way that it can be moved across the inputs with a single motor-driven ratchet. As the ratchet opens one valve, it closes the other valve in precise but opposite proportion. This means that when one valve is, for example, 90 percent open, the other valve is 10 percent open, creating a mixture that consists of 90 percent of one octane and 10 percent of the other. By shifting the ratchet back and forth, the blend valve can produce any octane of gas, ranging from the highest to the lowest grades stored in the tanks -- and all octanes in between.

Keep reading to find out how the dispenser makes sure that you don't overflow the gasoline capacity of your tank.

The Automatic Shut-off

When the customer removes the pump handle from its place on the side of the dispenser, this action activates a switch that starts the dispenser operation. (In some cases the switch is spring-loaded and activates automatically; in others, the customer must raise a small lever manually to begin the process.) At that point, the customer simply inserts the nozzle into the car's gas tank and pulls the lever. Stopping the flow of gas is just as simple -- the customer need only release the lever to cut off the stream of fuel.

But what if the tank fills unexpectedly to the brim and the gasoline threatens to overflow? As anyone who's ever operated a gas pump knows, the pump will switch off automatically. But how does the pump know when to stop pumping?

As the gas level in the tank rises, the distance between the dispenser nozzle and the fuel grows smaller. A small pipe called a venturi runs alongside the gas nozzle. When the end of the venturi pipe becomes submerged in the rising gas, it chokes off the air pressure that holds the nozzle handle open and shuts down the flow of gas. Unfortunately, this shutdown can sometimes happen before the tank is full as the rapidly flowing gas backs up on its way into the tank. This can cause the gas handle to spring open before pumping is complete, leaving the annoyed customer to squeeze the handle again and risk the possibility of overflow. Pausing briefly will allow the gas to continue into the tank and the pump nozzle to start pouring gas again.

For more information on fuel and fuel efficiency, take a look at the links on the next page.


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