• Crazy gas prices driving German consumers mad

    Fabrizio Bensch / Reuters

    A price board at a petrol station in Berlin, Germany on March 30. The price for "super" at 1.71 euro per liter is approximately $8.56 a gallon.

    By Andy Eckardt , NBC News Producer

    MAINZ, Germany –  “Oh nein,” there is another traffic jam at my local gas station.

    Normally, German drivers only encounter severe congestion on their famed autobahns, where traffic flow is often hampered there by the large number of construction sites regularly installed by the German government to keep its state-of-the-art highways "in order."

    These days, though, it is not unusual for gas prices to change up to five times per day at German gas stations, a phenomenon which traffic experts refer to as the “yo-yo effect.” 

    When prices are lowered, many inner-city gas stations in Germany see drivers pull up in hordes.

    Given costs of up to 1.70 Euro (and more) per liter of unleaded fuel – the equivalent of $8.56 per gallon – it should come as no surprise that Germany's drivers have become bargain hunters. (One gallon is equal to 3.78 liters).

    Critics say that the yo-yo phenomenon is fueled by the highly competitive market and dominance by leading suppliers in the German market, like Aral, Jet or Shell.

    Retailers and consumers, who see a lowering of prices during lower-demand times and a hike during rush hours or school holidays, are increasingly calling for prices to be directed by supply and demand.

    "When the prices are high in the morning during rush hour and then suddenly drop when most people are at work, our customers often get upset and complain heavily," said Ferdinand Raker, who has been running an independent gas station in the town of Molbergen since 1998.

    Constantly changing prices
    "On some days, we see a lowering or raising of the prices by up to 14 euro cents ($0.18) per liter," said Andreas Hoelzel from German automobile club ADAC in Munich. "We understand that there is a competitive market situation, but the extent of price fluctuation is just enormous."

    It is all about a plethora of petrol pumps in Germany, representatives from the industry argue.

    The cover of Germany's popular news weekly magazine Der Spiegel this week with the headline, "The Fuel Cartel – How Oil Firms Manipulate the Fuel Prices."

    "This shows that we have a functioning business competition in the German petroleum market, which in comparison to other European countries has an above-average volume of gas stations with its nearly 14,700 outlets nationwide," said Karin Retzlaff from the Association of the German Petroleum Industry, known as MWV.

    This argument, however, has neither satisfied the average driver nor officials from automobile clubs, who represent Germany's now grumpy motorists.

    Reports about illegal price fixing among multinationals could not be proven in recent investigations by Germany’s Federal Cartel Office, but experts and media reports are still accusing oil firms of implementing “methods of systematic confusion.“

    On Monday, weekly “Der Spiegel” news magazine headlined its cover “The Fuel Cartel – How Oil Firms Manipulate the Fuel Prices” and argued in its seven-page analysis that the leading gas companies are using their power in the market to deliberately inflate fuel prices.

    Creative thefts
    Frustration over high fuel costs has also set off a high level of fuel thefts across the country, officials say.

    According to police in Germany's most populous state, Northrhein-Westphalia, diesel thefts, for example, have increased over the course of the past year. (More than 40 percent of German cars are powered by diesel.) An internal survey, which listed all cases with diesel thefts above 100 liters, showed 111 cases in January and 83 in February in this local state alone.

    The statistics indicate that criminals are mainly targeting fuel depots, heavy construction machines and large trucks. In 2011, state police in Northrhein-Westphalia recorded 986 cases with a total of 344,000 liters (90,875 gallons) stolen.

    Thieves have become increasingly creative. Police have recorded incidents in which criminals have drilled holes into gas tanks of private cars or used stolen or fake licence plates so that they can remain unidentified at gas stations when they drive off without paying the bill.

    "Last month, I lost 10,000 liters of fuel after thieves signed up for a special debit card with false identifications and then pulled up numerous times with different vehicles to steal my petrol," says Raker, the Molbergen gas station owner. “Police caught the culprit," he said, "but he was broke and I was left with the damage.”
     
    Relief in sight? 
    With anger on all sides, the mass-circulation BILD newspaper offered a sign of possible relief soon with the headline "Finally! A law against fuel rip-off.“ The article referred to a meeting of Germany's upper house of parliament last Friday, where politicians debated proposals for a new law, which could help calm down fluctuating gas prices.

    Politicians in Berlin suggested that oil firms should be required to warn of new fuel prices by 2 p.m. on the day before the change, and the altered prices would have to remain unchanged for at least 24 hours.

    Prices could also be stored in a central public database under a new law, which would give motorists the ability to check the cheapest pump prices in their vicinity with the help of the Internet or modern smart phones.

    Yet, a decision on a possible new law is not expected before the end of the summer (or, as some believe, might not come at all).

    And, despite the fact that there now appears to be light at the end of Germany's tunnels in regard to regulations that could stop the rollercoaster ride at the pump, the underlying price for crude oil on the world market is unlikely to fall dramatically any time soon.

  • Oil price surge could dampen global recovery

    By John W. Schoen, NBC News

     

    A surge in oil prices sparked by saber-rattling from Iran is beginning to weigh on the global economic recovery, with potential ripple effects on consumers, corporate profits and interest rates.

    Drivers already are seeing the impact at the pump, where prices have risen by an average of 12 cents per gallon in just three weeks to more than $3.50 a gallon, according to a report out this week. Crude oil prices rose for a third straight day on U.S. markets Friday, topping $103 a barrel, and remained on track for a second straight week of gains.

    The cost of crude has been rising steadily since hitting a seasonal low in October, gaining upward momentum on escalating tensions with Iran after a series of moves by the U.S. and European Union to pressure Tehran to shut down a uranium enrichment program aimed at producing nuclear weapons.

    The moves sparked fears among oil traders that Iran, the world's fifth-largest oil producer, may retaliate by disrupting the flow of oil through a critical Persian Gulf shipping channel.

    "The Iranians have a lot at their disposal to upset this market, whether by embargoing the (European Union) or even just creating some mischief," said oil industry analyst John Kilduff. "They don't even have to block the Strait of Hormuz, they just need to sink a ship, lay some mines and be disruptive."

    As Western nations bent on denying Iran access to nuclear weapons have ratcheted up the pressure, traders have been busy bidding up oil and gasoline prices. Last week, more than 350,000 gasoline contracts were open (each contract represents 1,000 barrels of oil) as hedge funds and commodity investors placed heavy bets that pump prices are heading even higher. Traders expecting prices to move higher bet some $10 billion more than those who see prices falling, the third-largest skew of all time, according to Tom Kloza, president of Oil Price Information Service.

    The timing of the price spike for crude comes just as oil refiners are getting ready to switch production from blending gasoline for winter use to building inventories formulated for summer consumption. That switch typically involves temporary refinery shutdowns that have pinched supplies in the past. That could produce a larger-than-normal spike this year when the summer driving season rolls around.

    Pump price jumped 0.9 percent in January alone, helping to fuel a 0.2 percent increase in the Consumer Price Index,  the Labor Department reported Friday.

    Higher driving costs are hitting consumers just as they're beginning to catch a break balancing their households budgets. Stronger job growth and longer hours have helped boost worker paychecks in the past six months. Household incomes will continue to benefit from a payroll tax cut and long-term jobless benefits, which Congress on Friday agreed to extend through the rest of the year.

    But that economic boost could be wiped out by another surge in gasoline prices: Every added penny at the pump diverts roughly $1 billion in consumer spending from other sectors of the economy. Gas prices peaked last year in May just shy of $4 a gallon, on average, and had been falling steadily before reversing course. Last week, the average price of a gallon of regular was $3.52, according to the Energy Information Administration.

    Friday's consumer price data also showed that the cost of all goods rose an unexpectedly steep 2.3 percent over the past 12 months. On top of higher gasoline prices, household budgets have also been squeezed by higher prices for food, clothing, health care and education.

    “While inflation has moderated, it is still higher enough to wipe out worker earnings,” said Joel Naroff, chief economist at Naroff Economic Advisors. "Even the moderate earnings growth is still not enough to improve consumer spending power a whole lot."

    Businesses also are feeling the pinch, especially heavy energy users such as airlines, shipping companies and chemical manufacturers. Many of those companies, though, have figured out how to pass along their higher costs to consumers.

    A temporary spike in oil and gasoline prices would be unlikely to have a lasting impact on the U.S. economy. If worries about the standoff with Iran subside, prices should ease back fairly quickly. U.S. crude inventories are near five-year highs for this time of year. While the gathering strength in the U.S. economy could push demand higher, that will likely be offset by the widening economic  slowdown in Europe.

    A longer-term rise in oil prices, though, could present problems for policymakers at the Federal Reserve, as they mull their next steps in trying to keep the economic recovery on track.

    The Fed last month said it plans to hold its benchmark interest rate at a record low near zero until late 2014.  That pledge could be hard to keep if inflation were to begin a sustained move upward. The Fed is forecasting that inflation will rise just 1.6 percent this year, below its target of 2 percent. Fed Chairman Ben Bernanke announced that target, the first ever for the central bank, last month.

    But the Fed's forecasts don't assume a sustained period of elevated oil prices. Until the standoff is resolved between Western nations and Iran, those inflation forecasts will be more difficult to make.

    That standoff could take months to play out.

    Last month, the U.S. imposed sanctions on foreign banks financing Iranian oil sales, and the Obama administration is deciding how widely to apply them. Congress is considering wider actions,  including a ban on ships that have docked in Iran, North Korea or Syria in the last two years; and sanctioning private companies involved in Iran's oil industry.

    As part of its coordinated campaign with other countries, the European Union last month imposed an embargo on Iranian oil that takes effect July 1. Since then, European countries have been making arrangements to secure other sources of supply.

    Are you worried about skyrocketing energy prices? Share your thoughts on Facebook.

     

     

  • Coastal villages in Nigeria protest as crude oil washes ashore

    By msnbc.com and news services

    Nigerian villagers say oil washing up on the coast comes from a Royal Dutch Shell loading accident last month that caused the biggest spill in Africa's top producer in more than 13 years.

    Shell denies that any of the oil is from its 200,000 barrel per day Bonga facility, 120 km offshore and accounting for 10 percent of monthly oil flows, which was shut down by the spill on Dec. 20.

    George Esiri / EPA

    A woman walks past some of the hundreds of dead fish believed to have been killed as a result of the recent oil spill off the coast of Nigeria.

    Shell says five ships were used to disperse and contain the spill and that this kept any oil from washing ashore.

    But local villagers, as well as environmental and rights groups, dispute this account, saying the oil is still at large, coating parts of the coast, killing fish and sparking protests.

    On Saturday, a Reuters team visited two of 13 villages whose residents say they were affected by the spill in the steamy swamps of the Niger Delta. In both, there were stretches of beach coated in a film of black sludge with a rainbow tint.

    In one, two children skipped along the beach, dodging the puddles of sticky ooze.

    Villagers in Orobiri, Delta state, spent much of the day scooping crude from the water in plastic buckets and jerrycans.

    "When this spill occurred, we called on Shell to come and do a clean up, ... but since then, they have not turned up, so we the communities now did a clean-up instead," said Jacob Ajuju, the paramount chief of Orobiri village, surrounded by rows of assorted buckets and containers full of crude.

    As he spoke, dozens of women villagers marched in protest at the spill, their heads adorned with leafy branches to symbolise unhappiness. Others continued to tip the oil from jerrycans into large plastic drums.

    "On Christmas day, all the women you see here, were just at the seaside parking this oil into the jerrycans," said Dennis Igolobuabe, Orobiri community youth president.

    Shell says no oil from the spill washed up on the coast.

    "We believe the oil on the beach is not from Bonga. We made significant progress every day to disperse the oil that leaked from Bonga," Shell Nigeria spokesman Precious Okolobo told Reuters in an emailed statement.

    "We are confident that any oil of that age, colour and consistency that hits the beach is not ours. We are taking samples ... which will be reviewed to provide evidence that this is not Bonga oil on the beach," he added.

    Okolobo suggested the oil may have been from "a third party spill which appeared to be from a vessel, in the middle of an area that we had previously cleaned up".

    Spills by all oil companies operating in the region are common, and it is sometimes hard to tell whose is whose.

    On another beach near Agga village, a man on a motorbike paused to look at scores of silvery fish washed up dead.

    "Before this spill came, we were already been informed by Shell in Warri (the main town in the region) during a meeting that this is what is coming ... It's a calamity," said Joseph Gbuebo, community secretary for Agga.

    "On the 25th of this month, we saw some helicopters flying, dropping some chemicals along the shore, but this has been injurious to our health," he added.

    Shell's pipelines in Nigeria's onshore Niger delta have spilled several times. The company usually blames such leaks on sabotage attacks and rampant oil theft.

    BP's Macondo well in the Gulf of Mexico ruptured in April last year, spewing nearly 5 million barrels of oil into the sea in what was the worst U.S. marine oil spill. The disaster brought intense negative publicity for BP.

    But in Nigera, spills are so commonplace they often go unnoticed by the outside world.

    A U.N. report in August criticised Shell and the Nigerian government for contributing to 50 years of pollution in a Niger Delta region that it said needs the world's largest oil clean-up, costing an initial $1 billion and taking up to 30 years.

    Separately, the cost of fuel more than doubled in Nigeria a day after the government announced an end to fuel subsidies.

    Sign posts at a few gas stations Monday morning put the price at nearly $3.60 per gallon (94 cents per liter), up from about $1.70 per gallon (45 cents per liter) on Sunday.

    Many more stations were shut down, while bus and taxi fares had already risen.

    The subsidy was one of citizens' few government benefits in the oil-rich nation, and its removal follows the government's Saturday declaration of a state of emergency in some parts of the nation over a growing Islamist insurgency.

    Nigeria produces over 2 million barrels per day of crude oil but a lack of investment in refineries and infrastructure means almost all of this is exported, while refined products such as petrol have to be imported at great cost.

    Labor unions, who ironically described the holiday move as the president's New Year "gift" to Nigerians, vowed they would fight it.

    Reuters and the Associated Press contributed to this report.