Tuesday, June 28, 2005

Gas & Oil at a Glance: 06/28/05

Gasoline prices continued their trek upward this week, at an increased rate in relation to the last few weeks. As of yesterday, the average gallon of Regular Self-Serve Unleaded was selling for $2.21.5 across the United States, according to the Energy Information Administration. That's ahead 4.4 cents from the prior Monday and is the fourth straight week of increases at the pump. Even so, this amounts to slightly less than 12 cents or 5.6 percent more since May 30, which is puny during a time when oil has erupted by nearly 17 percent.

Oil is again at an all time high, having penetrated the formidable $60 per barrel figure for the benchmark West Texas Intermediate variety. Finishing the day at $60.54 on Monday, its recent upward momentum appears intact at this point, as the main considerations responsible for pushing the sticky liquid skyward – growth in demand, tight supplies and refinery capacity restrictions – are generally regarded as realities.


Crude's current charge is just $1.17 higher than last week, but relatively speaking, gasoline kept pace with this cursory advance over the week. That fact is revealed by the two statistics which I feature in this column, the 'Gas to Oil Price Ratio (GOP Ratio) and the 'Spread'. On the previous Monday – June 21 – the GOP Ratio stood at it's lowest level in almost 15 years. This week, it is little different, turning out to be 1.54.


Likewise, the Spread – the difference between the cost for a gallon of gasoline and that of the same amount of crude oil - has changed moderately, growing by just over 2.5 cents from one week ago. Seeing the Spread amount to a dime or more beyond where it is right now would not be at all unusual, when one considers that its average for all of 2004 approximated 87 cents.


All of the above bodes for prices to continue ascending at your local filling station, unless there is a swift and sudden reversal in what the world is willing to budget for oil. Frankly, it wasn't too long ago when I became convinced that the world's largest supplier group, the Organization of Petroleum Exporting Countries, wanted to keep crude around the $50 per barrel figure. My conclusion has been – and remains - that most of those who make up OPEC realize that, should their product become too costly, a global economic downturn becomes more likely, threatening their pleasantly profitable margins.

On top of that, the search for alternative sources of energy will intensify, ultimately lessening the value of what they have to sell. Yet, for the time being, it seems that the call for the items requiring oil is simply outstripping its availability, across the globe. Many of the indications I see lead me to think that OPEC and the other providers of black gold, try as they might, are incapable of producing in quantities adequate to satisfy all of their potential customers at a dollar amount sufficiently low to ensure a continuation of recent circumstances.

How long this double edged sword of a sellers' market will prevail is anyone's guess, but it can't last forever before the diminished growth and consumer behavior modifications come into play. My view is that the world is encountering restricted provisions of oil, especially of that which readily comes out of the ground, while larger numbers of people want it, leading to the increased values that we have been seeing. There are qualified, opposing perspectives though, and several days ago, the Christian Science Monitor published an article giving them their due attention.

Those implications aside, the near term bottom line for gas prices only slightly varies from the mantra that I've been reciting since the month of June began: I would lay you excellent odds that they're going up again this coming week. The advances during June have been modest considering the extent to which oil has jacked up, so don't be surprised to see that which you spend for fuel accelerate at a faster pace in July.

For further background about this report, including a description of the methods that I use for preparing it, please refer to this post. God willing, see ya next week.


Monday, June 27, 2005

A precocious postmortem of the Las Vegas Sun: Part IV

When I learned that the ‘Sun’, Las Vegas' daily p.m. newspaper, is going to shrivel within the dominant Review-Journal, it brought to mind a hard hitting five part critique that came out nearly six years ago. It was written by a former Sun editor, Ken Ward, and published on a web site that I then owned and managed. Well ahead of the curve, this vintage focus on the Sun's shortcomings has proven sadly prophetic. In that sense, it provides a valuable perspective and a wealth of lessons for anyone with an interest in the business of journalism. Within the next couple of weeks, if not sooner, I should be able to have all of the components posted, so please subscribe to the available feeds for JonnymoOps, or check back here for the additions!
My Way or the Highway
Two years of tyranny and turmoil in the Sun’s dysfunctional newsroom
Part 4 of 5
By Ken Ward
(Originally published circa September, 1999)

Bruce Falk, a Kelley hire, got the hell out after less than a year. He blames what he characterizes as the managing editor’s erratic and dictatorial behavior. “He’s a hard man and he’s a hard inconsistent man,’’ says Falk, who has been an editor for 12 years.
On Day 3 of the Kosovo conflict, Kelley called the copy desk an hour before deadline to inform the editors they had been playing the story too small -- even though it had been atop Page One for a week. “This was the first we’d heard there was a problem,’’ Falk says. “We had to scramble to remake the page.’’
The next day, the desk editors were summoned into a meeting with Kelley, who proceeded to unload. Falk recalls Kelley huffing, “‘You’re the dumbest people in the world, You have no sense of history.’ Then he went onto a tangent about graphics and accusing us of blowing them off.’’
The message that Falk took out of that meeting rang loud and clear. “The right way is whatever Kelley thinks that day, and it’s never the same two days in a row.’’ Falk, who quit without a job, now works at the R-J and makes more money.

Mary Manning, a 23-year Sun veteran, says she’s been energized by the new regime. “They’ve got the dead wood out of here now and we’ve got the best editors,’’ she says. These days, the city desk has four editors instead of only two in the pre-Kelley era. Manning, who covers the environment and Yucca Mountain, credits Kelley for boosting salaries and encouraging the development of her beat. “He’s the only editor who’s told me to write long,’’ she enthuses. “I even got (salary) credit for getting my Ph.D.’’
Vowing to “wipe (R-J environmental writer) Keith Rogers off the face of the Earth,’’ Manning epitomizes the kind of rabid loyalty that the Greenspuns reward. And she categorically dismisses the notion that the Sun is merely a stepping stone to the bigtime. As proof, she points to two new metro editors who came from Denver and Washington, D.C.
Yet the chronic churn factor suggests that retention remains a problem. “They do nationwide searches for everything. The philosophy is to get talented people to come and stay but it hasn’t worked,’’ notes a senior reporter who asked that his name not be used.
Says another: “Kelley would hold these monthly staff meetings to talk about ‘The Mission’ of being bigger and better. I wouldn’t know half the people there.’’ And another: “Going to work is like entering a minefield.’’
Disarray was evident to judges of this year’s Nevada Press Association “Better Newspaper Contest,’’ where Sun writers won only two first-places. The paper’s other five first-place finishes were in design and photography (all by photographers who pre-date Kelley’s arrival). By comparison, the R-J won 14 top prizes and the Reno Gazette-Journal garnered 12, including coveted awards for general excellence, community service and freedom of the press.
"There are obviously lots of serious subjects -- growth, ethics, shady business deals, lax regulation -- but there was no depth, no enterprise,’’ he noted. “The content was very shallow.’ The chief jurist in the general excellence category, Seattle Times Managing Editor Alex MacLeod, complimented the Sun’s “modern, cleaner’’ design. Beyond that, however, he didn’t find much to like.
“There are obviously lots of opportunities to write about serious subjects -- growth, ethics, shady business deals, lax regulation -- but there was no depth, no enterprise,’’ he noted. “The content was very shallow.’’ Pointing to a Page One story on political ethics, MacLeod recalled that he and a fellow judge read the article twice. “And we still couldn’t figure out what it was trying to say.’’
“I was very surprised that they couldn’t come up with better examples,’’ MacLeod said, adding that the Sun wasn’t competing in very stellar company. “Of the papers in that (larger circulation) category, it was hard to recognize any as being truly excellent. By the industry’s standards, the entries weren’t up to those standards.’’

Wednesday, June 22, 2005

A precocious postmortem of the Las Vegas Sun: Part III

When I learned that the ‘Sun’, Las Vegas' daily p.m. newspaper, is going to shrivel within the dominant Review-Journal, it brought to mind a hard hitting five part critique that came out nearly six years ago. It was written by a former Sun editor, Ken Ward, and published on a web site that I then owned and managed. Well ahead of the curve, this vintage focus on the Sun's shortcomings has proven sadly prophetic. In that sense, it provides a valuable perspective and a wealth of lessons for anyone with an interest in the business of journalism. Within the next couple of weeks, if not sooner, I should be able to have all of the components posted, so please subscribe to the available feeds for JonnymoOps, or check back here for the additions!

Getting Scooped
Two years of tyranny and turmoil in the Sun’s dysfunctional newsroom
Part 3 of 5
By Ken Ward
(Originally published circa September, 1999)


In interviews with a dozen current and former employees, it becomes clear that hard news and trenchant reporting are not at the top of the Sun’s agenda these days. Kelley is fond of USA Today-style “centerpieces.’’ But unlike the nation’s largest newspaper, the Sun serves up warmed-over soufflés -- pretty pictures, but less filling.
So-called “Sun Exclusives’’ generally consist of a diet of documents spoon-fed to “senior investigative reporter’’ Jeff German. In earlier days, German’s tough reportage once got Steve Wynn so mad that Brian Greenspun was barred from the casino mogul’s exclusive Shadow Creek Golf Course. Of late, however, the pit bull has become a lap dog. One of German’s recent commentaries extolled the civic virtues of Wynn’s self-serving scheme for a publicly financed sports arena.

And more journalistic debacles appear daily. A soporific eight-part series on life in a classroom droned on in exhausting, pointless detail -- without naming any children or even showing their faces. The Sports staff actually rewrote a press release and labeled it an exclusive.Meanwhile, Sun reporters were asleep at the wheel when propane tanks exploded at the Treasure Island hotel-casino -- a story that the crusading Hank would have bannered. They were a day late on Las Vegas mayoral favorite Jay Bingham’s withdrawal from the race.
And the paper skipped over UNLV’s controversial decision to kick adjunct English professors out of their offices and into a trailer.Features Editor Steve Bornfeld once offered tough critiques of Las Vegas TV news in his weekly column. But now, since the Sun launched its own cable news channel, Bornfeld assiduously avoids any local commentary.

Some newsroom wags say Kelley hasn’t had a scoop since he sold Swensen’s Midwest Inc., where he owned and operated ice cream shops in the late ‘70s. Indeed, in the m.e.’s 40-year career, 18 years have been spent outside the news business.“He’s not worried about news. It’s all about who likes him and who’s talking,’’ says one former editor. “That’s why the competent people are leaving. They don’t need to put up with the horseshit.’’

In addition to his Teamster duty, the managing editor’s eclectic resume also includes eight years as a staffer to former U.S. Sen. Thomas Eagleton. The Missourian is best remembered as George McGovern’s erstwhile vice presidential nominee who quickly bowed out when it was learned that he had received electro-shock treatment for depression.

Kelley’s only other journalistic experience was two separate tours at the Kansas City Times (now defunct). Claiming that he transformed the Daily Southtown into a metropolitan powerhouse, Kelley has made some improvements at the Sun. The city desk has been bulked up, the paper was redesigned, and the business section competes well (though two of its best reporters also departed inside a year).

One top editor, who also asked that his name be withheld, praises Kelley for being “precise.’’ “He works long hours and he has his own way of doing things,’’ this editor said. When the Sun does break news, it often comes via Executive Editor Mike O’Callaghan. The former two-term governor has perhaps the best network of sources in the state, and he has tipped many a reporter to major stories concerning politics, the military, law enforcement and even sports.

Ed Koch, one of the few remaining veterans on the cityside staff, also has the ability to quickly turn around dispatches on a variety of subjects. A throwback to the days of the grizzled general assignment reporter, Koch maintains an institutional memory that has all but faded in the Sun newsroom.

And so the paper continues to flail. The growth and development reporter left after an uninspiring stint. He was replaced months later by a reporter from the bustling metropolis of Wilmington, Del., which has been l-o-s-i-n-g population. At least one day a week, the front page of the Sun’s features section is devoid of any local copy.

The Monday edition is full of stories that appeared in the combined R-J/Sun over the weekend.One cityside reporter who was actually beating the competition was a summer intern, Sonya Padgett. Her coverage of North Las Vegas ran circles around the R-J but when she inquired about filling one of the Sun’s many newsroom vacancies on a permanent basis, she got the run-around. Padgett promptly took a job at the R-J as a reporter for the weekly View section.

Reporters with a penchant for politically incorrect enterprise inevitably run into a stone wall at the Sun. Prior to Kelley’s arrival, Brian Greenspun spiked investigative stories on Silver State Disposal Co. and a county official who relinquished her master’s degree amid charges that she plagiarized her thesis. Such front office intervention has continued and the reporters on those stories eventually left, with one, Jeff Schweers, tossing his company-issued pager to Assistant City Editor Dave Clayton and telling him, “Set it on vibrate and shove it up your ass.’’

Scott says that Kelley and Metro were upset when she unearthed a hushed-up story about 47,000 gaming chips taken from the Excalibur hotel-casino. Meantime, the managing editor stood by while Brian Greenspun yanked an account of Assemblyman David Goldwater passing around a revealing picture of fellow lawmaker Sandra Tiffany at the Legislature. (Greenspun did not return phone calls for comment about his role in the newsroom and his assessment of Kelley’s performance thus far.)

Today, Kelley favorites such as Martin Kuz and Stacey Willis get to pick and choose their periodic cover stories while others do the daily grunt work and rewrite the R-J. Sacred cows such as American Nevada Corp. and Cox Cable get favored treatment as Greenspun corporate partners.

And U.S. Sen. Harry Reid continues to be handled with kid gloves now that Ben Grove has been dispatched to Washington. Grove, a former education writer, replaced State News Service, which had provided coverage at a bargain-basement rate of a couple hundred dollars a week. Grove had been hankering for the D.C. billet since his girlfriend took a job on Capitol Hill. And, despite his inexperience with national politics and the higher cost, the Sun obliged.“I just go in and do my job and go home,’’ sighed a long-time city room scribe, who repeatedly pleaded for anonymity.

Tuesday, June 21, 2005

Gas & Oil at a Glance: 06/21/05

Will wonders ever cease? If only because I again correctly called its direction last week, it's a perverse sort of pleasure to say that gasoline prices at the pump went up again in this prior seven-day period. What's equally wondorous is the extent to which they didn't grow. According to figures released late yesterday from the EIA (Energy Information Administration), the average gallon of Regular Self-Serve Unleaded across the United States is now selling for $2.16.1. Compared to last week, and particularly in terms of oil getting a ton more expensive, this is a modest move higher of 3.1 cents.

Petrol is creeping at a snail’s pace compared to crude oil, which has spurted skyward, ahead well over $10 per barrel within the last
month, with nearly four dollars of that amount tacked on this past
week. When oil was being sold for $48.66 per gallon on May 23, gasoline was extracting $2.12.5 from consumer pocketbooks. Now, with a 42 gallon barrel of our West Texas Intermediate Crude Oil benchmark setting a new nominal all-time high of $59.37, I'm at a loss to explain why gasoline is only some three and one-half cents more expensive since that time.

All that I can say is enjoy this - what really should be considered a respite - while it lasts. Both of my 'specialty statistics' - intended to give a sense of where gasoline prices stand in relation to those for crude – are considerably out of whack. This week, the Gas to Oil Price Ratio is fixed at 1.53, extremely low by any standard. Since October 15, 1990, it has never been less. This is near the time when data for both gas and oil became available via the EIA and were the months prior to Gulf War I, when high anxiety about energy sources prevailed due to Sadaam Hussein‘s invasion of Kuwait.

The other figure to which I routinely refer, the 'Spread', that being the retail charge for gasoline minus the cost of the oil that goes into making it, is likewise far beneath the norm. At this time, the Spread stands at 74.74 cents, the lowest it has been since March 7 of this year. It was only a little more than one month back that the Spread amounted to over a dollar.

With crude being purchased in the neighborhood of the high 50's, my trend line is showing that fuel at retail should typically be beyond $2.30 a gallon nationally, another reason for my feeling that we have a way to go towards the upside. The only roadblock for this steamroller will be a huge retrenchment of black gold among those who do the buying, which at present, doesn't appear to be in the cards.

One other measure that I have been tracking lately, the wholesale prices for Unleaded Regular gasoline traded on the New York Mercantile Exchange, also portends motor vehicle fuel costs climbing. Last week at this time, the going rate was around $1.55 for one gallon. At this time, just seven days hence, it has escalated approximately nine cents.

The prevailing condition that is driving oil's rise is simple. Demand continues to soar, while confidence wanes regarding the ability of those possessing and processing the resource to keep up.

Of the last 18 weeks, this is the 16th in which oil has brought in over $50 a barrel. It makes me wonder if we'll soon be longing for those 'good old days', like about ONE YEAR ago, when the thick liquid crossed into the $40 realm. Considering a longer time horizon, Jim Jubak of CNBC explains why he believes oil's cost will remain elevated, if due only to the increased expense of getting it out of the ground. As well, look at the Energy Information Administration's description of the bears and the bulls on oil. Is your take, as is mine, that they seem to be slanting towards the bullish view, those who see it as scarce, rather than that of the bears, who believe oil to be an overly abundant commodity?

My best advice for the coming days: If you are one of those who just 'gotta have it' and need to replentish soon, you're very likely wise to fill that tank quickly. It appears virtually certain to me that gas is headed upward over the next week, and probably on into July, possibly with a vengeance.

For further background about this report, including a description of the methods that I use for preparing it, please refer to this post. God willing, see ya next week.


Saturday, June 18, 2005

A precocious postmortem of the Las Vegas Sun: Part II

When I learned this week that the ‘Sun’, Las Vegas' daily p.m. newspaper, is going to shrivel within the dominant Review-Journal, it brought to mind a hard hitting five part critique that came out nearly six years ago. It was written by a former Sun editor, Ken Ward, and published on a web site that I then owned and managed. Well ahead of the curve, this vintage focus on the Sun's shortcomings has proven sadly prophetic. In that sense, it provides a valuable perspective and a wealth of lessons for anyone with an interest in the business of journalism. Within the next couple of weeks, if not sooner, I should be able to have all of the components posted, so please subscribe to the available feeds for JonnymoOps, or check back here for the additions!

Ethical Lapses
Two years of tyranny and turmoil in the Sun’s dysfunctional newsroom
Part 2 of 5
By Ken Ward
(Originally published circa September, 1999)

Ironically, the Sun started as a union paper in 1949. After striking R-J pressmen launched the Free Press, Hank Greenspun took over and renamed it the Sun. In the ensuing years, Greenspun developed a reputation as a small-time muck-raker. By the mid-’70s, the Sun had nearly matched the R-J’s circulation, then around 70,000.

But the seeds of a dysfunctional culture were being sowed too. Poor pay, capricious editorial decisions, a succession of managing editors, incompetent marketing and a decrepit press hobbled the Sun (whose newsroom remained non-union by the way). By the time Greenspun died in 1989, his paper was hemorrhaging. Hank’s heirs agreed to a joint operating agreement with the arch-rival R-J and converted to the p.m. cycle.Circulation took an immediate dive -- and it’s never recovered.

Now under 37,000, and slipping in one of the nation’s fastest growing metropolitan markets, the Sun continues to fall further behind what Editor Brian Greenspun still delusionally refers to as “the little paper down the street.’’ Greenspun, who is still contemplating a run for U.S. Senate, is, like his mother and brother, a registered Republican. He’s also a college pal of Bill Clinton, even writing a front-page story about the president without disclosing his close friendship and presidential sleepovers at his Henderson home.

But none of this means that Greenspun & Co. are friends of organized labor. In fact, Barbara Greenspun once told then-Managing Editor Sandra Thompson that she would shut down the paper before she’d accept a union.Kelley -- an on-again, off-again journalist who spent four years as an executive assistant with the Teamsters’ Central States Pension Fund -- has proclaimed his desire to clean up the ethically challenged Sun. He has issued new guidelines that attempt to curb conflicts of interest and halt the flow of freebies. His efforts have been generally praised by staffers as long overdue. But when confronted with an ethical conundrum involving four reporters who took an expenses-paid junket to a Sacramento Kings’ playoff game last spring, Kelley threw up a brick. Sportswriter Tim Graham quit, but the other three got off with no apparent sanctions.
Still more ethical potholes lay ahead, however.

A second participant in the Kings’ freeload, police reporter Karen Zekan, was accused of having an 18-month sexual affair with a Metro Police public information officer while covering the department. The allegation came in a July 13 letter that ex-reporter Cathy Scott wrote to Sun management.

Zekan was fired within a week. It remains an open question what Kelley knew and when he knew it -- or if action would have been taken if Scott hadn’t sent the letter. (Scott, who was fired last year, is suing Metro for violating her civil rights, claiming that the department pressured the Sun to have her terminated. She alleges that Zekan leaked damaging information to the cop shop.)

Zekan vaguely denies Scott’s account and says Sun management never showed her the damning letter. But, in retrospect, the alleged liaison would explain Zekan’s soft coverage, which included litters of cuddly features about the police canine unit. All she told editors at the time was that she didn’t feel “comfortable’’ writing tough stories about the department. In her last month on the job, she was transferred to the features section.“Now he can bring in his own big-busted women,’’ she says of Kelley.

Zekan, who has been consulting with lawyers of her own, says, “After all the shit (the Sun and Scott) gave me, my career is ruined. What am I going to do, work at a department store?’’ Guilty or not, Zekan was the second Kings junketeer to bite the dust. The two others, Adrienne Packer and John Katsilometes, continue to plod along. Hired by Kelley, the pair, who married on the job, appear to have escaped unscathed.

Katsilometes, a former sports writer who had been let go by the R-J, now has a twice-weekly column in the feature section. He’s the third writer Kelley has tried in that slot after terminating long-time columnist Bob Shemeligian. (Katsilometes, named one of the city’s worst journalists by CityLife, also authored the aforementioned “Hell’’ story.)Packer remains on the county beat, churning out meeting stories and features. Until the R-J’s Steve Friess left for the Ft. Lauderdale Sun-Sentinel, she was regularly beaten on hard news involving controversial land deals, misspending and malfeasance.

Friday, June 17, 2005

A precocious postmortem of the Las Vegas Sun: Part I

When I learned this week that the ‘Sun’, Las Vegas' daily p.m. newspaper, is going to shrivel within the dominant Review-Journal, it brought to mind a hard hitting five part critique that came out nearly six years ago. It was written by a former Sun editor, Ken Ward, and published on a web site that I then owned and managed. Well ahead of the curve, this vintage focus on the Sun's shortcomings has proven sadly prophetic. In that sense, it provides a valuable perspective and a wealth of lessons for anyone with an interest in the business of journalism. Within the next couple of weeks, if not sooner, I should be able to have all of the components posted, so please subscribe to the available feeds for JonnymoOps, or check back here for the additions!

CIRQUE DU SOLEIL
Two years of tyranny and turmoil in the Sun’s dysfunctional newsroom
Part 1 of 5
By Ken Ward
(Originally published circa September, 1999)

A while back, the Las Vegas Sun carried a feature story titled “Ahhhhh, Hell.’’ The piece -- all 150 inches of it -- purported to discuss society’s view of Satan as we approach the millennium. Some Sun staffers say the story hit pretty close to some -- and that’s hardly a compliment. Overwritten and underreported (just one local pastor was quoted), the article embodied the soft and squishy journalism that has become the Sun’s hallmark under the reign of Managing Editor Mike Kelley. "Hell’’ also is a metaphor for the bunker mentality that prevails at the Sun offices on Valley View Boulevard.

Employees tell of a newsroom rife with paranoid intrigue and internal politics. Bringing water cooler gossip to a new level, snitching and backstabbing are considered sport. Sycophants are blessed by management while nonconformity is punished.

It’s been quite a fall from grace, considering the Sun’s rambunctious past. Under now-deceased owner Hank Greenspun, the paper earned a statewide and national reputation as a pugnacious voice, targeting organized crime and red-baiting U.S. Sen. Joseph McCarthy, R-Wis. A.J. Liebling praised the Sun’s aggressiveness in his Wayward Press column that ran in The New Yorker in the ’50s. The Sun prided itself as a paper more inclined to side with the little guy than with powerful special interests.

But those days are gone. While the Sun still employs a handful of accomplished journalists, such as Carson City veteran Cy Ryan and syndicated political cartoonist Mike Smith, the paper has hit rock bottom under its current management.

The most obvious manifestation of the Sun’s turmoil is its comings and goings. Since Kelley arrived from Chicago’s Daily Southtown newspaper two years ago, some 25 staffers have left. By industry standards, that’s a phenomenally high number for a paper with just over 60 employees. And the churn continues. A half dozen reporters and editors hired by Kelley have already left. Some lasted less than a year. Louis Chunovic, on board for two weeks, was fired the day after he wrote a caustic review of a charity gala honoring the late Frank Sinatra, a long-time pal of Publisher Barbara Greenspun.

Though the Page One piece was vetted by the editors, Chunovic took the fall. Kelley, who has a standing policy of not speaking to local media about newsroom operations and would not return phone calls for this story, was brought in by the Greenspun family to shake things up. But the afternoon paper keeps suffering from self-inflicted wounds.

Through its revolving door, the Sun has ushered in a phalanx of new reporters with little or no knowledge of Las Vegas or Nevada. While learning on the job, they are getting soundly beaten on stories -- and not just by the Review-Journal. The weekly Las Vegas Business Press and the monthly Real Estate Journal routinely break news before the Sun.

Even worse than the inexperience is the inaction. The Page One editing slot was left vacant for more than six months, leaving a depleted copy desk to scramble each morning. Job applicants for numerous openings come and go but, amid the turnover, empty desks remain.Mark Konkol, who applied for a federal court position, flew out from Kelley’s Chicago alma mater to look over the Sun last month.

He had heard colorful stories about Kelley’s Southtown tenure. He left Las Vegas unimpressed.“It was a weird experience,’’ he said. “They talked about how they are going to buy the R-J and were talking shit about that paper. The R-J doesn’t seem like much of a paper either, but it was pussy stuff. I didn’t want to hear it.’’While saying he liked the staff well enough, Konkol added, “The place didn’t seem professional, it looked like (management) played favorites. It’s the kind of place that needs a union.’’

Tuesday, June 14, 2005

Gas & Oil at a Glance: 06/14/05

Oil began floating in the mid 50's last week and, based upon storm and capacity fears, then ascended some, ending up yesterday at $55.62 for a 42 gallon barrel of West Texas Intermediate Crude. The increase over the seven day period prior was $1.13. The lotion that gives us motion has now proceeded to near record highs, bloating nearly seven dollars since May 23rd.

Gasoline followed the same path, but it did so like a reluctant dog on a leash. As of Monday, according to the Energy Information Administration, it was pegged at an average price of $2.13 across the United States for one gallon of Regular Self-Serve Unleaded.

That's only 1.4 cents more than last week and a comparatively minimal 4.3 cents from two weeks ago. Go back just one more week, and you'll see that, while gasoline was going for a mean of $2.12.5 on May 23, oil's toll was $48.66. Now, even though we see gas commanding a mere one half cent more, oil has ballooned close to $56 a barrel.


This revised relationship between gas and oil prices is reflected in the two statistics that I have come to rely upon, the Gas to Oil Price Ratio (GOP Ratio) and the 'Spread'. As the term suggests, the GOP Ratio reveals the extent to which the present price of oil constitutes that of gasoline at the corner filling station. It currently calculates out to be 1.61, the lowest that it has been since March 21, nearly three months ago.

The Spread, the amount that remains after subtracting the gasoline duty for one gallon at retail, minus the existing cost for the same quantity of crude, has diminished as well, down to 80.52 cents, another decline that hasn't been seen in almost a quarter of a year.

All of the above strikes me as an irrefutable indicator that we should anticipate prices to climb within the next week. Even if oil attenuates, as it well could, that being dependent mainly upon announcements emanating from the soon to happen meeting of the Organization of Petroleum Exporting Countries, it seems to me as if those downstream, those who brew and bequeath upon us the fluid that our vehicles would be rendered worthless without, have some catching up to do.

My precision is lacking as far as foreseeing the extent to which gasoline prices will rise or fall over a seven day period. Yet, for the sixth week going, I have successfully predicted its direction within that time horizon.


(Excuse me while I gloat. Now, please, help me to find a way to make some money at it!)

This week, my confidence exceeds those immediately preceding. My trendline reveals that, with oil in this present range, $2.20 gas is the norm, with the variability biased towards the high side. So, this is a dollars to donuts type of bet that we'll see fuel higher by this time next week. Let's see what happens. If all goes well, I'll be back next Tuesday, to affirm, or squirm, about my stated expectations.

Looking over the bigger picture, here are two 'perspective' stories worth considering, as we continue to grasp for the forces affecting gas prices as we go forward. California Aggie gets into the implications of the peak oil concept. Playing in Peoria, there's a Copley News Service piece addressing the pitfalls of consolidation among the energy companies, especially with respect to the enterprise of refining.

For further background about this report, including a description of the methods that I use for preparing it, please refer to this post. See ya next week.







Tuesday, June 07, 2005

Gas & Oil at a Glance: 06/07/05

While oil was spurting substantially for the second straight week, gasoline's nudge was negligible. The U.S. national going rate for Regular Self-Serve Unleaded was $2.11.6 per gallon across the United States, an increase of 1.9 cents from May 31. This is the first move to the expensive side since April 11 of this year, when gas sold at its all time nominal high of $2.28.

Oil, which only two weeks ago was being bought at below $50 a barrel, has gushed upward by almost $6.00 during this abbreviated time span. Yesterday's close stood at $54.49 for 42 gallons of West Texas Intermediate Crude. This kind of fluctuation doesn’t happen often, but neither is it extremely rare. The last time a bigger break out took place over a 14 day period was on January 17 of 2005, when oil spurted skyward by $6.30.

One of my statistics, the Gas to Oil Price Ratio, which expresses the extent to which oil contributes to the price of gasoline, came in lower, at 1.63, as would be expected when crude goes up a lot and gas only seeps ahead minimally. Restating what I wrote in the prior issue of 'Gas & Oil at a Glance', the lower the GOP Ratio gets, the better the possibility that gasoline will become more expensive in the near term.

The other number that I regularly emphasize in this column, the 'Spread', works in tandem with the GOP Ratio most of the time. The Spread is simply a numerical statement of the charge for one gallon of gasoline at retail, after subtracting the cost for one gallon of oil, providing a picture of how much is being kept by those who refine and market motor fuels. This week, the Spread was down to 81.86 cents, less than it has been in two and one-half months. It decreased from last week by about four and a quarter cents.

As I've been doing during the last several weeks, I'll mention the often reliable 'leading indicator', the national petrol prices that are continuously updated by GasPriceWatch.Com (GPW). It is meaningful to me, as I have found that, whether on the high or the low side, GPW's prices tend to predict the direction of the other more prominent sources that publish the same figures, those being the Energy Information Administration and the Fuel Gauge Report, put out by the American Automobile Association. Around the time that I was producing last week's report, GasPriceWatch, supported by an army of volunteer spotters, was showing gas to be selling for $2.02 a gallon. At this time on Tuesday morning, GPW is coming in at $2.09. Thus, as this organization reveals it, the downward trend in gas prices has reversed.

You'll excuse me if I take this moment to blow my own horn - hopefully not further exacerbating the greenhouse gas problem in so doing – but I believe this is the fifth straight week in which I've called the very near term direction for gasoline correctly. Prediction is the riskiest of all businesses - and I certainly haven't developed a 'prophet complex' yet - but I am pleased with the results. In my opinion, it validates the value of the GOP Ratio and the Spread as a two useful numerical tools for those who want or need to project where the retail cost of gasoline is heading.

Now that I've finished my little back patting exercise, what about the future? As we proceed into the month of June - and probably into July and August – it looks as if more of our wealth will be guzzled by gas. Demand does not appear to be favorable to lower prices, since, with the additional driving done during the summer, people are purchasing fuel in larger quantities. Link that with crude oil back up in the mid 50's, and it bodes for a gallon of gasoline selling in the $2.30's.

However, to temper the above, I'm not so sure we'll see all that much of a spike. From my regular reading about the energy business, I get the impression is that OPEC and their contemporaries love letting the crude float at $50, but when it proceeds into the territory of $55, they get antsy. Signs are that crude around $50 has been fairly well tolerated by the global economy. Yet, black gold five bucks or so beyond, the producers seem to fear, could bring economic slowdowns closer to reality, raising the ominous eventuality of collapses in the worth of what they bring to market.

Oil in that realm could also spur customer countries to intensify the quest for alternatives. Bottom line, I believe that those who hold the raw resource needed to fuel our vehicles will do everything they can to keep their commodity right around half a C-Note. If they can't do it in reality, they'll resort to bluffing, by talking about expanding the production of what is immediately available for exploitation and by decreeing that they're ambitiously exploring for new supplies.

One other consideration that should keep prices in the United States from ratcheting completely out of sight is the strength that we have been seeing lately in the dollar against other world currencies. A greenback having a greater worth makes oil cheaper in this country, as that's the denomination of choice for its exchange.

To summarize my expectations, look for gas to go higher but not exorbitantly. Relief, that now to me meaning a retreat below $2.00, may come only after that last drop of summer sweat evaporates.

For further background about this report, including a description of the methods that I use for preparing it, please refer to this post. God willing, see ya next week.


Thursday, June 02, 2005

Did the Oilers Aid Bush's Reelection??

Presidential approval ratings and gasoline prices have a pretty predictable inverse relationship. The higher the cost of petrol, the less the public is inclined to favor the job that the nation's CEO is doing. From that point, I'll take a little logical leap and suggest that this tendency should translate to votes won or lost in an election.

Which brings up the question: Could shaving a few pennies off the cost of petrol have turned the tight 2004 presidential contest to George Bush's favor? Last year, as the voting drew nearer, a few of us were noticing that gasoline prices did not seem to be climbing to the levels that we would have expected, given the extent to which the expenditures for oil were escalating.

In the past several months, I have looked at shorter post election time frames and not found any variations worthy of note. But, at this point, with the benefit of some 29 weeks beyond the passing of the plebiscite, this extended interval reveals that a change in pricing has taken place. The data, while perhaps not superficially spectacular, are sufficient to raise an eyebrow or two.

In the 13 weeks leading up to the culmination of the contest between George Bush and John Kerry, gasoline sold for an average of $1.92.41 across the United States. In the nearly seven months since that landmark event, through May 23, 2005, gasoline has edged over the two buck threshold, going for a mean of $2.00.06, or 7.65 cents more per gallon.

It's necessary to note that oil prices, the key factor in determining what we pay for gasoline, have risen also. At the same time, they haven't escalated all that much. During the quarter of a year prior to the referendum, oil was available for $48.12 for a 42 gallon barrel of West Texas Intermediate Crude. In the seven months afterwards, the same grade of product has been selling for a puny added premium of $1.11, with the average tab being $49.23. Normally, that kind of rise in the cost of oil is not enough to drive gasoline up by the seven and two-thirds cents that we have seen.

If oil is not accounting for the ascending pump prices, where has the extra money gone? Looking at the 'Spread' – the cost for a gallon of gasoline after subtracting the going rate for the same amount of oil – it would appear to have lined the pockets of the petroleum refiners and marketers. Federal and state taxes eat up some of the Spread, but they do not appear to have made the difference.

Comparing the pre and post election periods, in the three months prior, the Spread was 77.83 cents. From early November of 2004 through May 23 of this year, it has been 82.85 cents, 5.02 cents above where it was previously. That accounts for nearly two-thirds of gasoline's gain during this time span, with the remaining one-third attributable to oil. For some perspective, since 2000, the Spread has ordinarily constituted one-half of petrol's full retail price.

Humm. Although these findings can't be deemed sufficient to conclude that the Bush friendly fossil fuel energists did him any favors, it certainly would be enlightening to hear a few of their spokesmen elaborate upon why such discrepancies exist. As the television character Ricky Riccardo was often heard to demand of his beau: “Lucy, you got some'splainin' to do!”