Episode Transcript
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Speaker 1 (00:04):
Let's Go third hour radio program affectionately known as common
Sense Amplified. It's the Morning Show with Preston Scott. He
is Jose I am Preston, and joining me on the
program is Gifford Briggs. Gifford is the executive director of
the Gulf Coast Region for the American Petroleum Institute, effectually
(00:28):
known as API. Gifford, how are you good?
Speaker 2 (00:32):
Good morning. I hope you're bringing the common sense today.
I can bring the amplified.
Speaker 1 (00:38):
I think it's got to be the other way around
for this topic. My friend, Hey, before we get into
the nuts and bolts of this, what's it like being
you or working in that industry at a time like
we have been in since the end of February, when
gas prices are elevated so high.
Speaker 2 (01:00):
There's a lot of questions from anyone and everyone. So
whether it's the soccer field or seeing people at church,
I think people have a lot of the same questions
on their mind. But I've been in this industry now
for twenty years and there's been ups and downs, and
(01:20):
so it's just part part of the job.
Speaker 1 (01:23):
If you're sitting down with somebody and maybe you're at
a table with a group of folks and everyone's kind
of just trade and chit chat, and it gets around to, oh, well,
what do you do? Well, what do you do? And
they find out what you do? How quickly in the
last few months has it turned to so what can
you tell me about gas praises? How soon does that happen?
Speaker 2 (01:46):
Almost immediately? And oftentimes, you know, that's been part of
the conversation before we even get around to the question
of what you do. Obviously, it's something that impacts people
in their daily lives. You know, obviously the impact for
food prices and other goods is real. But what people
(02:08):
experience the most is going to the gas station and
filling up their car. And you know, I got I
got a son at child's high school right now, so
I'm even hearing it from his friends because they're big
old drucks or are taking way more gas than their
little job can afford right now.
Speaker 1 (02:26):
Yeah, And I think a lot of people by default
don't fully understand the impact of fuel prices on everything else.
The trips to the store. Yeah, you're filling up your
gas tank and it costs more, But the things at
the store, I mean, you know, the fuel price, the
cost of transit for goods and products is a major
(02:50):
cost to the consumer.
Speaker 2 (02:53):
Well, it just builds in everything, right, So I mean
you taking your grocery store example, you go to the
prow section and the produce got to the to the
grocery store, you know, and and by by by transportation
generally by truck. Obviously that cost is higher for them.
But then you go back to the actual farming costs,
right and how the how the how the fruit was made,
(03:16):
and increase cost there because fuel costs more, and then
the fertilizer that goes into helping to farm the product
has additional cost. So it is it carries throughout the
economy from top to bottom.
Speaker 1 (03:32):
How big? Because I want to wait till the next
segment to get into the nuts and bolts of prices
up and down. But was the transition that we find
in parts of the country from winter to spring and
summer fuel mixes did that factor in at all to
just sort of bad timing for this entire conflict in Iran?
Speaker 2 (03:53):
I mean it's baked into sort of our psyching now
a little bit that we have the summer blends and
they're a little bit more expensive. But given the volatility
that we have been seeing in pricing. You know, I'm
not sure that it was as noticeable that has been
in previous years, where you know, if we're at two
(04:15):
seventy five consistently and all of a sudden it jumps
up to you know, three h five as the summer
blends come, it makes sense. But you know, as we've
seen today, we've seen prices rising and falling, you know,
fairly quickly, and so it's a little bit harder to
pinpoint and say this is when the summer blends, you know,
have started to have the impact.
Speaker 1 (04:33):
You said as prices rise and fall quickly, I think
some people might take a little issue with that. Uh,
prices jumped pretty quickly, and they're not falling as quickly
as they jumped. Talk to me about why when fuel
is because this is what I've heard at nauseum, and
(04:56):
I know you've heard this, but people have written me
and said, look, the fuel jumped overnight, and they didn't
pay that for the price. They didn't pay a new
price for what was already in the ground that was
going to be pumped through the pumps. They got that
in the last shipment that was at the lower price.
Why did the price jump up on the front end
(05:17):
before the new shipments came to them at the higher price.
Speaker 2 (05:21):
It's just it's just a function of way the way
the markets work, and it always seems that they that
they jump up higher than they go down. And reality
is I think that in the data that we've looked at,
they track very similar. And we're seeing prices falling below
four dollars a gallon right now just now seeing you know,
(05:43):
obviously there's a there's a deal in place, and I'm
trying to use air quotes on that right now, because
it's not the first time that a deal has been
in place during the time of this conflict. And so
we've seen, you know, the price of oil, you know,
go from one hundred dollars down to eighty and so
now we'll see those prices start coming down. At the
(06:06):
same time, it's also summer driving season, so as people
go up and demand goes up, you know, it may
keep them from going down as low as they were
back in February. And if you're looking at that as
sort of your anchor point, it may it may not
seem like they're coming down as much. But we're in
the summer driving season demand is going to be peeking,
(06:27):
and so as it may not come down quite as
much as people might like to. Some of it has
to do with summer blends, others just the demand from
a driving season.
Speaker 1 (06:40):
I gotta tell you, I'm not sure I'm in agreement
with you on coming down about as fast as they
went up, because I'm looking at the West Texas price
right now, the Brent price on crude, and then I'm
looking at the correlating gas prices and where they were
on February twenty six and twenty seventh and where they
(07:01):
are now. And the prices do come down a lot slower, Gifford,
They just do. And I guess what I'm trying to understand,
And I think what my listeners want to know is
is this a supplier issue or is this a retailer issue?
Speaker 2 (07:23):
You know, I don't know that my expertise in the
area on the retailer side is there to be able
to say. And I don't want to point fingers and
say what the what's going on with the commercial retail
side because we don't represent those retailers. So for for API,
(07:45):
we represent the people that refine the product, and for
the refiners. You know, crude oil is input and it's
exported and then transported you know, to a terminal. So
for Tallahassee, that fuel comes in through the Colonial Pipeline
which goes from Louisiana all the way up to the northeast.
(08:06):
And then our fuel is actually brought in the Tallahassee
from Bainbridge, and so our refiners take the product whatever
they're paying for it, which you know, again could be
extremely high priced still right now, put it in the lines,
and then it goes to the terminal and then it's
brought from the terminal to Tallahassee. And at that point
in time, the retailers are the ones that are setting
(08:27):
the prices. It's impacted by the costs of the transportation,
the transportation to get it there as well as whatever
market drivers the individual retailer has for their cost basis.
Speaker 1 (08:41):
So and I appreciate you don't want to roll retailers
under the bus. But when going back to the kind
of the original issue that my listeners emailed me at,
you know, I mean, in large volumes about is getting
their mind around why the gas that was in the
holding tank waiting to be pumped, that was purchased at
(09:02):
the low price suddenly jumps up when they did not
pay any higher. That fuel was already there, It was
sitting there, it was waiting to be pumped. And and
people are struggling with that, and that splashes onto your industry,
whether you like it or not. I know you know that.
But but you know, where is a consumer supposed to
(09:23):
go with this? If there's because what this comes out
as is it comes out as price gouging. It does.
Speaker 2 (09:32):
Well and and and you know, price price gouging, you know,
typically is focused around you know, people taking advantage of
a supply issue, around a around a hurricane, where exactly
they're they're jumping the price up in an emergency situation.
You know, I would say that if we look at
take your same argument, now, maybe the prices aren't coming
(09:55):
down as much. But if we if we say that
that it's only the price based off of what's in
the tank, then in theory, prices shouldn't be coming down
at all right now because a lot of the fuel
that's in the tank was purchased when crude was over
one hundred dollars, and so you know, the market is
while some of it is going to be the cost
(10:15):
the price is going to be. Some of it is
the cost of the product that's coming into the station.
Other parts are just the overall you know, market price
and global economics of fuel, and so it's a it's
a combination of both and how each individual retailer sets
the price, you know, and what every gas station is different. Right,
(10:37):
you can go to one corner and you've got circu
k at one price, and you've got the Wildlie at
one price, and you know, buckets in another if that
happens to be the corner that you're at. And again
it's so it's the global market price might be the same,
but the individual product, the additives that go into it,
and then whatever market price that the gas station is
(10:57):
putting in all go in to building out the actual price.
Speaker 1 (11:02):
Gifford, Let's let's first talk about the agreement. If this
deal gets signed on Friday, how long before the markets stabilize?
Speaker 2 (11:13):
So, I mean, I think if we're if we're talking
to stabilize a return to pre war condition, the the
answer is really months. If we if we think about
for a second, if we assume that the you know,
the deal moves forward, that doesn't mean that all of
a sudden, the you know, the hundreds of tankers that
are sitting in the gulf over there are going to
(11:35):
start flowing through the Straight of four Moves. I mean,
you know, you have to have a captain that that
that is willing to get on a boat and trust
that the minds are all clear and there's not going
to be more jone attacks. Then you have to have
a crew that's willing to return to the boat and
take the risk. Then you have to have the insurance
company that's willing to ensure the boat as it tries
(11:57):
to go through. That process alone is going to take,
you know, potentially weeks for some ships to be able
to start moving through. And then you know, from there
those ships had a destination already. That's going to take
three to four weeks to get those ships to where
they need to go. And then from there they have
(12:18):
to take another trip and then maybe make it back
to the Strait. And only then and that's twelve weeks
down the road. Do you see, you know, maybe ship
traffic returning to normal after they start moving through the strait.
And then on top of that, you have tremendous amount
of infrastructure destruction in the Middle East and whether it's
(12:41):
been refineries or pipelines production that has been shut in,
and with twenty percent of the crewed supply flowing through
that region, it's a lot of infrastructure that needs to
be repaired and brought back to life in order to
restore pre war normal conditions. And so it could take
(13:02):
at a minimum, you know, three months, you know, but
potentially a year to see full restoration of of operations
and global you know, energy flow, particularly because of the
challenges in the Strait.
Speaker 1 (13:19):
But if the Brent price and if the I mean,
if the crude price right now, depending on which which
type of oil or crude you're looking at, is within
six dollars of what it was before the thing even started,
the conflict started, are you suggesting that that all of
this that you just laid out is accounting for the
six dollars difference, because that's a pretty dramatic, you know drop,
(13:42):
and it's pretty close to where it was, and it
wouldn't explain why gas prices are over a dollar fifty
higher than they were.
Speaker 2 (13:51):
Well, right, so if you're looking at just you were
going to sell out the energy market as a whole,
not necessarily just particularly focusing on the prices for the
for a large part, the devices that are out there
and the energy markets have have have performed in a
way that most of the analysts did not predict. And
that the resiliency to keep prices low largely because you
(14:13):
know the ability of the American energy producer to surge
production in areas where we were to increase our refining
in ways that we were the drawdowns on the strategic
petroleum reserves not only in our country in other places.
That is that has allowed us to weather the storm
of the supply situation in the Gulf or in the
(14:37):
Strait of hor Moves in Middle East. And so you know,
the fact that prices are down right now is a
great sign for the global economy because we were able
to weather a storm that if you would have asked
anyone in February what a three month shut down the
straight of hor Moves would mean for prices, people would
(14:57):
have said one hundred and fifty to two hundred barrel
And that's what analysts were predicting. But because of how
America has positioned ourselves as this global energy leader now,
we were able to weather the storm in ways that
nobody could have predicted. So prices being an eighty right
now are great. That doesn't mean that they're guaranteed to
(15:18):
stay there because it's going to take some time for
the markets to fully stabilize. But we have outperformed from
an economic standpoint because of the American energy industry, and
hopefully we can continue to do that while being stabilized
in the strait.
Speaker 1 (15:36):
All right, I'm up against it, So I need about
a fifteen second answer on this. Tell our listeners because
we had someone call in with a question what the
margins are right now for the industry.
Speaker 2 (15:48):
I'm not sure you know from a margins standpoint where
they are, but I will say this that when you're
talking about, you know, refining a barrel of oil, you
know you're talking about, you know, fraction of pennies that
are being managed. And obviously you know the larger refiners
are processing hundreds of thousands of barrels. But you know,
when you're looking at refining a barrel of oil and
(16:11):
putting into different products, you know the margins are very
small there. Again, and I can't comment on what's going
on in an individual convenience store and gas station, although
you know they make more money off Red Bull than
they do off gasoline.
Speaker 1 (16:25):
All Right, thank you very much, Gifford. I appreciate the
time this morning.
Speaker 2 (16:28):
All right, have a good one. Thank you very much.
Speaker 1 (16:30):
Thank you, Gifford Briggs with US American Petroleum Institute, Gulf
Coast executive Director and our guest here in the Morning
Show with Preston Scott.