Why gas is so expensive, when oil isn't

Prices at the pump may soon set a record, but analysts say U.S. oil prices and gas prices from 2008 don't reflect the true cost of crude.
By Steve Hargreaves, senior writerApril 21, 2011: 7:38 AM ET

NEW YORK (CNNMoney) -- Gasoline prices have been rising for months and are within striking distance of their 2008 all-time high of $4.11 a gallon. But while oil prices are above $100 a barrel, they're still 24% below their 2008 all-time high.

So why is gasoline so expensive, when oil is so far off its record price?

The answer is that the price of oil Americans see every day has little to do with the price of gasoline at the pump.

Those prices are for a particular type of oil -- West Texas Intermediate -- that's stored in Cushing, Okla.

Thanks to increasing supplies from the Rocky Mountain states and Canada's oil sands, plus a lack of pipelines to move that oil out, there's currently a big glut of oil in Cushing. That's pushing the price of West Texas crude down.

Prices for most other types of oil, which make up the vast majority of oil that refiners use in U.S. gasoline, are much higher than West Texas Intermediate. London's Brent crude, for example, was closer to $124 a barrel on Wednesday.

"It's really a broken benchmark," Tom Kloza, chief oil analyst at the Oil Price Information Service, said of the West Texas price.

Also, it's important to remember that oil and gasoline prices don't move in lockstep with one another. Gas prices lag behind oil prices by a couple of weeks.

During the oil price spike of 2008, gas prices were still trying to catch up as oil prices had already started falling.

That put refiners in a tight spot.

"[Refiners] couldn't sell their product for as much as crude was increasing," Rayola Dougher, a senior economic advisor for the American Petroleum Institute. "People lost money."

Kloza, who crunches numbers for motorist group AAA, agrees. "Crude went up," in 2008, he said, "but gas prices did not follow."

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The difference between what refiners pay for a gallon of oil now and how much a gallon of gas sells for -- excluding taxes -- is about 78 cents, said Dougher.

That's slightly higher than normal, but not terribly so, said Dougher.

That's little consolation to drivers, who can expect the price of gas to continue rising. Gas prices have jumped 29 cents over the past 29 days to a nationwide average of $3.84 a gallon, according to AAA.  

All eyes focused on clásico series

by Sportillustrated

Lionel Messi and Barcelona take on archrivals Real Madrid four times in the span of 18 days.

Jasper Juinen/Getty Images

Here we go, then. Barcelona and Real's very own World Series starts now, the most exciting run of games in living memory or definitive and depressing proof that no one else in Spain matters -- great clubs, superb teams and talented players, relegated to an irrelevance, in the shadow of two footballing behemoths. For two weeks, at least.

These promise to be two and a half weeks of merciless hype, of opportunism, of myopia and provocation, of faux-outrage and point-scoring, aimed at the complete obliteration of each other. And of everybody else. Or perhaps, for them, it's a relief. "The more Madrid and Barcelona play each other, the more the rest of us can get on with our work in peace," said Athletic Bilbao coach Joaquín Caparrós.

One thing's for certain: they could hardly play each other more. Barring a miracle, FC Barcelona and Real Madrid will face each other four times in 18 days and with every single trophy in play: league, Copa del Rey and Champions League. They have played each other in Europe twice before -- Madrid winning both -- but nothing like this has ever happened.

On Saturday, they face each other in the league at the Santiago Bernabéu. On Wednesday they face each other in the Copa del Rey final at Mestalla. And in the following two weeks they face each other in the Champions league semifinals at the Santiago Bernabéu and the Camp Nou. Or do they? On Saturday, do they in fact face each other in the league, the Copa del Rey and the Champions League? Rather than a simple league game, is it just the first quarter of a game that decides everything? Just the first chapter in a sensational saga.

On the face of it, Saturday's game appears the least important of them all. After all, even if they lose, Barcelona will probably still win the league title: assuming it does not lose by more than 5-0, it would still have a five-point lead which is effectively a six-point lead (given head-to-head tiebreakers) at the top of the table, with just six games to go. But could the reverse actually be true? Could Saturday's game actually be the most important of the series? Could that be exactly the point? That these are not four games but a series, in which every game affects every other?

In situations like this when two teams face each other a handful of times over a handful of days in different competitions, the hypothetical is inevitable: some variation on the "if someone offered you the Copa del Rey final in return for losing the league game, you'd take it" theme. But not only does it not work like that, not only would Real Madrid and Barcelona never sign a pact (mind you, Hitler and Stalin did), the exact opposite might be true. Rather than "you take this, I take that," could this be one winner takes it all?

Johan Cruyff, the former Barcelona player and coach, its ideologue, insisted Monday that in order to take it all Barcelona does not need to win every game: it merely needs to win the second and the fourth -- the Copa del Rey final and the Champions League semifinal second leg. Put simply, he is quite right. Just as Jose Mourinho's Inter Milan only won once in four against Barcelona last season, yet still reached the Champions League final instead of Barça.

But can Barcelona win the second and fourth without winning the first and the third? Is winning the second and the fourth harder if you lose the other two? Could it even be easier? Is there some mileage in focusing effort and soccer in certain matches? As Cruyff insisted, Barcelona must compete in every game, it must be able to assimilate the result from every match as it prepares for the next. And the same goes for Real Madrid. Especially as it will all end with the most important game of all, a culmination of clashes until it reaches a climax: the Champions League. Even if honors are shared -- a Cup here, a league there -- at the end of this, only one team will be standing. Only one will feel satisfied.

One of the fascinating thing about this series of games is that question of interdependence, the extent to which every game is conditioned by every other game. Emotionally, physically, tactically. How much does every game affect the next? Will there be trump cards that are held back, ready to be played at certain times, rather than wasted on one match? All the questions that are asked before any clásico are multiplied now. And, at the risk of reading too much into it, at going too far, there are many more. Psychologically, the intrigue, is extraordinary. The strategy is seductive. The mental battle could be mesmerizing, the pressure intense.

How different will each game be? And how different will each game become as a result of the one before -- will plans change as results and expectations do? The question begs to be asked: to what extent is the approach to each game is conditioned by the next? When rotations are employed, that question is always valid: now it becomes more pertinent than ever before. Does Guardiola trust the fact that, on the face of it, his starting XI is stronger? Does Mourinho take comfort in a bigger and better squad? Will he rotate within these games?

The first game looks the least relevant. Is it in fact, the most? The game that sets a tone for the whole series? One Barcelona player recently admitted that he thinks Madrid is under huge mental pressure because it has now lost five consecutive clásicos and was defeated 5-0 in November. How much greater that pressure must be with four in two weeks, and yet how much quicker it offers a chance for redemption. Meanwhile, if Madrid breaks that run in the first game, does it break it for all the rest? To use the Spanish phrase, would that mean the pressure catching the Puente aéreo, the flight that connects Spain's two biggest cities? How easy will the teams find it to assimilate defeats and draws as they prepare for the next match?

It may be counterintuitive but it appears impossible to treat these games in isolation. You wonder if both teams have done some basic planning for all four games or if the approach will be modified as the matches go by. It is harder to get your head around these clashes than any other clásico precisely because they all come together, because it is a series. To what extent do both managers believe that the league title, for all the public declarations to the contrary, is decided? And does that change the approach at the Bernabéu?

Will tactics at the Bernabéu alter because of the Cup final four days later? Will the two teams be playing two games at once? Or four games, even? How can they isolate themselves from their past and their future to focus on their present? Will they reveal their cards or hide aces up their sleeves? Can they? After all, they know each other so well. How much capacity for surprise is there? Who has greater variety? Who can shuffle their side more? Is that even beneficial? Will they defend differently, to keep each other guessing? Will the attack be modified? Will, say, Ronaldo play left on Saturday and right on Tuesday? Will the league game be a testing ground for the next three?

To put it in very basic, if Neanderthal terms: Barcelona has two center backs out, Eric Abidal and Carles Puyol. Only Piqué is left. Will Madrid target him in the hope of removing him from the Copa del Rey final? Will it try to bully Messi -- not so much to keep him out of the league clásico but to get him out of the Champions league clásico or the final of the Copa del Rey? Will Barcelona try to rough up Cristiano Ronaldo, provoking him into something that would cost Madrid not just for this game but the next too? Will Barcelona try that bit harder to tug on the referee's card-waving arm? Will it have looked at the Madrid players a solitary yellow from a ban and taken note?

The cliché talks of taking each game as it comes. It has never been true: everyone looks ahead. But this time, more than any other time, it is an immense lie. It is utterly impossible. How could it be otherwise? What is going on inside the tortured minds of the two coaches and their players? We have never seen anything quite like it; a run of games so mind-bending, so all-encompassing. This may be four different matches, three different competitions and two different teams, but it feels like just one, truly epic clash.

Read more: http://sportsillustrated.cnn.com/2011/writers/sid_lowe/04/13/4.clasicos/index.html#ixzz1JT7SbSAx

Lampard: Roman deserves success by ESPN

By ESPNsoccernet staff

Chelsea midfielder Frank Lampard believes success in the Champions League would be just reward for the way in which Roman Abramovich has transformed the club.

PA PhotosFrank Lampard makes his 500th appearance for Chelsea on Wednesday

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Chelsea won their first Premier League title within two years of Abramovich buying the club from Ken Bates in 2003, and he has won every trophy available apart from the Champions League.

Lampard told the Sun: "Everything I've achieved in the last 10 years has only been possible because of the owner's investment.

"I never envisaged that we would be winning league titles, competing in the Champions League and fighting on all fronts year after year so quickly. Everything changed when Mr Abramovich arrived in 2003. He has made a huge investment and we are all very thankful.

"I'd be very proud to win the Champions League for a lot of reasons but I definitely understand the thought process that we owe it to him to win it.

"He never sits us down and says 'You must win the Champions League, this is the main thing'. But we all know it would be a fantastic thing to him.

"And he deserves it for all that he has given to the club.''

Meanwhile, Michael Essien is the latest player to back Fernando Torres to overcome his goal drought.

Essien told the Daily Express: "Didier and Torres are different kinds of strikers. Didier is big and Torres is not so big, so when Torres plays, we have to change and adapt to his style of play.

"But we've worked on it for the last two months and now we know him really well. We're going to start feeding him and he'll get his goals back.

"He's been working very hard and has everyone's support. We know he's going to deliver. And when he starts scoring, all the noise about him will stop. It's just a matter of time."

Zero G on Ford's factory floor

By Eilene Zimmerman, contributing writerMarch 24, 2011: 3:45 PM ET

(CNNMoney) -- Building things like airplanes and cars takes heavy lifting for both workers and their employers: Injuries from overexertion cost U.S. companies more than $13 billion each year. Enter a Garrett Brown, an inventor who wants to revolutionize factory work the same way he revolutionized Hollywood back in 1976.

That's when he unveiled the Steadicam, a stabilization arm that eliminates jolts and shocks from camera movement. Using the same fundamentals that drive Steadicam technology, Brown invented a "zero gravity" industrial arm that attaches to heavy tools like riveters and grinders, making them effectively weightless for their human operators.

Brown teamed up with former Panavision executive Eric Golden, who recently brought the technology to market through Equipois, a Los Angeles startup.

"You can have something that weighs 25 pounds and move it with your fingertips, as if you're in space," Golden, 42, says enthusiastically.

Equipois' "zeroG" devices -- roughly the size of human arms -- are made of aerospace-grade aluminum and steel, come in two sizes, and require no outside power to operate. Instead, they simulate weightlessness by creating a counterbalance: each arm uses a large spring that pulls upward with constant force on a tool.

"The actions cancel each other out," Golden explains. "When the arm holding the tool moves, the position of the end of the spring changes to compensate for the movement. That's 20 pounds of lift on a 20-pound tool, no matter where it's positioned."

The zeroG arm uses a gimbal -- a structure to hold the tool in place while allowing it to rotate freely -- so factory workers can manipulate familiar tools the way they always have. And the arms can be mounted almost anywhere: on walls, tables, floors or mobile carts.

Although Brown developed the actual device, the idea originally came from an industrial engineer at Honda, who approached him in 2006 to ask whether Steadicam arms could be used to hold tools. Not long after, Brown and Golden met at an entertainment industry trade show. Golden wanted to find new uses for Hollywood technology -- bringing techniques from "The Industry" to heavy industry -- and believed that a Steadicam-style arm could meet a critical need on factory floors.

In early 2007, with $2 million from friends and family, Golden launched Equipois, with Brown as his top inventor and consultant. After three rounds of venture funding, Golden has raised an additional $10 million.

Equipois began selling zeroG arms three years ago to major manufacturers that now include Ford, Boeing, John Deere and the U.S. Navy. The company has 22 employees and at the end of 2010, annual sales hit $1 million. The larger arm costs about $10,000, and the smaller one goes for $5,000. The devices aren't cheap, but Golden says his customers report productivity increases of 30% to 50% percent.

"Because it uses no electricity -- just springs -- it's actually much cheaper than our current method of tool support," says Allison Stephens, a technical specialist at Ford Motor Company (F, Fortune 500) who manages the manufacturer's assembly ergonomics worldwide. Ford uses 10 zeroG arms to assist the human operators running high-torque tools to secure car parts.

"We selected jobs that had difficulties because of heavy tools, and operators who had medical visits because of that," Stephens says. "We've seen some great results -- no injuries when the arms are used. We are going to incorporate it into our engineering strategy."

James Mallon, a vice president at Humantech -- an Ann Arbor, Mich., management consulting firm focused on ergonomic engineering -- calls the zeroG arm "revolutionary."

In ergonomics, the concerns are high force and repetition. "Equipois' arm completely removes the force, but doesn't inhibit a tool's use," Mallon says. "That's hugely innovative."

Golden says his biggest challenge so far has been the global recession. "We started out slower than we could have, and there was a period a year ago when big manufacturers just weren't spending money, no matter what the investment," he says.

"We tried to get companies to try one arm, even if they really needed 20, because in 2009 it was difficult to get the money to buy any. We wanted each customer to have at least one success story from using it," he recalls. "When they started coming out of the recession, they'd know where to put their money."

Now the money is finally starting to loosen up. Golden can't wait for his customers to ramp up their capital spending: "I really feel like we're going down the right path," he says. "I would grow faster if I could." 

Stocks fall for week as Japan weighs on markets

Click the chart for more market data.
By Ken Sweet, contributing writerMarch 18, 2011: 4:46 PM ET

NEW YORK (CNNMoney) -- U.S. stocks rose for a second day in a row on Friday, as news of a cease-fire in Libya eased traders' concerns about developments in the Middle East. However, the ongoing turmoil in Japan led U.S. stocks to fall for the week.

The Dow Jones industrial average (INDU) climbed 84 points, or 0.7%, to 11,859; the S&P 500 (SPX) added 5.5 points, or 0.4%, to 1,279; and the Nasdaq Composite (COMP) rose 7.6 points, or 0.3%, to 2,644.

For the week, the Dow fell 1.5%, the S&P 500 lost 1.9% and the Nasdaq dropped 2.7%. While the Dow and S&P 500 remain modestly higher for the year, this week's declines have now put the Nasdaq down 0.4% year-to-date.

Stocks were higher throughout Friday's trading session as investors welcomed two pieces of encouraging news: Libya's cease-fire and the G7's Japanese yen intervention plan.

The financial sector kept the momentum going, after the Federal Reserve gave the green light for several big banks to raise dividends and buy back shares. Among the firms to announce dividend hikes were JPMorgan Chase (JPM, Fortune 500), Wells Fargo (WFC, Fortune 500) and USBancorp (USB, Fortune 500), which each saw their shares climb.

The Libyan government announced an immediate cease-fire after the United Nations voted to impose a no-fly zone over the country. However, witnesses in the besieged city of Misrata told CNN a fierce pro-government assault was persisting.

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Oil prices, which had ticked higher on the U.N. vote, turned lower after the cease-fire announcement. Crude prices fell 25 cents to $101.15 a barrel. Earlier in the session, prices neared $104.

And while Japan continues to struggle with its nuclear power plants, the Group of Seven major economic powers announced a coordinatedintervention to prevent the Japanese yen from rising further. The announcement helped the yen ease and boosted the Nikkei 2.7%.

"It's good to see leaders acting to provide stabilization in the currency market -- it gives the market confidence," said Anthony Conroy, head trader with BNY ConvergEx.

The Japanese yen had been driven sharply higher in recent days by global uncertainty and the prospect of more cash flowing into Japan.

Why the yen needs to be restrained

Because Japan is heavily reliant on exports to drive its economy, a strong yen would put a difficult headwind against what is already a struggling economy, said Bill Stone, chief investment strategist with PNC Financial.

"A little weakness in the yen would be a good thing," Stone said.

U.S. stocks closed broadly higher Thursday, rebounding after two days of sharp declines.

World markets: European stocks closed higher. Britain's FTSE-100 added 0.4%, the DAX in Germany notched up 0.1% and France's CAC 40 gained 0.6%.

Aside from the Nikkei, other Asian markets ended higher. The Shanghai Composite rose 0.3% and the Hang Seng in Hong Kong added less than 0.1%.

Companies: Cisco (CSCO, Fortune 500) shares rose 0.8% after the company announced a new 6 cents-a-share dividend.

Nike (NKE, Fortune 500) shares tumbled 9% after the company reported disappointing earnings and said it would raise prices on many of its products because of higher commodity prices.

Celera (CRA) shares soared 34% Friday after Quest Diagnostics (DGX,Fortune 500) announced it would buy Celera for $344 million, or $8 a share.

Shares of tax-software maker Intuit (INTU) rose 3% after the company said that the number of users of its TurboTax software jumped 7% compared to a year ago.

Currencies and commodities: The dollar fell against the euro, but gained versus the British pound.

Gold futures for April delivery rose $11.90, or 0.8%, to trade at $1,416.10 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury rose, pushing the yield down to 3.26% from 3.27% late Thursday.