Gas Headed Back To $2.00 Per Gallon?

Ramapo

Rookie
Joined
Aug 29, 2006
Messages
31
Reaction score
4
Points
1
http://money.cnn.com/2006/08/30/news/economy/gas_prices/index.htm?cnn=yes

Gas may be headed back near $2
Analyst sees prices 'closer to $2 than $3' by Thanksgiving, newspaper reports.
August 30 2006: 7:20 AM EDT
NEW YORK (CNNMoney) -- The recent drop in prices at the pump could pick up steam, driving gasoline sharply lower in coming months, USA Today reported Wednesday.

'We'll be closer to $2 than $3 come Thanksgiving,' Fred Rozell, a gas analyst at at the Oil Price Information Service, told the newspaper.

The average cost of a gallon of gas peaked this year at $3.036 on Aug. 10, the newspaper said, citing surveys by the motorist organization AAA and Rozell's OPIS.

AAA reported a nationwide average of $2.84 Tuesday, the lowest since April 20, according to the article.

Online gasoline price survey site Gasbuddy.com shows Wednesday's national average at $2.80.

Several factors are behind the recent declines: the end of the summer driving season, which reduces consumer demand for gasoline as well as, the end of seasonal federal requirements on gas that makes the cost of importing and refining it cheaper, the newspaper reported.

Overall gas consumption is down for the year, which takes the edge off wholesalers prices, who in turn are trying to get rid of the product.

Finally, petroleum traders, worried that high prices won't last, are anxious to sell their holdings, the newspaper reported.

Crude oil, accounting for about half the price of gasoline, closed below $70 a barrel Tuesday for the first time since May 4.







:bsflag:



http://money.cnn.com/2006/08/30/news/economy/gas_prices/index.htm?cnn=yes
 

Bonnie

Senior Member
Joined
Jun 30, 2004
Messages
9,476
Reaction score
669
Points
48
Location
Wherever
I hope so, I know by me the prices have dropped to 2.65 per gallon for regular.
 
OP
Ramapo

Ramapo

Rookie
Joined
Aug 29, 2006
Messages
31
Reaction score
4
Points
1
We are down to around that price also.
 

Nienna

VIP Member
Joined
Feb 24, 2005
Messages
4,515
Reaction score
334
Points
83
Location
Ohio
We're down there, too. I read a financial statement last week that predicted gas down to $40 a barrel in the next 10 years, due to falling demand & new technology. Don't know how accurate that was.
 
OP
Ramapo

Ramapo

Rookie
Joined
Aug 29, 2006
Messages
31
Reaction score
4
Points
1
I hope so. Oil is the root of all our problems.
 

Mr. P

Senior Member
Joined
Aug 5, 2004
Messages
11,329
Reaction score
622
Points
48
Location
South of the Mason Dixon
Now are you guys wondering what I am?

After the BP pipeline shutdown that provided 8% of the supply, how can prices drop so much, so fast?

Makes me rethink the claims of gouging.
 
OP
Ramapo

Ramapo

Rookie
Joined
Aug 29, 2006
Messages
31
Reaction score
4
Points
1
They've been gouging since the 70's and we turn a blind eye towards them.
 

Mr. P

Senior Member
Joined
Aug 5, 2004
Messages
11,329
Reaction score
622
Points
48
Location
South of the Mason Dixon
They've been gouging since the 70's and we turn a blind eye towards them.
I don’t have a problem with oil companies making as much as they can “legitimately”,
legitimate being the key word. If prices are high because we only have x refineries, ok
If they’re high because of reduced supply, ok.

But when we lose 8% of the supply and if these things were true, prices would sky rocket, no?
The price is dropping, IMO this alone gives validity to those that have claimed gouging all along.
 

misterblu

Active Member
Joined
Sep 11, 2004
Messages
611
Reaction score
64
Points
28
Mr. P said:
But when we lose 8% of the supply and if these things were true, prices would sky rocket, no?
The price is dropping, IMO this alone gives validity to those that have claimed gouging all along.


Ramapo via CNN said:
...petroleum traders, worried that high prices won't last, are anxious to sell their holdings...
:read:
 

BaronVonBigmeat

Senior Member
Joined
Sep 20, 2005
Messages
1,185
Reaction score
163
Points
48
They've been gouging since the 70's and we turn a blind eye towards them.
No, gas prices fell dramatically during the early 80's. In fact, it dropped below $1/gallon several times. And it was cheap throughout most of the 90's too.
 

Hobbit

Senior Member
Joined
Mar 25, 2004
Messages
5,099
Reaction score
421
Points
48
Location
Near Atlanta, GA
I don’t have a problem with oil companies making as much as they can “legitimately”,
legitimate being the key word. If prices are high because we only have x refineries, ok
If they’re high because of reduced supply, ok.

But when we lose 8% of the supply and if these things were true, prices would sky rocket, no?
The price is dropping, IMO this alone gives validity to those that have claimed gouging all along.
Some of it has to do with the feds releasing part of their reserves to ease the shortage. The other has to do with the fact that with conflict in the Middle East, futures trading on oil has skyrocketted. Like any good investor, they all knew the price would eventually go down. Now that it's peaked, investors are unloading, sending it down further.

Then, like the article says, everyone's vacation is over and they're driving less. It's also during a mild season, when people aren't working the heat/air as hard as they have been.
 

Mr.Conley

Senior Member
Joined
Jan 20, 2006
Messages
1,958
Reaction score
115
Points
48
Location
New Orleans, LA/Cambridge, MA
To add to what Hobbit said you have to also account for the fact that while we lost a lot of domestic supply, we didn't lose any refining capacity like we did post-Katrina. Losing 8% of domestic capacity is roughly equivalent to losing 3% refining capacity. Refining capacity is more important than domestic capacity because not only can domestic capacity be replaced with foriegn oil, but because without refining capacity then domestic and foriegn oil supplies basically become irrelevant because we can't process the oil into usable products. After Katrina we lost about 12% of our refining capacity, or 4 times the eqiuvalent amount of actual supply lost when the BP pipeline went out. As long as BP and the oil companies are able to redirect oil from foriegn territories, and make good use of the relaxed demand of September, then we shouldn't see any significant price escalations like we did after Katrina.
 
OP
Ramapo

Ramapo

Rookie
Joined
Aug 29, 2006
Messages
31
Reaction score
4
Points
1
To add to what Hobbit said you have to also account for the fact that while we lost a lot of domestic supply, we didn't lose any refining capacity like we did post-Katrina. Losing 8% of domestic capacity is roughly equivalent to losing 3% refining capacity. Refining capacity is more important than domestic capacity because not only can domestic capacity be replaced with foriegn oil, but because without refining capacity then domestic and foriegn oil supplies basically become irrelevant because we can't process the oil into usable products. After Katrina we lost about 12% of our refining capacity, or 4 times the eqiuvalent amount of actual supply lost when the BP pipeline went out. As long as BP and the oil companies are able to redirect oil from foriegn territories, and make good use of the relaxed demand of September, then we shouldn't see any significant price escalations like we did after Katrina.
The moral of the story: We need more refineries.:clap:
 

Adam's Apple

Senior Member
Joined
Apr 25, 2004
Messages
4,092
Reaction score
448
Points
48
This will be a bit off the topic, but I think all you Republicans on the board will get a kick out of it. Yesterday in our congressional district gas was $1.80/gal, and it was even pumped by our ex-Congressman who is trying to get his seat back in this fall's election. The difference in the regular price of $2.80/gal. and "his" price was paid to the station by his campaign committee.

So be on the lookout for campaign stops by your Democrat congressional candidates. They may be willing to buy you a tank of gas to entice you to vote for them.

Do I think gas will fall below $2/gal. again? No, not likely, but then you never know--there may be a Democrat running for Congress in the neighborhood.
 

Nienna

VIP Member
Joined
Feb 24, 2005
Messages
4,515
Reaction score
334
Points
83
Location
Ohio
I filled up at $2.45 this morning... The first time in I don't know how long that it has cost less than $50 to fill my tank, and my gas gauge was BELOW empty (don't tell my husband! ;) )
 

glockmail

VIP Member
Joined
Aug 31, 2006
Messages
7,700
Reaction score
436
Points
83
Location
The beautiful Yadkin Valley
Am I the only one that thinks this is bad news? With oil prices low, there is no incentive to tell OPEC to ESAD.

I think we should have a tarrif on OPEC oil at $100/ bbl, with a corresponding decrase in highway and income taxes to make it revenue-nuetral. That way there will be a huge incentive for domestic drilling, alternate fuels, and nuclear power.
 

Avatar4321

Diamond Member
Gold Supporting Member
Joined
Feb 22, 2004
Messages
82,283
Reaction score
10,122
Points
2,070
Location
Minnesota
Now are you guys wondering what I am?

After the BP pipeline shutdown that provided 8% of the supply, how can prices drop so much, so fast?

Makes me rethink the claims of gouging.
yeah, well honestly i thought the pipeline was alittle overhyped. I mean think about it. The pipeline wont effect one iota how much oil is drilled. just what path it will take to get to the refineries. i didnt think it would effect anything.

I think market forces are taking effect. the price was being forced up by speculators and now its coming down for the same reason. I wish there a way to untie it from the speculation and make the prices more stable. But i think we can do that through competition
 

Annie

Diamond Member
Joined
Nov 22, 2003
Messages
50,848
Reaction score
4,826
Points
1,790
Gouging? Manipulation? Markets anyone?


http://www.tcsdaily.com/article.aspx?id=090806F

Big Oil's New Conspiracy
By Pejman Yousefzadeh : BIO| 08 Sep 2006

oil prices down

We have heard much in recent months about the plot by oil companies to gouge consumers at the pump. Now, I am writing to report another insidious plot on the part of Big Oil. They are scheming to lower prices.

Shocking, I know. But it is all true. Just read:

"Gasoline prices are falling fast and could keep dropping for months.

"The only place they have to go is down," says Fred Rozell, gasoline analyst at the Oil Price Information Service (OPIS). "We'll be closer to $2 than $3 come Thanksgiving."

Travel organization AAA foresees prices 10 cents a gallon lower by the end of next week. It reported a nationwide average of $2.84 Tuesday, the lowest since April 20.

It's good news for consumers and the economy. Continued lower prices "may act like a tax cut" and stimulate spending, says Richard DeKaser, chief economist at National City in Cleveland. He calculates that higher energy prices the first six months cut growth of consumer spending 1 percentage point.

The U.S. average for a gallon of regular peaked this year at $3.036 Aug. 10, according to OPIS/AAA daily surveys. That's slightly under the high of $3.057 Sept. 5, a week after Hurricane Katrina battered petroleum production in the Gulf of Mexico and caused fears of fuel shortages."​

The conspiracy of which I write is a vast one. It even involves oil companies manipulating countries and international crises the way a grandmaster would manipulate pieces on a chessboard:

"Oil fell more than a dollar to less than $68 a barrel on Monday, pulled lower by expectations that any sanctions against oil producer Iran were some way off and would not necessarily disrupt export flows.

U.S. light sweet crude was down $1.17 to $68.02 a barrel, just off a session low of $67.77.

London Brent crude settled at $67.71, $1.44 a barrel below Friday's close. Its session low was $67.59, the lowest level since June 21.

Trading volumes were light as the New York Mercantile Exchange pit was closed on Monday to mark the Labor Day holiday. U.S. futures were only trading electronically and the ICE exchange, where Brent trades, closed early."​

Okay, so I am being facetious.

Needless to say (you'd think), the arguments alleging oil company manipulation of the market value for gasoline are fundamentally flawed. According to these arguments, oil companies have the power in the first place casually to adjust the market value of gasoline with the same degree of impunity that you and I have in determining what we want to have for lunch. Of course, even those who are minimally knowledgeable about economics know that the primary influence on the market value of gasoline is the law of supply and demand. As the USA Today report linked above suggests, the end of summer means reduced driving needs which in turn reduce the demand for gasoline. The report also points out that gasoline use in the first eight months of this year is up by less than the amount considered typical. This reduced demand helps push down prices.

Additionally, supply is increased because "federal requirements for clean air, summer-blend gasoline end next month, making gasoline cheaper to refine and import." The Reuters story linked above reports a further reduction of demand fears with speculators and observers betting that there will not be any political conflicts with Iran in the near term that will reduce supply.

All of these facts notwithstanding, we will continue to be plagued by myths that gas prices are somehow capriciously and artificially set by businesspeople bound and determined to rob consumers of their hard-earned dollars so these self-same capitalists can line their filthy pockets. But the merest bit of Googling brings up excellent rejoinders demolishing these myths.

Economist Don Boudreaux points out, for example, that to the extent that sellers capriciously "choose" to sell gas at a certain price, buyers also "choose" to buy it at that price. Additionally, Professor Boudreaux reinforces the fact that market value for gasoline is set (again) by supply and demand, not by individual people at all:

"When hurricane Katrina destroyed much oil- and gasoline-producing capacity in the gulf south, the supply of gasoline fell. This sudden fall in supply made the market value of each gallon of gasoline rise. No one -- no flesh-and-blood person -- no oil-company executive, no bureaucrat, no consumer, no one -- chose for this rise in market value to happen.

Prices, of course, typically adjust to reflect market values. (Or perhaps we should say instead, "prices typically are adjusted to reflect market values.") Because the economist recognizes that prices serve their purpose best when they accurately reflect market values -- and because the economist recognizes also that the incentives in private-property markets generally lead participants in those markets to set prices in accordance with market values -- when the economist says "supply and demand determine prices," what he or she means is that underlying supply and demand conditions determine market values and that the incentives confronted by sellers and consumers prompt each to agree to exchange each product at a price that reflects its market value.

So while prices can be kept above or below the market values of the products in question, market values are not subject to such manipulation.

The economist understands that prices are best that reflect market values; the non-economist too often overlooks this fact."​

The end result, as Professor Boudreaux writes, is that calls for gasoline companies to charge at rates below market values really constitute calls for market failure. In the end, this does more damage to the interests of the individual consumer and the economy as a whole than any supposed greedy and capricious "price gouging" on the part of a gasoline supplier or the oil companies.

It is also worth pointing out that at no point during the recent increase in gas prices did the increase reach crisis levels. On the contrary. As this post points out, when adjusted for inflation in terms of 1979 dollars, gas prices are not even close to the level they were a little over a generation ago. And with gas prices now poised to fall dramatically as supply outstrips (anticipated) demand, the fears of "crisis" should diminish further still.

All of this goes to show that the explanations behind increases and decreases in gas prices are more complicated than conspiracy theorists about market manipulation by oil companies and gas station merchants would have you believe. To be sure, none of what I write will stop the myths from spreading. Next summer, when prices inevitably go up as demand increases, there will be claims of "price gouging" along with demands that the Federal Trade Commission (FTC) investigate whether "gouging" has occurred. In fact, a price increase -- along with demands for an FTC investigation -- could occur as soon as the next significant natural disaster. That trend has been well-established, after all -- as have FTC findings that debunk price-gouging claims (and explain price increases by "regional or local market trends"). When it comes to explaining the variance in gas prices, lots of people prefer to mythologize rather than face up to the cold, hard facts of economics.
 

Most reactions - Past 7 days

Forum List

Top