Good News!
And Entirely Expected By Those Familiar With Economics
By Pejman Yousefzadeh Posted in Economy — Comments (16) / Email this page » / Leave a comment »
Looks like the evil and pernicious conspiracy of the oil companies is coming to an end:
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.
Of course, this could just be the laws of supply and demand at work, but I am sure that the conspiracy explanation will win out. Get ready, however, for prices to go back up next spring, as the story warns. Then there will be demands that the Federal Trade Commission investigate price gouging. The FTC will so investigate. And as usual, it will find nothing.
Incidentally, does the coming drop in gas prices mean that Republicans might benefit in the upcoming midterm elections? And will there be as much emphasis on falling prices and the political assistance such falling prices might give Republicans as there might have been if gas prices continued to increase, thus benefiting Democrats? Something to ponder . . .
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Good News! 16 Comments (0 topical, 16 editorial, 0 hidden) Post a comment »
Really it's all his fault. A lighter than expected start to the hurricane season coinciding with the end of the summer driving season? It's a Rovian conspiracy!
"The Road To Freedom Is Seldom Traveled By The Multitude" Madhouse Thought
that going into the November elections the price4 of gas goes down? Coincidence? I think not! Combined with the manipulation of the hurricane season things are just a bit too pat for my liking.
John
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Why would God invent a thing like whiskey? To keep the Irish from ruling the world of course.
Ernesto at least made some kind of landfall. The latest refinements in the Rovian Weather Manipulation Software will keep future storms offshore entirely, emit indicators of a warm winter to depress prices in the heating oil/natural gas markets, and supress precipitation for a better Christmas shopping season.
As if that's not enough, another Rovian cabal has successfully restrained the rise in interest rates.
Is there no end to his demonic brilliance?
that Bill O'Reilly will take credit for breaking up the price-fixing scheme.
Democrats on Iraq: "We don't want to win. We just want to quit."
We should not make light of the fact that high gas prices are a problem for millions of Americans.
How about a little more understanding and a little less cynicism.
Clearwater Conservative
That's way deep. Deeper than the subject deserves.
Lots of things are problems for millions of Americans.
That's what we do. Solve problems. Our own problems. And if we don't get into tinkering with the market economy (free or not, as your proclivities may lead you), the market will help us solve them.
It just won't be overnight.
Democrats on Iraq: "We don't want to win. We just want to quit."
is that if you look at the available supply of oil vs. demand over the time period that oil spiked to $70 per barrel there really was no change. What realy changed is only the perception of future supply along with rampant speculation due to excess liquidity from 1% interest rates in the U.S. and 0% interest rates in Japan. There was any easy way to weed out the excess speculation which was to require anyone trading in the oil futures market to take on physical delivery per year, and to change the margin requirements to a tiered system where suppliers and other wholesalers paid much lower margin rates vs. investors/speculators. By adding an additional risk premium/cost you would have driven out the people creating the problem.
leads me to a secondary point that as the FED raised rates (along with many global central banks) the costs to smaller speculators rose by a lot and I think many may have begun to unwind their positions in both the oil and gas markets. That combined with the end of the summer driving season and you have the edge coming off the market a bit. Now the Aug 31 deadline on Iran and the months ahead could bring unkown scenarios where gas/oil spike 25% above where it is now.
Exactly right. It drives me nuts how the oil/gas market is driven as much by "fear" at it is by real supply and demand. Supply kept up, but every time that loose cannon in Iran opens his mouth, the price of oil goes up. What a racket! I'm a salesman and I make my money by making my customers happy. If I could make more money by simply threatening my customers (which would be a helluva lot easier), I'd be a millionaire!
I hope a lot of speculators lose a lot of money. Maybe some will learn their lesson.
is to determine the price of fear, uncertainty, and the fear of uncertainty.
Democrats on Iraq: "We don't want to win. We just want to quit."
The current oil market is driven by speculation. It has already priced in a total cutoff of Iranian and Venezuelan supplies, by the look of it. Industry analysts have agreed for the last couple of years that the supply-and-demand figures indicate a price fluctuating between $35 and $45 per barrel. The rest is the speculator's bubble, which must burst sooner or later.
for me, I own stock in two oil/gas energy companies.
"Nothing works like freedom, Nothing succeeds like liberty"
Kyle
Of course gas prices are going to come down. Labor Day weekend. Summer's ending. It's been the tradition since we built the Interstates.
If the conspiracy theorists wanted something to research, they could start looking at whether Ahmadinejad's mouth is on Shell's, ExxonMobil's, et al payroll.
Disclaimer: yes, I'm an XOM and CVX shareholder. I follow Lee Raymond around with my running shoes on just in case he drops his wallet.
In fact, I believe it could make the difference between majority and minority status.