Thursday, May 28, 2009

Oil:Fundamentally, there is little reason for the recent price spikes

The economy shows only manipulated numbers of some kind of hope for the end of the year for those who emotionally or politically cannot bear the realities of mild deflation (checked those LCD screen prices lately ?) .

Prices on homes, appliances, vehicles, even some foods are falling.

Jobs continue to disappear.

But gasoline here in Maine gas has gone from just over $2 to $2.47 in less than a month despite softening of demand, and incredibly high inventories.

When supply outstrips demand, and prices rise what shall we think?

Huh, Wahabbis? Huh, A'jad, Hugo and thugs?

Oil and gasoline prices hit a new high for the year Wednesday despite expectations that OPEC will not cut production again and more bad news arrived for the nation's automakers.

Benchmark crude for July delivery rose $1 to settle at $63.45 a barrel on the New York Mercantile Exchange. Prices haven't been that high since early November.

Retail gasoline prices, which are up 19 percent in the past month, rose 0.9 cents overnight to $2.434 a gallon (64 cents a liter), according to auto club AAA, Wright Express and Oil Price Information Service. Prices are now 10 cents higher than a week ago and 38.4 cents a gallon higher than a month ago. It's also a high for the year.

Oil prices dipped below $35 a barrel as recently as March.

Many experts say that fundamentally, there is little reason for the recent price spikes and that consumers should expect related costs to come down before the summer is over.

Major U.S. industries continue to struggle and on Wednesday, a bankruptcy filing by General Motors Corp. appeared inevitable.

Jim Ritterbusch of Ritterbusch and Associates said U.S. gasoline prices could be back down to nearly $2 a gallon by the end of summer.

"Demand is going to remain weak, and we've got plenty of excess refining capacity to crank up production," he said.



1 comment:

Anonymous said...

Gas in my neck of the woods went up 10 cents a gallon over 5 days. It went from $1.84 gallon (end of April) at the least expensive local fuel station to $2.49 (last Monday) overnight (no incremental increase).

FWIW, Here's a few websites that track the best price of fuel per gallon - it would be interesting if their data could be used to track the artificial rise in prices as well.

National Gas Prices/MapquestAAA fuel cost calculatorAlternate fuel pricesgas price watchGas buddyfuel economy dot govRemember when gas was up near $5/gallon last summer? Saved this from back then:

The Working Stiff’s Asinine Gas Saving Tips
(Clip-N-Save for your fridge)
1. Move to Venezuela, Iran or Saudi Arabia – It’s cheaper to fill up your swimming pool with fuel in these countries than it is to fill up an SUV in America. Bonus savings if you are a woman with a car in Riyadh. It is still forbidden for you to drive there at all.
2. Lay Off on the Brakes – Only use your brakes when absolutely necessary. Slowing down is SO overrated. Reducing wear and tear on the wheel drums will save money in repairs – money that can be pumped back into the pump.
3. Fill Up More Often – People are whining that it takes two swipes of the credit card to fill a tank with more than $50. If you refill at the halfway point, each gas station visit will only cost you $25.
4. Show Up To Work Late – Less traffic congestion means better mileage. If your boss complains, give him the director’s cut of the Al Gore documentary.
5. Play Russian Credit Card Roulette – Several oil companies are offering 20 or 25 cent discounts per gallon for the first few months you use their credit cards. If you’re disciplined, you can double your Clinton-McCain bonus this summer. If you are a day late with your check, however, one $39 late fee will wipe out three months of gains.
6. Give up Gas Station Candy Bars – Some places want 95 cents for a regular-size Snickers. You can’t blame the Saudis for out-of-control nougat prices, but you can reallocate your snack budget for fuel.
Are you sick of being told over and over again that if we just drive 55 and check the air pressure in our tires, we’ll be okay during the oil crisis? What are your asinine gas saving tips?
Send them to and I’ll share the most ridiculous/clever ones with the Working Stiff world.