Sandy bumps the gas price rollercoaster

Since the previous update the first week of this month, gas prices here bumped up, then down, although they haven't returned to where they started November. Calculated Risk took a snapshot of the situation in Gasoline Prices down 30 cents over last month, where Bill McBride quoted the Sacramento Bee.

"Gas prices at the end of October were dropping at the fastest speeds in nearly four years," said Beth Mosher, director of public affairs for AAA Chicago. "If this trend continues, motorists could be paying less than last year to fill up their cars."

Assuming a smooth restart to production following Hurricane Sandy, AAA predicts that gas prices will continue to drop through the end of the year. ... The Northeast is a significant gasoline consumer and not a major producer, so it is expected that the decline in demand from people not driving will outweigh any disruption in gasoline production.

That was on November 5th, when the corner station was selling gas at $3.37. Then came Election Day, when the price jumped up to $3.45. Shortly after that, it bounced again to $3.49. The stations down the street bracketed the price, selling unleaded regular for anywhere from $3.45 to $3.55. Shortly after that, all of them including the one at the corner, returned to $3.45. Last week, all of their prices shot up to 3.59. The Detroit Free Press reported that rise in Gas prices in Michigan up 6 cents from last week. The average price in the state last Sunday was $3.47. The good news is that was a penny less that it was a year ago. Hey, year-over-year, gas price is down!

That passed, and gas is now selling between $3.45 and $3.49 again. That was part of a nationwide trend, as Average retail gas prices fall seven cents on trend: survey. Here's the relevant excerpt from the Reuters story.

The average price for a gallon of regular gasoline in the United States fell during the past two weeks as demand took a hit from supply disruption after Hurricane Sandy and the loss of daylight savings time, according to a widely followed survey released on Sunday.
...
"U.S. crude oil prices actually rose a little in the past two weeks but the weak gasoline demand has helped pull down prices and contributed to the down trend (in gasoline prices)," Lundberg said.

"Unless we have a significant reason for crude oil prices to rise, such as escalating conflicts in the Middle East, I do expect retail gasoline prices to continue to edge down in the near future," she added.

About those "significant reasons," a Reuters article from last Friday read Oil rises on Middle East conflict, Gulf of Mexico fire.

Oil rose on Friday as a fire on a Gulf of Mexico platform and the escalating conflict between Israel and Palestinians stoked supply concerns.

News of the fire at a Black Elk platform in morning U.S. activity helped crude extend early gains, although the Coast Guard later said it had not been producing oil at the time of the fire, which helped calm market jitters. Two workers were missing and four others injured by the fire.
...
The market was already on edge after Iraq's envoy to the Arab League said in Cairo it would invite Arab states to use oil as a weapon to press for a halt to Israeli attacks on Gaza. He later appeared to withdraw the remark, saying Baghdad would make no particular proposal to a League meeting.
The conflict has gripped oil markets, which have been looking for any signs it could impact Middle East supplies.
...
Trading was volatile with the U.S. December crude contract expiring at the end of Friday's session, following the Brent December contract's expiry the day before.

Expiring U.S. December crude traded up $1.22 to settle at $86.67 a barrel. The more heavily traded U.S. January crude gained $1.05 to settle at $86.92 a barrel. Front-month January Brent crude rose 94 cents to settle at $108.95 a barrel.

According to the gas price calculator at Econobrowser, a Brent price of $108.95/barrel translates to a price at the pump of $3.56. In that case, $3.45-$3.49 looks pretty good. Time for Professor Farnsworth.