Friday, June 22, 2012

Gas price rollercoaster returns to this month's low

In The gas price rollercoaster starts up again, I chronicled how the local gas price dropped briefly from $3.65 to $3.55, then shot up to $3.79 while global oil prices dropped. Based on the advice of the GVSU economist in a WOOD-TV video, I then predicted that the price would drop. Events have proved me right.

By the end of last week, the price slid to $3.75 at the corner station. Confident that the price would continue to fall, I bought only half a tank. A few days later, it fell to $3.69. A couple days ago, the price dropped to $3.59. That was lower than where the ride had started, so I topped off the tank. I probably should have waited, as the price today fell again to $3.55, this month's low. Will that remain the low price for the month? Probably not, based on the price of oil falling even more this week, as Reuters reports.
U.S. August crude gained $1.48 to $79.25. It slid as low as $77.56, the lowest since October 5, 2011, after dropping 4 percent on Thursday. The contract was on course to post a loss of about 6 percent for the week.
U.S. crude has dropped $33 from its 2012 of $110.55 also struck in March.
That's the first time West Texas Intermediate (WTI) has been below $80 all year. What about Brent Crude? After all, for more than a year, gasoline prices have been tracking Brent instead of WTI. Reuters again.
Brent oil futures rose above $91 a barrel on Friday, rebounding from an 18-month low, but remained on course for a weekly decline of about 7 percent as investors worried about signs of slowing global economic growth.

Oil futures regained some composure after falling around 4 percent on Thursday as oversold conditions prompted some investors to return. However, recent weak economic data and currently abundant supplies have kept investors cautious in putting in higher bets, traders said.
In London, August Brent crude was up $1.81 at $91.04 by 12:40 p.m. EDT. It rebounded from a session low of $88.49, the lowest since December 2010.
At the day's lows, Brent has fallen nearly $40 from the year's high of $128.40 hit in March.
Looks like the price of gas will continue to fall. As for how far, my wife said she'd like gas around $3.00/gallon. I told her she might get her wish sometime this fall. She responded that she hoped so and that low gas prices would be good for Obama's re-election. All things being equal, she'd be right. I have my doubts that all things really are equal (these are not business as usual times), but I can hope. Just the same, as I'm fond of saying, this is "Good news, everyone," and it's not a suppository.

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