The gas price rollercoaster finally descends

In the previous update, I passed on WXYZ's forecast that gas prices would drop during September. It took a while for that prediction to come true, but it finally did.

The corner station's price held steady at $3.99 for a couple of weeks before inching down to $3.98 in the middle of the month, when it remained until about a week ago, when it went down to $3.95. That's not falling like a parachute, that's gliding like a sailplane. Only this week did the price jump out and open its parachute. By Tuesday, the price dropped again to $3.92, which is where it was Wednesday morning when I decided not to fuel up my car, but wait until afternoon. That ended up being a smart decision, as the price fell to $3.85. I filled my tank up only halfway, as I suspected the price would fall even more before I needed to gas up again. That prediction came true even sooner than I expected, as the corner station was selling regular for $3.79 yesterday.

As for whether the price will continue to trend down or reverse course, normally it would continue to fall because summer driving season is over and demand for gas will decrease. These are not normal times. Here's what Bloomberg News had to say about oil prices yesterday.

Oil Recovers From 8-Week Low After U.S. Inventories Drop

Oil rebounded from the lowest close in almost two months and extended gains on speculation that China will take measures to stimulate its economy.
...
Oil for November delivery gained as much as $1.46 to $91.44 a barrel in electronic trading on the New York Mercantile Exchange and was at $91.17 at 1:35 p.m. London time. The contract yesterday fell $1.39 to $89.98, the lowest close since Aug. 2. Prices are down 5.5 percent this month and up 7.3 percent this quarter.

Brent oil for November settlement rose $1.43, or 1.3 percent, to $111.47 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $20.39 after closing yesterday at $20.06, the widest since Aug. 16.

According to the calculator at Econobrowser, a price of $111.47 for Brent crude means that the average price of gas in the U.S. should be $3.62. However, Econobrowser shows the latest price to be $112.37, meaning a price of $3.65. That's still lower than it is now, so expect prices at the pump to sink just a little more, but not much, as the fear premium over Iran is still in effect and U.S. gasoline inventories are down.

Gasoline inventories dropped 481,000 barrels last week, the Energy Department said. They were projected to gain 500,000 barrels, according to the median estimate of 11 analysts in the survey. Distillate supplies, a category that includes heating oil and diesel, declined 482,000 barrels compared with a forecast 500,000 barrel increase in the survey.

That's the bad news. Here's the good news.

U.S. oil production surged last week to the highest level since January 1997 after output rebounded from August shutdowns in the Gulf of Mexico because of Hurricane Isaac. Output rose by 3.7 percent to 6.509 million barrels a day in the week ended Sept. 21, the Energy Department said.

The nation met 83 percent of its energy needs in the first six months of the year, department data show. Imports have declined 3.2 percent from the same period a year earlier.

Everyone listen to Professor Farnsworth.