Wednesday, July 10, 2013

Crude prices reflected at pump after slight delay

I ended the previous report by predicting higher prices.
The local station raised its price today to $3.48, exactly what the three stations down the street were selling it for Wednesday as well.  Not only is it a fair price based on that of Brent crude, but it's also right at the national average and below the prices being charged last year at this time.
Again, I'd post Professor Farnsworth, except I'm sure the price will continue to go up for the next week or so.  Maybe I should fill up my car.
At first, prices didn't increase.  They actually dropped slightly to $3.47 over the weekend, two pennies less than last year at this time.  That was happening elsewhere, such as Cincinnati, where WCPO asked if it was cheap gas Monday?

Want to know where to fill up? Well, here is where gas prices are falling.
It was still like that Monday morning, which prompted me to use it as an example against fuel inflation at Kunstler's blog.
CPI is low. It’s even true with energy. I haven’t checked the national averages, but in my little corner of metro Detroit gas prices are actually a few cents lower than they were at this time last year. That’s despite the unrest in Egypt.
I spoke too soon.  That evening, the corner station had jacked the price of regular up to $3.69.  It was still there Tuesday morning, while the three stations down the street held their prices steady at $3.47.  I expected the price at the corner station to drop, but this evening it remained at $3.69.  That's enough to make me check the price of Brent crude, which Reuters via CNBC reported Crude Prices Surge on Falling Inventories during Tuesday's trading.
Crude oil prices on both sides of the Atlantic ended with moderate gains on Tuesday, supported by a stock market advance and worries over Egypt. But gains were limited by a strong U.S. dollar and supplies were brought back online.
Brent oil futures ended the day 38 cents higher at $107.81 per barrel. U.S. crude oil futures settled 39 cents higher at $103.53, after trading as low as $102.31.

Fears that violence in Egypt could ignite conflict in the broader Middle East, which pumps a third of the world's oil, continued to lend support to oil prices.

While oil prices had shaved some gains, Brent was still hovering at a three-month high and U.S. crude at a 14-month high.

"The majority of last week's near $5 gain is on the back of geopolitical risk premium," said Gene McGillian, analyst with Tradition Energy in Stamford, Connecticut.
Ah, yes, the fear premium.  I'm glad I haven't seen that for a year.  Here's to hoping that goes away now that the government has changed.

Meanwhile, Brent is at $107.81.  According to the calculator at Econobrowser, the price at the pump should be $3.53, almost exactly where the national average is now.  Prices will go up, but the $3.69 at the corner station is too high.  I still expect it to drop by the end of the week.

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