Sunday, July 12, 2015

Gas and oil fall for Ruby's July driving update

Two events occurred within minutes of each other on Friday: I fueled up in my old neighborhood and Ruby rolled over 92,000 miles. Therefore, it's time for a combined update on both gas prices and my miles driven, just as I did for Dez in June. While oil and gas have more general interest, it's my blog, so I'll start with the driving update.|

|Ruby passed 91,000 miles on May 12th, 59 days before last Friday. That's one day less than it took to drive the previous 1000 miles. Consequently, my miles per day increased from 16.67 to 16.95 and miles per standard month increased from 508.3 to 516.95. I drove more despite my teaching only at the closer of the two campuses during May through August and going to fewer meetings at other worksites. This confirms what I expected would happen when I moved; my wife and I are driving more in our more car-dependent neighborhood. It also shows that my wife and I are contributing to all Americans driving more.

Follow over the jump for the gas and oil price update.

When I last drove through my old neighborhood two weeks ago, the lowest-price station was selling regular for $2.89 and the next lowest for $2.93; I didn't get the price for the corner station, which is usually the most expensive. On Friday, all stations had lowered their prices. The corner station was selling regular for $2.86 and both the stations down the street offered the lowest grade at $2.79. That was the best price I had seen in four weeks, when the cheap stations were selling for $2.76. As I wrote in the opening paragraph, I filled up Ruby. Maybe I shouldn't have been so eager, as Gas Buddy is now showing both stations selling regular for $2.76, exactly where they were a month ago. On the other hand, the stations in my new neighborhood haven't started lowering their prices yet.

That shouldn't take long, as Gas Buddy shows the Detroit average slipping from $2.97 on July 6th to $2.93 today. The stations in my old neighborhood are very underpriced by that measure and shouldn't be droping their prices soon. On the other hand, the station on the way home from work, which dropped its price from $2.99 to $2.95 on Thursday, should feel pressure to lower its price even more, pulling the other outlets nearby with it. That will eventually cascade into my new neighborhood.

More than just the normal seasonal decline as summer driving season winds down will be contributing to lower prices at the pump. All the serious events I mentioned in Shark Week drink and drinking games--the No vote on the Greek referendum, the Shanghai stock market crashing, and the negociations over Iran's nuclear program--are already contributing factors in lowering gas prices. On top of all those, Reuters reports North Dakota oil output jumps in May despite low prices. Supply is up and demand is down, so prices are falling.

Oil-Price.Net shows this trend in full force, listing the Friday closes for WTI, Brent, and RBOB at $52.74, $58.73, and $2.02, respectively. Those futures are well below both the $59.63, $63.26, and $2.05 that they were at two weeks ago and the $60.77, $65.11, and $2.13 they were at a month ago. RBOB hasn't been this cheap since the end of May, and crude oil hasn't been this low since the middle of April. The news makes me agree with New Deal Democrat.
The price of gas and oil bottomed at the end of January. The 2010-2013 Oil choke collar has been broken. Gas prices rose $0.80 since then, before backing off in the last three weeks. If they follow past seasonal patterns, their summer peak will be roughly $1 above their winter low, but it appears increasingly likely that we have already seen the peak.
Because of the lower gas prices and economic expansion, Gas consumption is up in the U.S.--the highest since 2007--as a result, even if global demand is down. This is pleasing a lot of American drivers.
Happy Motoring!

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