My Gas prediction this summer - $3.40

[morph999]

Anyone care to make predictions on what gas prices will be? I'm guessing $3.40. Gas went up 10 % in last two weeks or so they say on yahoo.

[deronmoped]

Actually I surprised that gas prices are not higher already. From what I have noticed, people seem to be driving even less. I'm thinking there are quite a few people out there that are out of work or are cutting back. I would bet gas prices will be flat this summer.

Deron.

[swbluto]

My reasoning says 2.90, at the high end, with a slight chance in the 3-3.30 region but I'm hoping for more like 4.

Anyways, it's interesting to track the historic price of oil. You'll notice that oil has outpaced inflation for the past decade which means that oil is truly getting more and more expensive which points to its increasing scarcity / demand combo, so it seems likely that people will be economically be forced to ween off their oil addiction in one way or another *in the long haul* or adapt to it (Possibly technological advances in improving petrol engine and vehicular efficiency). That could mean half a century or a century from now, but it seems inevitable that current consumption levels are not sustainable.

[TylerDurden]

I'm not sure how to interpret it, but diesel is cheaper than RUG for the first time in a few years (~5yrs?).

[Mr. Mik]

Oil is great, no matter what the cost is.

We must make sure we keep some in reserve so that we can use it to catapult us of the planet once we have thoroughly wrecked it!

Onwards and upwards!

[nutsandvolts]

.

[dogman]

The usual artifically induced shortage of refined product just in time for summer vacation. Usually prices peak between memorial day and fourth of july, so, I say $2.60 localy for self service regular. A week ago it was about 2 bucks, today it is $2.29, so I don't see much more than another 30 cents coming this summer. Other locations will go a buck more, like LA.

[deronmoped]

Gasoline prices have not really effected me too much for years. I might spend $300.00 a year on gas. My E-bike, mopeds and not having to drive all that far for work is nice.

I wonder what the percentage is of people that have made permanent changes in their gasoline consumption rates? From what I have seen there are way more people on bikes and a hell of a lot of Prius's out there.

Deron.

[dogman]

Even when gas got high last year, it wasn't that I couldn't afford it so much as I was mad as hell and not taking it anymore. I am broke, but that is a charge card thing that resulted from owning a hot air balloon for too many years. The gas the one ton truck that hauls the balloon wasn't near as expensive as the repairs. Keeping a big balloon crew happy and coming out to chase you and load the thing is the real expense, champagne, beer, margaritas, burritos, etc get expensive.

Anyway, the oil companies really screwed up last year for me, I'll never use as much gas as I once did in my lifetime. Even when we catch up and start flying again, I'll never drive a car to work unless I have to carry more than the bike can carry, like 1000 pounds of cement or something. Weather is a non issue here, so it's year round thumbing my nose at the gas pumps.

[swbluto]

Around here, in Seattle, it seems the average cost of gasoline has been creeping to 2.80, just 10 cents short of my prediction thus far.

[Reid Welch]

Gosh, what great, smart observations from bluto, dogman and nutsandvolts in particular.
But all of the comments are educational and helpful.
Gas here in Miami at the moment is about three bucks for 87 octane.

We shall garner NO sympathy from our European and Asian members,
not at these prices. I hope to be fully ebike and no car ere long, and then:
let it go to ten, twenty dollars a gallon, if not for the economic ruin it would bring to this
failing, fumbling giant called the "United States of America".
Our various social and financial warts are growing so large these past twenty years....
The world at large simply hates our leadership in politics and economics. Arabs....multiplying;
in full league with "american big oil". All in bed, petting one another.

Perhaps...it's all going to depend on oil prices remaining low. And three or four bucks per gallon is LOW.
Ask an Englishman what "high" means. Ugh.

[set]

I expect $4.00 a gallon. I hope it goes higher. When gas was at $5 a gallon, we saw tons of people on bikes. Also, the feelings changed when you saw a 100 lb woman driving a hummer alone. They get cut off, not let in traffic, etc.

[jag]

I'm not sure how to interpret it, but diesel is cheaper than RUG for the first time in a few years (~5yrs?).

I also noticed Diesel is 70c/l and gas 95c/l in Edmonton. Indeed, it has been several years since Diesel was cheaper than gas. Possible cause? No 1 and No 2 heating oil, which are the distillates sold as Diesel, jet fuel, heating oil etc are used in trucking, transport, industry, and heating. The first three are down due to the recession, and homes aren't heated in the summer.

Apparently consumers have not yet taken an equivalently large cut in their personal automobile driving, hence the demand for gas is higher than Diesel, causing a price difference.

Note that there is no rationale for a long term price difference, since gasoline can be produced by cracking (shortening the molecular chains) of heavier oil.

[JasonEBK]

Deleted. Thank you to all at ES.

[fechter]

It just passed $3.00 here. Funny how when the price was down to under $2.00 the oil companies were still making money. Lots of money.

[swbluto]

Yeah, in demand finite resources are a funny thing. The general idea in economics is that a commodity will generally be priced so that it's not "economically profitable" in the long run, as supply will increase to demand until price goes down to the point where its no longer profitable to increase supply. But, rare commodities seem to be the exception. As long as there's significant demand and there's appreciably finite supply, prices will generally remain such that it'll be profitable for the majority of suppliers no matter the market price. So, in essence, there's pretty much nothing society will do to stop the oil companies from handsomely profiting from society.

[needWheels]

I think history is just repeating itself with a shorter cycle.

gas-historial-2009-06.png

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[dogman]

I'm proven wrong already for my town. I just paid the peak I expected this weekend. $2.60, and not fourth of july yet, so they may ram another few increases down the throat yet. Unless the speculators go at it again.....

That chart really shows the speculative peak last summer as the dumbshits tried to fix the bad motagages with quick profits in oil. I kinda doubt 3 bucks will be seen here, but if people see oil going up and try to fix their bad morgages with quick oil profits,,,,, Oh crap, somebody get a rope.

[deardancer3]

From Forbes magazine:

The Crude Reality Of Peak Production Robert Lenzner, 06.10.09,
"If crude oil can double in value with the world in recession, just imagine what will happen when demand picks up. Prepare yourself."

"A price of $70 today is entirely supportable and will trend higher as the recession ends and the market comes to terms with the underlying story.
Even if the plan to electrify the U.S. auto fleet is achieved, it will be many years before our national use of 20 million barrels a day is meaningfully reduced. Even though we as a nation suck down almost one-fourth of global crude supply, the demand side of the equation clearly has other culprits. Did you hear that auto sales in China have exceeded the U.S. this spring?"


http://www.forbes.com/2009/06/10/crude- ... e-oil.html

[deronmoped]

So my understanding of the price increase on gas has been the speculators looking for a safe haven for their dollars.

Demand is flat, if not going down, supplies are up, storage facilities are almost at capacity.

People have money to invest and they are looking for safe places for it. The "0" has set the dollar up for a downfall, gold has been driven to record highs and people are betting that the recession will end and people will start to buy more gasoline. So the speculators are buying up the oil, driving prices higher then what the consumption market is doing. If the economy does not recover, the speculators will be caught with their pants down. But then again, it still may be a better bet then having your savings in dollars.

Everything is in turmoil right now, no one knows what will happen.

The dollar is not inflating right now because no one is spending them, they are holding onto their cash just in case, keeping prices for most stuff low. Also unemployment means not as many people have money to spend. And, the Government has not ramped up it's spending yet, the money is just sitting there, it will take them years to get the money spent.

I'm betting gasoline prices will take a big dump when demand does not come through and all the speculators options start to come due, they will realize oil might not have been such a good idea.

Deron.

[TylerDurden]

TIME: "Oil Is Plentiful, Demand Weak. Why Are Gas Prices Going Up?"

http://www.time.com/time/world/article/0,8599,1901446,00.html

[dogman]

Yeah, it wouldn't suprise me to see prices dump again next early fall. One issue a lot of people don't think about on the refiner end is that when they see themselves getting stuck with too much summer formula gas on hand, the refiners have to dump it, or get stuck with re processing it into winter formula.

Here in NM we are more familiar with this since it is one of the few places it's legal for refiners to dump summer gas in the winter. Sometimes our cars run like shit all fall since the gas can barely vaporize in cool weather. Anyway, when america stayed home last summer, the refiners saw themselves stuck with a lot of gas and had to slash wholesale gas prices by august or have to send it through the refinery again. On top of that, more crude they didn't need was arriving. So it was a perfect storm for the refinery last fall. $200 crude was still arriving just when prices fell. This kind of crazy price fluctuations is part of oil buisness history all the way back to the model T days but now it seems like all the bubbles are going in faster cycles than ever before.

[deardancer3]

TIME: "Oil Is Plentiful, Demand Weak. Why Are Gas Prices Going Up?"

http://www.time.com/time/world/article/0,8599,1901446,00.html

Some nifty information in this article, BUT, dont know if I can agree with the following:

"For those feeling the pain at the gas pumps, however, there is one piece of good news. Oil is unlikely to hit $147 a barrel again — at least not during the coming decades. The U.S. Energy Information Administration said on Wednesday that oil prices would likely rise to $110 a barrel by 2015 and $130 a barrel by 2030."

The bad news is that the above prediction does not include the inflationary impact on US $'s. And since that article was written two weeks ago, Kuwait has already announced they want $100 a barrel for their oil. Add some inflation/dollar devaluation, and we are at $115 in 2010. Given market sentiment chasing whatever it chases, and here we go again.

We in the US are not going to be able to control the price even with our decreased consuption, as other economies are using all the oil we dont use up. Many of those newer economies SUBSIDIZE the price of oil to keep their economy humming, since they spend little on defense or retirement. China is loaning BILLIONS to all Oil producing countries hurt by the 'low' oil prices. To be repaid in OIL at a future date, at approximately 14% interest.

Complicated dynamics, makes my brain hurt.

Vastly improved efficiencies for all of today's energy using U.S. products including houses, cars, all forms of transportation, public transit, appliances etc, conversion to Natural gas for fleet use, and use of plug-in Hybrids, appear to be a way to dull the pain.

Of course most of us already use plug in hybrids of a sort.

The world does not seem to realize that the significant reason for the economic meltdown was the unplanned drastic increase of petroleum energy. They still think that bad housing loans were the sole cause. along with a "goodtimes will never end" mentality, people using way too much gasolione to commute to low wage jobs.

Blaming medical bills on people getting sick too, but that already has its own thread.

Didn't wind power drive all the sea-gong exploration for over 300 years?

Anyway, since gasoline is already at $3/gal in california, 3.40 seems quite probable. Just the exact date is in question.
Labor day seems like an easy bet.

d

[dogman]

Yeah, Cal has it's own world with gas prices. Lots more demand, plus higher costs for everything, from the trucking to the real estate the pump sits on, stricter air quality laws, etc etc. 4 bucks in LA soon would be no suprise.