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-   -   Gas prices at 1.15 maybe ??????? (http://www.cruisemates.com/forum/chit-chat-cruisers/320846-gas-prices-1-15-maybe.html)

ousoonerfaninbatonrouge September 19th, 2006 07:53 PM

Gas prices at 1.15 maybe ???????
 
Remember when you paid $1.15 a gallon for gasoline?

You could be paying it again. Maybe not this year, but perhaps in the next few years.

Sure, oil experts say there's little excess refining capacity. Oil reserves are stretched. Oil consumption is soaring in China and India.

But things are starting to change. Drivers are changing their habits. Global tensions are easing, and more supply is on its way.

Crude oil zoomed to nearly $80 a barrel this summer as traders fretted about waning supplies and two big potential problems: tensions over Iran's nuclear research program and Katrina-style hurricanes threatening oil production in the Gulf of Mexico.

To keep prices moving ever higher, traders needed -- and frequently got -- a steady stream of bad news. "It was like you needed a fifth of booze a day to keep the buzz going," says Peter Beutel of Cameron Hanover, a Connecticut energy consulting firm.

But prices began falling a month ago when it became clear hurricane season wouldn't be anything like last year. Oil traders have come to sense, too, that all the saber rattling over Iran was dissipating. "We got everyone leaning the wrong way," Beutel said.

(In fact, a big hedge fund was forced to tell its investors this week that it would be taking a huge loss because it bet the wrong way on natural gas.)

Result: The spot price of crude oil closed at $63.23 a barrel in New York on Thursday, down nearly 18% from a peak of $77.03 a barrel on July 14. Crude rallied slightly on Friday and Monday.

AAA says the national average price of gasoline is $2.495 a gallon, down nearly 17% from peaks in August, and there are some communities in Missouri where it has fallen under $2 a gallon. Prices should moderate further in the coming weeks because the summer driving season is over.

The oil price break has forced everyone in the energy business to take a hard look at how much lower prices could fall. A lot lower, says Philip Verleger, a noted energy consultant who was a lone voice several years ago in warning that oil prices would soar. Indeed, he told McClatchy Newspapers last week, "All the hurricane flags are flying" in oil markets.

If everything falls into place, crude could drop perhaps even to $15 a barrel, Verleger says. And then, he says, you would see gasoline at $1.15. Here's how that could occur.

Oil and gasoline inventories continue to grow. They've been building up all over the world as users and refiners have scrambled to ensure enough supply in case, say, the Strait of Hormuz in the Persian Gulf is shut down. Tankers from Iran, Saudi Arabia, Kuwait, Iraq and other Gulf oil producing countries must pass through the strait to bring crude oil to the rest of the world.

The weather cooperates. On top of a hurricane with few threats to the oil and gas fields in the Gulf of Mexico, weather cooperation means a warm winter like the winter of 2005-2006. That would drop demand for heating oil, a key heating source especially on the East Coast and in Europe. And that would create excess supplies of crude that refiners could use to make gasoline.

Tensions in the Middle East continue to ease. This assumes conflicts between Israel and Hezbollah in Lebanon tail off and that Iran and the rest of the world come to an agreement over Iran's nuclear program. (Admittedly, the latter is a reason why the scenario could fall apart.)

Drivers take the bus. There is anecdotal evidence that U.S. drivers are finding other ways to get around with gas prices above $3. The big question is if they will climb back behind the wheel as prices drop.

ready2gonow September 19th, 2006 07:58 PM

$1.15 would be nice, however, there sure are some big "ifs" in there.

Donna September 19th, 2006 08:11 PM

We can only hope, have noticed the price has come down recently, lets hope it continues.

Marc September 19th, 2006 08:12 PM

sooner, where did you copy the report from? Probably want to give them credit.

JeanS September 20th, 2006 06:55 AM

Dang, when I started driving, gas was only 26 cents a gallon! And that INCLUDED a windshield washing, tire filling and fluid check!!

Guess those days are LONG gone! :twisted:

JamesRT September 20th, 2006 07:36 AM

Gasoline is $1.95 a gallon here in our part of Missouri

Mike M September 20th, 2006 07:43 AM

Gas is free at my place but I don't know if the terrible taste in my mouth from the siphon hose is worth it. :wink: LOL

Note: If you do come across an article or text make sure it doesn't have a copyright or post the link to it. Cruisemates can get in trouble for having copyrighted material on the boards even if a reader posts it. :cry:

Take care,
Mike

sue September 20th, 2006 08:15 AM

The reason why gas prices have been falling is very simple: Elections are coming up. This is the biggest scam ever and the american people don't see it. I find it very very sad.

JeanS September 20th, 2006 08:29 AM

Of course it's all a scam, Sue, but what the &#*()#@ can we do about it???

When prices change at least twice in one day, you know something ridiculous is up!! I thought gouging was illlegal, but I guess it's alive and well in the good ol' US of A.....

Desdemona01 September 20th, 2006 10:32 AM

Quote:

Originally Posted by sue
The reason why gas prices have been falling is very simple: Elections are coming up. This is the biggest scam ever and the american people don't see it. I find it very very sad.

You're absolutely right! Be prepared to see them start creeping up again on Nov. 8th

Rev22:17 September 20th, 2006 01:27 PM

sue,

The reason why gas prices have been falling is very simple: Elections are coming up. This is the biggest scam ever and the american people don't see it. I find it very very sad.

That's an interesting line of reasoning, but let's apply a sanity check to it. There's no need for fancy economics here; just basic application of the law of supply and demand that governs prices in a capitalist economy.

>> 1. It's quite easy for wealthy people who want to drive up the price of oil to do so, at least in the short term. They just start buying "futures" contracts on next year's production, in competition with oil refineries, and thus do drive up the prices in the short term by increasing demand while supply is static. The miscreants often also fuel speculation on the part of naive investors, amplifying the effect and the magnitude of the bubble that forms. Of course the miscreants and the speculators who are driving up the price usually do not have facilities where they can store the crude (or other commodity) when it becomes deliverable under the futures contracts. Thus, they have to sell their futures before the delivery date. The aggregate sales of such large quantities create a glut, causing price to plummet, so the bubble bursts and miscrants and speculators take a royal bath.

>> 2. To drive the price of oil downward suddenly, one must have enough oil to sell to create a glut. It would be extremely difficult for miscrants to accumulate sufficient quantities to manipulate the market downward that drastically.

It's far more likely that the manipulatoin of the oil market is the work of very wealthy people on the political radical left (folks like George Soros, Ted Turner, and othes certainly could afford it) thatn by people on the political right. Fortunately, the scheme seems to have failed and the bubble burst well before the November election.

Norm.

Rev22:17 September 20th, 2006 01:31 PM

ousoonerfaninbatonrouge.

Remember when you paid $1.15 a gallon for gasoline?

You could be paying it again. Maybe not this year, but perhaps in the next few years.


Realistically, I'm guseeing that we'll see gasoline prices solidly below $2.00 per gallon by the election in November, and that $1.50 per gallon by that time is not out of the question, throughout most o the country.

Norm.

JamesRT September 20th, 2006 02:17 PM

Norm,Well stated!

Desdemona01 September 20th, 2006 02:40 PM

Quote:

Originally Posted by Rev22:17
[
It's far more likely that the manipulatoin of the oil market is the work of very wealthy people on the political radical left (folks like George Soros, Ted Turner, and othes certainly could afford it) thatn by people on the political right. Fortunately, the scheme seems to have failed and the bubble burst well before the November election.

Norm.

Of course--it's the left's fault! That's why the retiring CEO of Exxon received a 1/2 billion $$ package, and ALL of the oil companies are recording record breaking profits. I hope they all show their appreciation to Mr. Soros and Mr. Turner. I honestly wish I could live in your world. There has been a direct correlation between the poll ratings and the gas prices for several months.

Fruitcake September 20th, 2006 03:20 PM

Look at the numbers: Americans list high gasoline prices as one of their top worries.
The current administration has its aproval numbers in the Dumpster.

The gas prices magically begin to go down ... conveniently before mid-term elections. I am betting they continue to get lower and lower.
And the current administration sees its approval numbers begin to rise.

Gotta do what it takes to preserve the status quo in the House.
You've done a heck of a job, W.

This type of manipulation has the hallmark of the righties.
Now all we need is a bogus terror scare or two.

sue September 20th, 2006 03:36 PM

Fruitcake, didn't we already have a few of those terror scares? :cry: :cry: :cry: :roll: :roll: :roll:

Fruitcake September 20th, 2006 03:52 PM

Yep ... all with questionable timing.
Almost as if they were intended to distract.

crabbie1 September 20th, 2006 04:45 PM

Gas prices at $1.15 maybe ???????
 
Fruitcake, only the righties???????????

Doesn't make any difference who is "in office"in the Whitehouse. When summer begins, prices per gallon have always gone up. With the end of "Summer driving" prices go down.

crabbie1

Marc September 20th, 2006 05:42 PM

Here is the link to the complete article:

http://articles.moneycentral.msn.com....aspx?GT1=8579

It is on the MSN Money site.

JeanS September 20th, 2006 05:43 PM

James, $1.95 per gallon?? Really?? If we had that here in California (the cheapest I've seen is $2.77!!) there would be lines around the block!!!

Send me some, will you??? :roll:

Tide Pride September 20th, 2006 05:48 PM

I don't subscribe to the conspiracy theories floating around regarding the drop in gas prices. This would hold true regardless of which party held power or the White House.
Rev 22:17 hit the nail right on the head in his analysis of the oil futures market and the surplus oil in the market place and the drop in demand coupled with no storm interruption of supply.
If you study the futures market this is where the price we pay is played out and enormous gambles are made and potentially huge profits and losses can be made and suffered.
Just MHO.

Regards,
Ben

JamesRT September 20th, 2006 06:56 PM

JeanS $1.85 this afternoon.Diesel $2.23 a gallon.Wish I could send you a truckload.

ready2gonow September 20th, 2006 07:06 PM

O.K. someone explain to me, please why diesel is higher than regular gasoline when it is so much cheaper to refine. Is it affected by the "futures" again?

JamesRT September 20th, 2006 07:28 PM

readytogonow,They told me it was because the new diesel fuel is lower in sulphur now due to the new regulations.

Tide Pride September 20th, 2006 07:33 PM

I also read where it takes more oil to produce a gallon of diesel than a gallon of gasoline...

Regards,
Ben

Russell in MD September 20th, 2006 09:10 PM

Quote:

Originally Posted by Desdemona01
Quote:

Originally Posted by Rev22:17
[
It's far more likely that the manipulatoin of the oil market is the work of very wealthy people on the political radical left (folks like George Soros, Ted Turner, and othes certainly could afford it) thatn by people on the political right. Fortunately, the scheme seems to have failed and the bubble burst well before the November election.

Norm.

Of course--it's the left's fault! That's why the retiring CEO of Exxon received a 1/2 billion $$ package, and ALL of the oil companies are recording record breaking profits. I hope they all show their appreciation to Mr. Soros and Mr. Turner. I honestly wish I could live in your world. There has been a direct correlation between the poll ratings and the gas prices for several months.

Last time I checked all the “Big Oil" types are publicly traded companies.

If you want a piece of the action all you have to do is pick up the phone and call your broker.

Norm hit it.

R

Rev22:17 September 20th, 2006 09:57 PM

Desdemona01,

That's why the retiring CEO of Exxon received a 1/2 billion $$ package, and ALL of the oil companies are recording record breaking profits.

Again, it's time for a reality check. The money that's bid for crude goes to the owners of the oil field (yes, that means countries like Iran and Venezuela...), with the big oil ompanies getting a fixed amount for extracting the oil from teh ground. In addition, competitive pressures in the industry are strong enough so there's little room for refiners and distributors to increase their mark-ups. If you look at the actual numbers, you'll discover that the principal contributors to the increase in profits at the major oil companies are (1) increases in volume actually sold, (2) improved efficiency in the refining process, and (3) diversification into other product lines not necessarily produced from petroleum.

Norm.

Rev22:17 September 20th, 2006 10:01 PM

ready2gonow,

O.K. someone explain to me, please why diesel is higher than regular gasoline when it is so much cheaper to refine. Is it affected by the "futures" again?

I don't know the origin of the myth that diesel fuel is cheaper to refine, but it is not true. In fact, diesel fuel is refined to much higher standards than gasoline at considerably greater cost. The unit cost of distribution is also higher due to the much smaller volume of sales.

Norm.

ready2gonow September 21st, 2006 07:51 AM

Thank you, Norm. I appreciate the explanation.

Desdemona01 September 21st, 2006 09:09 AM

rev22--I don't appreciate you using the term "reality check" in reference to your opinion on things. Your opinion holds no sway over me and your *facts* are your opinion. I've seen you proven wrong on other things before. One person's reality is another person's fantasy and clearly we will continue to disagree. My *opinion* is also rooted in data and facts but I don't presume to be the only voice of authority here, nor should you.


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