Gasoline prices could keep falling

http://www.usatoday.com/money/industries/energy/2006-08-29-gas-price-usat_x.htm

By James R. Healey, USA TODAY
Gasoline prices are falling fast and could keep dropping for months.

"The only place they have to go is down," says Fred Rozell, gasoline analyst at the Oil Price Information Service (OPIS). "We'll be closer to $2 than $3 come Thanksgiving."

Travel organization AAA foresees prices 10 cents a gallon lower by the end of next week. It reported a nationwide average of $2.84 Tuesday, the lowest since April 20.

PRICE HAPPY: OPEC president says $70 a barrel oil price is satisfactory

It's good news for consumers and the economy. Continued lower prices "may act like a tax cut" and stimulate spending, says Richard DeKaser, chief economist at National City in Cleveland. He calculates that higher energy prices the first six months cut growth of consumer spending 1 percentage point.

The U.S. average for a gallon of regular peaked this year at $3.036 Aug. 10, according to OPIS/AAA daily surveys. That's slightly under the high of $3.057 Sept. 5, a week after Hurricane Katrina battered petroleum production in the Gulf of Mexico and caused fears of fuel shortages.

OPIS' Rozell figures prices will jump again next spring.

Behind the current drop:

•The end of summer. Driving slows, reducing demand for gasoline. And federal requirements for clean air, summer-blend gasoline end next month, making gasoline cheaper to refine and import.

•Sluggish demand. Gasoline use in the first eight months of the year is up 1% vs. a year ago, less than the 1.5% to 2% growth that's typical, says Michael Morris, analyst at the U.S. Energy Information Administration. "Wholesalers are trying to get rid of product. The growth in demand for gasoline has really tapered off," he says.

Wholesale prices are falling faster than retail gasoline prices, meaning stations are making more money than when prices were $3. Wholesale prices Tuesday ranged from $1.77 to $1.79 a gallon, well below the $2-plus prices typical until recently.

•Petroleum traders, worried that prices are too high to last, are selling their holdings. That pushes prices down. They also believe hurricanes won't disrupt Gulf of Mexico production, OPIS senior analyst Tom Kloza says.

Crude oil, which accounts for roughly half the price of gasoline, ended New York trading Tuesday down 90 cents, at $69.71 a barrel. That's the first time it's closed at less than $70 since May 4.

Contributing: Chris Woodyard, Barbara Hagenbaugh

 

Thats weird, I work at a gas station and the last week or so the owner has LOST money because of the price drops. He usually makes 3 cents a gallon IF the person buying doesnt use a credit card. If they use a card he LOSES 18 cents plus around 6 cents a gallon.

The people making the money are the peopel selling the gas to the stations. Our customers piss me off daily. They complain about the prices and say my boss is ripping them off... if they only knew...

It also surprises me how many people dont know that when you use a credit card somewhere, that place PAYS a fee...

 

Gas at gas stations is just a loss leader. If stations didn't sell gas, no one would buy their overpriced drinks, foods, lottery tickets etc. They make a killing on all that.

 

I hope they don't, I just spent a month working on a site that depends on high gas prices to go higher...

 

I wouldn't worry too much about gas prices falling too far. Soon after the next hurricane forms the prices will go back up to their artificially high levels.

 

lmao...not laughing at your comment...I like your white fro.

 

Gas is down to $2.29 a gallon where I work.
Last week we were at $2.43 and the rest of the town was at $2.35 or less. My boss called to order gas and was told his price would be $2.37 a gallon BEFORE he added his 3 cents markup. He told them that was more than the places around him and they said they couldnt go lower.

My boss told them to keep the gas he wouldnt pay that price. We was without gas from 9:30 am the next day until 10pm that night. SO just over 12 hours with no gas. Piss all of our customers off because they couldnt understand a gas station being without gas... I explained what happened to the ones that asked, but many were still mad that he would stand up to "big oil". The biggest complainers were the same people that b*tch and moan daily about the high prices.

Well the only reason we got gas was because they caved in and gave my boss a price that would put him below what the other stations around us were at.

 

The world market price fell over 40% in a single day over a week ago, just in one day and keeps that level since. It will take up to 3 months before the consumers will benefit from that then since some contracts are still running on the higher price.

Yes, and the good point is: overall demand is going down since many countries are planning and some partly exercising alternatives allready.

 

you mean a 99 cent Snickers over priced???