Today’s fuel price musings - Nope, oil still dropping

July 29th, 2008 at 03:47pm Thomas V. Bona

Another day, another $2 saving at the ol’ oil field. Oil actually went down to a seven-week low of $120 a barrel before rebounding to $122.

Where does it go from here? Some conflicting expectations in this Bloomberg article:

• Galena-based energy analyst Jim Ritterbusch says $100 a barrel is possible by the end of summer or early fall because of reduced demand.
• OPEC President Chakib Khelil said oil prices are too high and need to come down. Of course he thinks that, because if demand falls too much, producers don’t make much money. It’ll be interesting to see if OPEC takes any action, like boosting production.
• Raymond Mazzeo, director of energy derivatives at Energy Merchant Intermarket Management LLC in New York said there’s a typical oil selloff of as much as 20 % this time of year, which would get oil down to about $118 a barrell. Much below that “would be very bearish.”

Here’s the real question. If gas prices drop back into our comfort zones, do we go back to our old driving habits, raising demand and putting us back where we were?

And now the prices you really care about (Numbers courtesy of AAA’s fuelgaugereport.com):

Gasoline: Rockford dropped more than two cents this morning to $3.81 a gallon, a 40-cent drop in two weeks and the lowest since May 11. We remain eighth in the state in gas prices. The Illinois average dropped more than two cents to $4.01, a 24-cent drop in  two weeks and the lowest since late May. The national average dropped almost two cents to $3.94 today and 17 cents in two weeks. Illinois has the 14th-highest gas prices in the nation (including the District of Columbia).

Diesel: Rockford increased a fraction of a cent, remaining at $4.66 a gallon, down 11 cents in the past month. We have the sixth-highest diesel prices in the state. The state average dropped more than a cent to $4.74. The national average dropped more than a cent to $4.72. Illinois has the 22nd-highest prices in the country (including the District of Columbia).

Entry Filed under: Fuel price musings