December 16th, 2008
I asked Tom Kloza, chief oil analyst with the Oil Price Information Service, what to make of the rebound in gas prices today. Here are his thoughts:
We broke the streak of consecutive days lower, and we may see an irregular jog (north & south) for the remainder of December. January will almost certainly bring another test of recent lows - it’s the time of the year when a lot of winter gasoline is around, and that gasoline has to be sold before the transition on pipelines and terminals is made to lower vapor pressure spring gasoline.
I’ve described it before as a bit of an enema for the gasoline distribution business. There will probably be firesales on winter gasoline and prices will retest recent multi-year lows. After the firesales, prices will tend to rise into Spring and Summer.
I think the $1.25 gal level or so that we saw for some Midwestern markets earlier this month may get tested again, but I don’t see the case for $1.00 gal or lower prices (as some folks have been predicting).
First 40 days of 2009 will be a rugged environment for oil, and particularly for gasoline. The next 100 days after that almost certainly sees an uptick.
Meanwhile, it looks like OPEC will cut production by 2 million barrels a day, which some analysts have said isn’t enough to move prices up. OPEC’s goal is apparently to get oil up to $70 a barrel, but anticipation of the cuts couldn’t even get oil back above $50 today.
December 16th, 2008
Toby Jones has the solution to your storage needs - come store it in his yard! (Warning, not entirely safe for work, but extremely funny).
Check out his “commercial” for a good laugh (and sadly, no, this is not a real business):
(Kudos to the always entertaining Nick Digilio for the heads up)
December 16th, 2008
Remember how I reported yesterday that Rockford’s gas prices had fallen below much of the rest of the state? No more. By the end of the day yesterday, we’d risen to fifth in the state …and today there was a big increase into the $1.80s. It appears to be an increase throughout the region, so wholesale prices must have jumped. Unfortunately for us, it makes sense - gas prices had fallen faster than oil prices, and oil seems to have stabilized. I don’t see any reason gas prices will top $2 anytime soon, unless OPEC’s production cut is REALLY big. But I’ve been wrong before…Here are the now outdated Tuesday morning prices (courtesy of AAA’s fuelgaugereport.com):
Gasoline: Rockford rose more than four cents to $1.69 a gallon. We had the fifth-highest gas prices in the state. More significantly, we rost to a tie as the 79th highest of the nation’s 250 metro areas. The Illinois average rose almost a cent to $1.71. The national average rose a fraction of a cent to remain at $1.66. Illinois is tied with the 16th-highest gas prices in the nation, including the District of Columbia. Only Alaska and Hawaii remain above $2 a gallon.
Diesel: Rockford dropped more than a cent to $2.63 a gallon. We have the third-highest diesel prices in the state. The state average increased a cent to $2.65. The national average increased a fraction of a cent to remain at $2.54. Illinois has the 13th-highest diesel prices in the country. Only Alaska, Hawaii and New York remain above $3 a gallon (Hawaii is still above $4).
