Today’s fuel price musings - Inching down, as the rest of the country inches up

Add comment June 10th, 2009

Gasoline prices are down a few more cents around Rockford, and we’re “down” to 23rd in the nation.

Oil’s recent push upward is sending gas prices with it. But AAA’s analyst doesn’t think that’ll last. It’s next year we have to worry about :

However, most analysts still agree market fundamentals generally do not support dramatically higher prices. Demand remains low and near-record supplies are still available to meet any minor growth in oil and gasoline needs. In fact, so much oil is available some traders have taken to putting excess supply on tankers for storage. The global and domestic economies, despite occasional glimmers of a turnaround, remain mired in recessionary patterns. In the US, the unemployment rate hit 9.4 percent in May, a 25-year high which further reinforces the belief of many investors that the economy has not created sufficient demand to justify the higher prices.

The recent climb in oil prices, absent sound increases in demand, has many investors thinking that something of an “oil bubble” exists in the market. However, when exactly the market corrects itself and to what degree are both unknown.
Most investors expect oil prices to rise as the economy slowly recovers later this year and into 2010. OPEC and others have suggested that oil prices will remain in the $65-$75 per barrel range for most of 2009. When the economy does begin picking up strength some investors are concerned that the oil industry may find difficulty in meeting stronger demand because their current slowed pace of operation. The result would likely be an oil and gasoline price spike.

Here are the prices from this morning (courtesy of AAA’s fuelgaugereport.com):

Gasoline: Rockford dropped a cent to $2.92 a gallon today. We’re second in the state and 23rd of the nation’s 280 metro areas - much of California has passed up. Chicago remains ahead of us at $2.93. The Illinois average stayed at $2.86 a gallon. The national average rose a cent to $2.63 a gallon. Illinois has the fourth-highest gas prices in the nation, including the District of Columbia

Diesel: Rockford remained at $2.59 a gallon. We have the third-highest diesel prices in the state. The state average rose almost a cent to $2.61. The national average rose a cent to $2.53. Illinois has the 10th-highest diesel prices in the country, including the District of Columbia