Today’s fuel price musings - As prices drop a bit, Rockford remains below most of state

6 comments November 3rd, 2009

Gas prices started to ebb a bit over the weekend, after a weird autumn uptick (then again, what’s normal economically this year?). Had a reader chide me for my story a few weeks ago where analysts predicted prices were going to fall, but then they rose. Well, predicting gas prices canoften be a fool’s game. So let’s try again!

Here’s AAA’s take, from manager of regulatory affairs Andrew Delmege:

The ongoing plight of the dollar has been, and will continue to be in the short term, the driving factor behind any major movement in market oil prices. Dollar weakness, which can be loosely defined to mean when the US dollar loses purchasing power or value against a competitor currency like the euro or a basket of currencies, can be caused by a myriad of factors. The major reasons for the current spate of dollar weakness include rapid growth in the national debt, the questionable health of the US financial system and the lingering effects of the recent recession. As the dollar weakens, oil and other commodities become cheaper for foreign investors to buy, which then drives up the market price. Also, oil is a physical good that can be used by investors to protect their portfolios from declines in the dollar’s value.Perhaps what is most surprising to consumers and analysts alike is how crude oil prices have managed to defy traditional supply and demand fundamentals. If one were to take the plight of the US dollar out of the oil price equation entirely, it would be difficult to justify logically why oil prices now hover above $77 per barrel. Huge existing oil supplies and demand for oil and gasoline that is only now slightly improving would likely have been enough to keep prices in the $65-$75 range absent the continued struggles of the dollar.

Here’s the good news, locally. Rockford’s prices are in the middle of the road nationally - 137th of the country’s 280 metro areas. Our prices are lower than most of the metro areas in Illinois, and all of Indiana and Wisconsin. Weird. Just like I can’t explain why we’re well above average, I can’t explain this

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

Gasoline: Rockford dropped two cents to $2.69 a gallon today, up almost 26 cents in the past month. We’re ninth in the state. The Illinois average dropped a cent to $2.80 a gallon, up 33 cents in the past month. The national average dropped less than a cent to remain at $2.69 a gallon, up almost 23 cents in the past month. Illinois has the seventh-highest gas prices in the nation.

Diesel: Rockford remained at  $2.86 a gallon, up 23 cents in the past month. We have the third-highest diesel prices in the state. The state average dropped a cent to $2.89, a  23-cent increase in the past month. The national average dropped slightly to $2.83, an almost a 21-cent increase in the past month. Illinois has the 14th-highest diesel prices in the country, including the District of Columbia.