Re: Oil down
Broadway
5/23/2011 3:39:11 PM
Perhaps if they delay the price drop at the pump long enough, they'll make it to the summer travel season when the prices will invariably go up again.
Also, keep an eye on the Atlantic come august and September. One bad hurricane landfall in the Gulf could shock the price even higher, like Katrina and Rita dud in 2005.
There is an easy explanation for "Why don't pump prices fall faster" question. It's becauses once the price at the pump goes up and wholesale gasoline goes down, the oil companies/refiners are loathe to drop prices because they have a window of higher profit margins. Therefore the downside in retail gas always has a delayed effect.
Well maybe John, but it's a chicken-or-egg question... if oil is up because the economy and stock market are up because of added Fed liquidity -- which is of course the Bernanke thesis -- then if they withdraw the liquidity does everything go down at once? Yes. You can't have your cake and eat it too. If the world economy improves, demand for oil goes up. If the economy weakens, demand for oil goes down.
$3.50 would be great news for the economy if that were to be the case for this summer. I hope you're right.
By the way, can anyone explain that when the price of oil goes up, gas stations almost immediately raise prices at the pump. However, when the price per barrel declines, it takes a long time before prices at the pump go down? Just wondering.
Well it's going down today! There is some liquidation in commodities. A lot of the rally was fueled by speculation linked to QEII, which ends next month. I say oil/gas trade down for the next month. Gas back to $3.50 at the pump for the summer driving season.
Re: Re : Surprise: Oil Prices Go Up, Spending Goes Down
John Jordan
5/23/2011 11:29:32 AM
I think rebuilding in Japan as well as the massive infrastructure work going on in China will keep prices high.
Re : Surprise: Oil Prices Go Up, Spending Goes Down
yalanand
5/23/2011 11:27:41 AM
But if we’re lucky, things will be calm and prices will fall.
John,
Do you think Japanese rebuilding efforts will keep the oil prices higher ?
I believe $4 a gallon is the threshold most people, including myself, start to think about driving less and spending less.
The unpredictability of energy prices is causing the economy to stagnate. Companies are reluctant to expand because their shipping costs to bring their product to market may rise and therefore postpone hiring the new salesman or senior VP.
A consumer who was thinking of buying that flat screen TV may think twice. Finally, a potential homebuyer also may decide to hold off on that purchase when he or she factors in the price of commuting to and from work into their monthly budgets.
While the economy is in recovery, energy prices will play a huge part in how strong the recovery will be this year.
Re: Gas Prices Up and then Down and then Up
TelecomFreq
5/23/2011 10:20:50 AM
i would think the only way to break this cycle is to move away from oil as an energy source. Natural gas is a good option that has been talked about on this site before, as is solar and other alternative sources.
I think the real key is to not depend so much on a signle source and better distribute our use so an price bump in one does not have such a drastic impact.
Gas Prices Up and then Down and then Up
ProfR
5/23/2011 10:13:07 AM
I think the annoying thing here is that we keep seeing the same story over and over again. Oil and Gas prices increase, people get upset, spend less in other areas -- then oil and gas prices goes down, people are happier and spend more elsewhere -- then oil and gas prices go up again, people get upset, people spend less elsewhere. What we need from a group like this is how do we end this cycle?
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