Falling gasoline prices

The AAA Daily Fuel Guage Report has been registering a nice pullback in retail gasoline prices over the past week. The national average retail price for a gallon of regular unleaded gasoline hit a peak of $4.114 on July 17, 2008. In only six days the price has fallen 7.2 cents to $4.042 per gallon. More declines are on the way, and they will be fairly dramatic.

Just today, the wholesale price (August 2008 Gasoline RBOB futures contract) fell very sharply by 11.3 cents to $3.034 per gallon. Add 60 to 65 cents to the wholesale price to get to target retail price, which would be $3.63 to $3.68. That means we could see decline of 36 to 41 cents over the next week or two. That would certainly be a welcome relief to consumers.

OTOH, the sharp declines in crude oil and gasoline and other commodities could simply be part of a short-term trading move by speculators which could reverse at any moment and reclaim all of the recent declines and then some in a matter of weeks if not days. Hard to say for sure.

-- Jack Krupansky