Saturday, November 19, 2011

Price of gasoline remains in free fall

I'm still not sure exactly what's going on with the price of crude oil vs. the price of gasoline. Crude marched strongly up above $100, although it finally took a breather at the end of the week. Meanwhile, gasoline has been in free fall, now down to $3.37, ten cents below a month ago. Usually higher crude drives gasoline higher. Who knows, maybe final, actual demand really is down and falling, but I am suspicious. There is some chatter about an over-supply of crude at the Cushing terminal and reversing a pipeline to feed more to refiners, but all of that would simply point to the "march" of crude up towards $100 being misguided speculation or outright market manipulation rather than any "real" demand for barrels of physical oil sitting in tanks or pipelines here in the U.S.
 
In any case, the good news is that lower gasoline prices "at the pump" are a positive "stimulus" to the economy, leaving more cash in the pockets of consumers and even businesses, although diesel fuel prices have been trending higher, suggesting that demand for business transportation may be stronger and driving some nascent economic strength even if consumers are a little skittish. Or maybe consumers are finally taking charge and "just saying no" when they feel that gasoline is too expensive.

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