Bring Down Those Prices! (continued from Sept. 15)
Monday 29 Sep 2008 | Posted By Ed Aboufadel | Predictions
Comment on the September 15 prediction: We haven’t had a price hike since then, and prices have been falling, albeit slowly. Basically CORRECT.
Monday, September 29, 2008, 7:00 PM: Two weeks ago, I wrote that NYMEX prices were starting to plummet, because Wall Street financial firms — many who have been involved in speculation in the energy markets — were falling apart. This new dynamic continues today. The bailout has been voted down, the Dow fell nearly 800 points, and NYMEX gas prices dropped 25 cents per gallon. Although this could all be reversed tomorrow, if not, given the good news on the refinery front, wholesale prices should collapse this week. Then, it is a matter of waiting for this collapse to work its way to retail prices, and we could see $2.99 a gallon in October. Just a small benefit of a troubled economy.
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We “only” saw about 17 cents down for branded gas, unbranded was about 22 cents down. Our rack prices are still more than 30 cents higher than the NYMEX price (they are normally around 5 cents of each other). I’m not sure if that means that the NYMEX has price has been too aggressive or if the rack prices have more catching up to do.
I keep thinking that wholesale prices have hit the bottom and then we get another 10+ cent drop. Wholesale prices would need to drop another 40 cents to make $2.999 a reality. It might be possible if the bad news about the economy keeps coming.
I would guess that in the next couple weeks Congress will pass a very similar version of the bailout plan and the futures market will have a big celebratory price increase.