Chicago Discount is baaaack! Will we get down to $1.50?!

Posted by mobile phone:
That’s right folks! The Chicago discount has made its way back into our area. We’re currently at a discount of about 5-cents per gallon to the NYMEX which is awesome news considering most the summer we ran a huge premium!

Also some more good news is that after re-evaluating the situation, I am now predicting that lower prices are yet to come. Odds of $1.50 gas are about 70%.

Stay tuned for more information as I’m posting from lunch break.

Updated: November 18, 2008 — 2:20 pm

7 Comments

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  1. Patrick – have you looked at the crack spreads on gas – If I were a refiner i would be making diesel all day long. Gas is a loser! As are all interesting predictions, this one will go on the dry erase board.

  2. Is demand down that much?

  3. $1.73 in Allendale!!

  4. Ray- yep. Expect gasoline production to drop as much as possible (it has as of today). Refiners are now stretching it as far as they can… this last week producing 8.8mb of gasoline a day and 4.4mb of diesel/heating oil a day. That’s about as far as they can stretch it.

    Gasoline demand is WAY down:

    (The U.S. DOE is way high here as many analysts including myself agree)
    “Over the last four weeks, motor gasoline demand has averaged
    9.0 million barrels per day, down by 2.2 percent from the same period last
    year. Distillate fuel demand has averaged 4.0 million barrels per day over the
    last four weeks, down by 3.3 percent from the same period last year. Jet fuel
    demand is 20.3 percent lower”

    I would tend to say gasoline demand is about 3-3.5% lower, diesel down 3-4%, jet fuel down 23-25%.

    This is repeating in many countries- China, Japan, the EU, etc. Global demand is MUCH lower.

  5. Oil dipped below $50 a barrel!!! Keep on going =)

  6. Looks like my prediction of $2.10/gal for Christmas posted back in Mid October is wrong…but on the GOOD side.
    Look at fuel prices today vs 1972/per hour worked by me. I had a $4.00 an hour job back then and lets say a gallon went for .32 cents. I could buy 12.5 gallons per hour worked and put it in a vehicle that got 10 MPG on a good day.
    Today I make around 26.75 as a railway conductor and can buy 14.944 gallons per hour worked and put it in a Jeep Cherokee that gets 19 MPG. Do I think, using my own wages as a calculator (and also using gross not net wages but it should work out roughly the same…probably should do that math to though..)that we are ahead of the game as far as 1972 vs 2008? At todays prices I say an unequivacoble YES. Just using MPG were using less fuel per person on the road (yet more people on the road) then we were in 72 by a long shot.
    Again I say, prices refelct the economy though. As the economy goes south so do fuel prices. Those of us still working get to reap the benefits but how long will we be working????
    Dan in Rockford
    p.s. Christmas gas, $1.53

  7. What about Diesel – where do you see that going? Do you think it will every fall below the price of ‘gas’ like in the days of (not so)old? It seems to be moving down oh-so-slowly…

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