This is why it can be bad for lower prices due to an economic downturn. Once there is hope for recovery, prices rebound. A big rise in market prices (11.5¢ for the Chicago spot) and big drops at the pump mean we are due for a spike. Plan on prices going up tomorrow or Thursday.
Month: September 2011
Yesterday’s market drop will be a welcome relief for consumers at the gas pump. The Chicago spot fell more than 12¢ yesterday, and has fallen more than 50¢ from it’s high a few months ago. Instead of seeing $4 gas, we are now getting close to seeing prices below $3 at the pump.
But is this a good thing? Last time we saw a large drop in gas prices, the bottom really fell out, and didn’t stop until we were below $2. But that was because we were in a recession. And all indicators are looking like we will be entering a double dip sometime soon if things do not change. So while we see something we really like to see, lower prices at the pump, we will also be seeing a weak economy get weaker. I for one hope this isn’t the case.
With market prices where they are, we have a 25-30¢ gap between current averages, and where prices should be. Expect prices to continue the current trend, going lower through the weekend (unless the market explodes today).
Tuesday, September 13, 2011, 6:50PM: Now that the summer driving season is over, wholesale prices have started to drop — 36 cents since the end of August, much of it the past few days. I estimate the 0-cent margin price tonight at around $3.33 (that’s the floor for retail prices), and the cheapest gas in town is $3.62 right now. So, we can expect prices to fall the rest of the week and through the weekend. Great! That’s a prediction. — Ed Aboufadel
Comment on the August 31 prediction: Prices rose that day to $3.85, as predicted. CORRECT.
Thursday, September 8, 2011, 12:20PM: Future prices have been bouncing all over the place the past few weeks, and yesterday they bounced up, so today we get a price hike to $3.89. Boo! Hiss! Something I saw on CNBC recently did get me thinking — in April 2008, gas was also $3.89 a gallon, and oil was $118 a barrel. Today, gas is also $3.89 a gallon, but oil is a bit below $90 a barrel. So, oil is 25% cheaper than 3+ years ago, but gasoline is the same price. What’s up with that? From what I read, it seems that gas prices were, believe it or not, lower than they should have been in 2008, or maybe oil prices were artificially high. (Thank you, speculators!) Well, whatever the case, if I can sound like a politician for a moment, “We need to do something about these job-killing price hikes!”