Comment on the November 24 prediction: Michigan seemed to escape the Midwest Thanksgiving price hike, so I was WRONG.
Wednesday, December 9, 2015, 1:30PM: Saw something in the media this week speculating on 99-cent gasoline in 2016, as oil prices dropped to a new low for the year. I’m skeptical, but what has been causing these low prices in oil and gas? Some ideas that I’ve heard about: (1) This is an early-warning sign of a recession next year. (2) Efforts underway worldwide to reduce demand for petroleum (e.g. solar and wind energy, cash-for-clunkers) and increase supply (e.g. fracking) have finally made a difference with prices. (3) We were paying a “risk premium” in the last decade due to the Iraq war and other instability in the Middle East. (4) This is a temporary respite caused by the collapse of energy speculators such as Glencore.
We won’t know the answer for sure for a long time, but very short-term, December is usually the month of cheapest gas prices, and that is true in 2015. With retail prices dipping to $1.70 and wholesale prices perking up a little this week, I predict we’ll see a price reset before week’s end, back to $1.99. — Ed A.