Friday, August 2, 2002

Gas prices have been falling for two weeks, and it appears they will continue. I have been having trouble with my predictions lately for one reason: The August unleaded contract was trading 8 to 9 cents higher than the September contract, for no apparent reason. Now the August contract has expired. This means the 0-margin price (with the Chicago Summer premium) is about $1.29. Expect gas prices to fall to that price by next Wednesday. After that, we have to look at the futures again, but I expect we will then see a price hike to $1.49. By the way, the January 2003 futures imply a retail price next January of $1.15.

CORRECT, sort of! Prices got down to $1.35 in Standale, but below $1.30 elsewhere in town. Everything reset on Wednesday to $1.44, which is right at the 20-cent margin price, if you don’t factor in the Chicago Summer premium (see below).

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