Comment on the January 1 prediction: Prices rose the next day as predicted, although not as high in Michigan as I thought. A week later, they rose again. Pretty much CORRECT.
Saturday, January 31, 2015, 10:15AM: Wow, oil spiked higher on Friday, so wholesale prices followed, and we are already back in price hike territory. Looks like the Cheap Gas Party of Winter 2015 is over, as I have been expecting. Don’t be surprised to see a price hike over the next few days. $2.39? — Ed A.
It’s all a matter of perspective, as $2.39 still seems pretty darned cheap to me.
Because gas prices in these markets are seasonal, I prefer to compare them to one year ago instead of one month ago when deciding whether prices are high or low.
And yes, I’m old enough to remember sub-$1 gas, so in that regard today’s prices seem high. But that’s ancient history at this point.
So, what excuse will we see to justify crude going back to 80+ and gas back to 3.50 or more?
*facepalm*
Ren, if there was a $2.39 average for our regions I would be the first to sign up; no squirrel references and no raising my fist in anger.
But you know as well as I do $2.39 today may be $2.79 by Valentines Day & $3.49 by Easter. That is the way it works in the ‘new normal’, especially from mid-Winter through spring and the saw-tooth curve to go with it.
Quoted For Truth, Bearcat…
Every time analysts sing the end of $80 oil or $100 oil what happens?
Whatever the “experts” predict, the opposite almost always happens. Goldman Sachs predicted $200 oil in 2008, after oil had doubled in 6 months. I think we all know what happened shortly thereafter.
“But you know as well as I do $2.39 today may be $2.79 by Valentines Day & $3.49 by Easter.”
So now we’re supposed to be angry about something that hasn’t even happened yet? Something that “may” not even happen? And, even if it does, the prices will still be far lower than they were at the same time last year?
The thing is, based on recent history, you’d be far happier now if prices were $2.99 and about to drop to $2.69 than you would be if prices were $1.99 and about to rise to $2.39. The lack of perspective is shocking.
Needless optimism isn’t much better than hopeless pessimism, but some of you seriously need to learn how to look at the bright side of some of these issues. Heck, I’d be giddy just to see neutral from some of you.
It may not have happened, YET, Ren, but it HAS happened each of the last four years, and 7 out of the last 8, including LAST year. in sw Ohio, we have seen prices increase by between 60 cents and $1.00 between February and April/May.
Bearcat is 100% correct, when he refers to that as the new normal.
“So now we’re supposed to be angry about something that hasn’t even happened yet?”
Spot went up around 12 cents Friday. You can’t tell me that a lot of that spike in the spot didn’t happen because of something that hasn’t even happened yet namely the Winter Storm in the Midwest this weekend.
Oil and gas rises a lot on what “might” happen. The least that can be afforded to us consumers is anger over something that has a better track record of actually happening in the near future.
I didn’t say it wasn’t going to happen, guys. In fact, I think a significant rise through April/May is a high probability.
That doesn’t change my point even a little bit.
Ren, most people don’t swallow the party line…
If we learned anything from our brief excursion into $2 land it was that Big Oil is determined as can be to stay in control of the situation and not let economic reality get in the way.
In a month or two we will be back at $80/3.00 and nobody will question why – not any more than anyone questioned $45 oil from $80. I don’t recall anyone questioning $147 either, or asking how come we were only paying $4.19 instead of MUCH more as we should have been.
I’m even willing to bet Obama will be mentioned as the reason for the hike via Keystone XL 🙂
This pricing brouhaha should have been all the indication people needed that the energy markets (and big business) are running rampant and that there’s no rational explanation for price swings other than “because we said so”.
Big Oil stooges can stooge all they want about the markets working their magic. But now we know better. All I really suspect that happened here is that our friends the Saudis realized American oil is here to stay $40 or $80 unlike 1985… Nice trial balloon….
No fists were shaken during the typing of this article 🙂
“Ren, most people don’t swallow the party line…”
What does that even mean? What party? Who’s swallowing their line? Are you saying that I’m blindly believing what this “Big Oil” says?
None of that is even closer to true. I’m on nobody’s side, unless free markets and capitalism are a side. THEY ARE IN CHARGE. That’s why prices dropped by half.
It works, and you’re going to have to accept that it works. And, when you do, you might actually be able to let yourself crack a real smile and act happy for once.
I know, you disagree. Don’t bother. You can continue to be wrong and doom and gloom continuously wrong with your predictions. Thankfully, you are free to do that. And I am free to keep pointing out when it happens. Which I plan to do. 🙂
Refinerie workers going on strike. Oil will be cheaper and fuel will be higher .
The problem today is there are no free markets or true capitalism. The game is rigged so that a few well placed people on wall street can manipulate any data they want to set any price they want for just about anything. Just like this morning. Nothing has changed from a week ago. Still have a over supply of oil, slowing world economy, and wow…guess what, oil is raising so fast it will be back to 80 bucks by next week at the rate its going. The rich just get richer and take more of our hard earned money by not doing a damn thing to earn it. And to top it off they own the people that are suppose to represent us, so there you go….
Free markets and capitalism?
LOLOLOLOLOL. We haven’t had those in decades.
Crony capitalism maybe
And as far as free markets – it’s privatize the profits and socialize the losses(i.e. bailouts).
The sad thing is that you guys probably actually believe what you’re writing. That nonsense might fly in a college classroom, but out here in the real world most of us can see through that ridiculous class warfare and unbridled cynicism.
It’s particularly funny how people on the RIGHT are called anti-science. Economics is based on provable math and science, but so many of you reject it in favor of polemics and dogma.
Capitalism does have too many “rules”, “regulations”, and Laws imposed on it to be a real free markets anymore. First are the rules that make storage of gasoline so expensive that there is no real reserve anymore, and then the enviro regs for refining that keep refineries from expanding and having new ones built. Just apply this type of control over every aspect, EVERY ONE and see if you really come out wit real actual free markets. They do the best they can under the circumstances. And the process of governments spending gasoline taxes for other things so that gas taxes need to be added AGAIN? Just a few examples. YES it is as free as it can be given the circumstances.
Ren, how can a commodity that is three or more monopolies deep be considered “free market”????
OPEC is level one.
Big Oil is level two.
Speedway and friends are level three.
Wall Street and it’s variations is level four.
This isn’t conputer chips we are talking about. When Intel was the only game in town prices were exorbitant. Once AMD and others got in the game prices reflected that.
I understand economics pretty well but I’m intelligent enough to see behind the scenes. You can stooge for big business all you want and on occasion you’ll be right but in general what we have today is hardly free markets.
Ohio Shell stations are spiking to $2.29 today. I imagine that Speedway will be the follower tomorrow.
Another 6 cent bumn in NYMEX RBOB futures today and Chicago spot tagged along for the ride. A second straight “technical rally”.
WTI Crude is now halfway to $100 bucks a barrel. At this rate Spot will be above $2.00 by mid-month and hello $3 dollar a gallon gas once again. I remember the good old days of a few weeks ago lol
It’s the invisible hand of the market shaking it’s fist at motorists lolz 🙂
In Ohio some of the BP stations are joining in Shell’s $2.29 spike. Greedway still not heard from yet. I have a bad feeling once they chime in it will be sticker shock.
Did someone say $2.79 by Valentines Day?
South Bend, IN – Speedway spike to $2.39 is underway. Pre-Spike $1.99-$2.19.
$2.39 in Indy also… looks like a blanket Indiana hike, and in addition, $2.35 in MI and OH
My how quickly we can get 50 cents added to a gallon. $1.90 to $1.40 in just a couple weeks. 25% increase in such a short time. Breath taking!
2.359 in sw Ohio. Was able to top off (5 gallons) at 1.849 last night.
Crude up 10%, gasoline up 25% or more. Never mind crude is only 66% of the price of gasoline or so we have been told.
So, how’s that invisible hand working for us Ren?
Yep 2.359 in Kalamazoo now. Will be over 3.00 by March. And not a thing has changed other than wall street and big oil has been able to invent a new reason to raise it. Works great, when one reason doesn’t pan out, they just make up another….
….and here it comes:
http://money.cnn.com/2015/02/03/investing/oil-price-rebound-opec-200/index.html
And a couple of weeks ago we were hearing about a Saudi Prince who said oil would never see $100 a barrel again, also reading about the bottom is not here yet, oil may go to $20-$30 a barrel. Yesterday we still had a GLUT of oil in the market. They’re all just blowing smoke, they don’t “KNOW” anything.
They may be blowing smoke, but it’s getting the prices back up where they want them so they can make a nice profit from the cheap oil they have stored already..Funny how that can happen when they control everything…
Don’t let Ren hear you say “they may be blowing smoke” Mike lol. Yes, we’re shaking our fists in anger. So I guess all the fracking, heavy inventories are now magically wiped out? Speculators must be back from their 3 month hiatus.
“These supplies will require the industry to invest $7-$10 trillion. However, with the big capital budget reductions oil companies have announced this year it could make it harder for the industry to meet future supply needs. ”
Nothing that can’t be accomplished with a few spikes and a few squirrels….
The issue is not 1.99 vs 2.29… The issue is that left unchecked the “free markets” will take us to $200 regardless of market realities…
We haven’t had free markets, as far as commodities go, since the CFMA was passed in 2000(at the lobbying of Goldman Sachs no less. and guess who the #1 oil futures holder is….)
Spot prices up nearly 6 cents again today.
Speculators hard at work in fear of a strike from members of the United Steelworkers union, and a decline in production rigs.
Irrefutable logic that shows the markets aren’t rigged:
http://theenergycollective.com/markjaccard/2189436/understanding-oil-demand-oil-prices-and-climate
Pay special attention to the final paragraph, and let me know if any of you see yourselves reflected in it…
Ren, good article! Thanks for sharing.
There are numerous investigations and legal action going on for more than a decade into whether the crude markets are fixed.
http://www.bloombergview.com/articles/2013-11-06/whiny-oil-traders-pretty-sure-their-market-is-rigged
And many more…. I would tend to believe legal actio over academics any time of the day.
Dumping oil to drive prices lower… Hmmm… If this had been automobiles…. Would we take action for dumping? Of course we did. But oil? Nah.
But in some stooge populated planet it seems natural for prices to go from 80 to 147 in a few months then crash. Then again. It’s all “free markets”
When paper oil barrel trading by speculators is ten times the volume of real oil any notion of free markets goes out the window. And we haven’t started talking about refining and distribution yet.
Not much new there in the article for me except how really uninformed most people actually are. I would also add that for US companies…….Inventory is used to cover up a lot of mistakes. In manufacturing, having a ready supply helps to cover up problems in raw materials, quality, delivery, and process issues. On Hand Inventory covers up a lot of mistakes. And the petroleum industry in the US has almost no inventory for this purpose. Demand is very inelastic, and enviro rules make it almost impossible to have a month of prepared gasoline. JUST IN TIME delivery does keep the price low, BUT it can boost the price immediately and balistically when demand does not decrease but yet supply is perceived as having an issue.
Weekly EIA report is in. Crude inventory ticked up, Midwest Gasoline inventory increased 0.7mbm gasoline damand is up and Midwest refinery utilization is 95.1%. Hmmmmmmm!
https://blog.gasbuddy.com/posts/EIA-gasoline-crude-inventories-increase/1715-599277-2875.aspx
On WOWO raido, some GasBuddy analyst was quoted as saying that gas may reach $3.00 this year. Heck, that is only two spikes away from yesterday!
Nope, does nothing for me, speculators always have and always will help to drive the cost of crude. We now have a big surplus of oil thanks to fracking in the United States and OPECS unwillingness to cut production. Throw in a fear of striking from big oil’s union members and the speculators raise the price of crude just because they can, nothing to do with competition, just fear. Its something thats been practiced over and over again.
Exactly. When 2 investment “banks” control over 50% of all futures contracts, how can the game NOT be rigged.
Oil and gas are both down today, so that means the jump we just got yesterday will be taken back tomorrow….oh, right, that only works one direction…
That’s what I call a ‘gratuitous’ spike. The tin-foil-hat brigade would say that it’s almost like they know the price of crude will drop by a few dollars and time the spike to sustain them thru the down cycle…
Supply and demand are great in theory, incidentally, but it’s not like the Saudis are pouring an extra 10% of crude into the markets and we don’t know what to do with it (not that it stopped speculators from buying crude low and storing it last time :))