Gas prices are still falling and falling sharply. Reuters writes, "The average retail price for a gallon of gasoline in the United States fell more than 48 cents per gallon in the past two weeks to $2.30, according the latest nationwide Lundberg survey."
In general the trend would appear to be completely positive although it could be a sign of another major product that is going through a deflationary cycle.
But, there is a more insidious effect which may be bad for the US consumer. OPEC has indicated that it will cut supply and cut it very sharply. Members of the cartel cannot repair that national budget deficits with prices this low so it appears that the cuts will be as deep as they need to be to get oil moving back toward $80 or $90.
In the meantime, there is evidence that Americans are driving more and, in some cases, moving back to buying less fuel-efficient vehicles. Alternative energy companies, particularly in the ethanol business, are trading at 52-week lows. Some may even go out of business.
There had been some hope that conservation of gas and fuel oil was here to stay when prices to fill up a car were above $4 a gallon. If the public forgets those days, it may be caught flat-footed by a big OPEC supply cut.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
11-10-2008 @ 7:55AM
bob said...
So we remain at the mercy of foreign oil. I Expect the new admin. to maintain the status quo. The years tick by.
11-10-2008 @ 8:06AM
Virgil Bierschwale said...
There had been some hope that conservation of gas and fuel oil was here to stay when prices to fill up a car were above $4 a gallon. If the public forgets those days, it may be caught flat-footed by a big OPEC supply cut.
========
Either that, or OPEC might hopefully go broke when we get off of our butt's and get our best and brightest scientists to invent a fuel source.
Surely if we can put a man on the moon, we can do something as simple as this ?
Virgil
http://www.KeepAmericaAtWork.com
11-10-2008 @ 9:12AM
Kortney Dunkle said...
The public needed a break. We should
take advantage of cheap gas and
stockpile now. Everyone knows we have
to convert to alternatives but we need
time. No one has waved a magic wand
yet. My cars, trucks, still burn gas
and we needed the break. Who is going
to produce the magic car if Detroit
goes belly up ? The Japanese, then
we will still be exporting dollars. There
is no alternative on the horizon. Look at
how things ARE ! Not as they might be.
11-10-2008 @ 2:11PM
alex said...
I hedged my gas for the next year with oil this low. I think there are a few sites that do this...the one I used was Petrofix.com.
11-11-2008 @ 12:57PM
Jason said...
Opec needs to repair the national budget deficits? They already have billions what are they talking about?
Also.....
WHY HAVENT THE PRICES OF THINGS THAT WENT UP BECUASE OF FUEL COSTS BACK DOWN NOW? Take food for example.. Everyone raised prices because of fuel costs but NOTHING has gone back down since fuel dropped.
As usual the rich stay rich and the poor get poorer. People in charge of companies should be forced to take pay cuts before they are allowed to lay people off and raise prices for the consumer.
12-01-2008 @ 4:38PM
Carlos said...
At this time should be a campaign asking all motorist to keep consume reduce as when gas prices where more than a $4. Dollar gallon