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Page added on October 26, 2013

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Consumers rejoice: Lower gas prices are coming!

Gas futures are trading around a 52-week low, which is not too unexpected—gasoline demand is always weakest in the fourth quarter. But with the recent selloff in crude, and more downside predicted, gas will trade even lower.

If you look at the charts going back 10 years, you will see that in just about every one of them, gas sells off around this time of year. That’s because of the declining seasonal demand for gasoline. After all, the market focuses on fundamentals, and the fundamental story right now is that there is plenty of supply, and demand has not gotten over 9 million barrels per day, the usual pivot point for prices.

Two other factors will likely push prices lower than in previous years. First, the Middle East is very quiet on the geopolitical front right now, so there shouldn’t be much of a “risk premium” in this market. Second, let’s not forget that Superstorm Sandy happened around this time last year, and the resulting outages pushed prices higher. Obviously, we do not have that issue this year.

So where do I see gasoline going now?

There is no reason why we can’t see gas futures trade at least 10 to 15 cents lower from these levels. But $2.40 a gallon should be a good base of support.


4 Comments on "Consumers rejoice: Lower gas prices are coming!"

  1. Dave Thompson on Sat, 26th Oct 2013 2:17 pm 

    Main factor, the holiday season begins the perceived price drop in gas gooses the consumer to spend more on shopping for crap. Feb.-March prices rise.

  2. shortonoil on Sat, 26th Oct 2013 3:05 pm 

    $100 oil has already taken its toll. Most of the world’s sovereign nations are bankrupt, and their financial systems insolvent. Ten cents on a gallon of gasoline is hardly something to cheer about, or restore confidence. With crude going higher over the next few years such enthusiasm, if it does exist, is short sighted, and will be short lived at best. Depletion does not take vacations!

  3. DC on Sat, 26th Oct 2013 7:15 pm 

    LoL! at amerikans. Cant live without its favorite drink. Leaded Gaz-o-leen. Maybe murdering all those people over in the ME and ruining the lives of millions is finally paying dividends! Gas is down a dime!

    Rejoice amerika! Dance in streets!

    O wait, dont do that. All that unfamiliar actively might make you dizzy. I got a better idea!

    Hope your GM trash cans and go for a drive to the MALL! And express your joy the best way you can. By giving more money to your corporate overlords

    Do this! The shopper-in-chief commands you.

  4. BillT on Sun, 27th Oct 2013 2:10 am 

    Minimum wage in 1963: $1.25
    Gallon of gas in 1963: $0.30 (avg)
    Or 24% of an hour’s wages.

    Minimum wage in 2013: $7.50 (avg)
    Gallon of gas in 2013: $3.30 (avg)
    Or 44% of an hour’s wages.

    Gasoline is not ‘down’, it is up.

    It would have to be $1.80 to equal the price 50 years ago when I bought my first car. Now I do not own one, and it is such a relief!

    BTW: Gasoline here in Manila is about $4.90 per gallon or 4 hours wages at minimum wage of $1.25 per hour. THAT is why very few own motor vehicles here.

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