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What would you rather have, a horrible economy and low gas prices or a strong economy and higher gas prices?  I prefer the latter.  Do I blame the president for high gas prices?  Yes, because the economy has recovered.  

But lets put things into perspective:
1. Gas prices were higher last Spring and even higher in the Summer of 2008.
2. Gas prices are expected to decline from current levels.  

Here is a table of Gasoline futures prices (Prior Settle Column).  Prices peak in April at $3.31 (the current contract).  As you go out further in 2012, prices drop below $3.

Spread the word, it looks like this is as bad as its going to get heading into the election.

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Comment Preferences

  •  Will gas prices fall if recovery continues? (2+ / 0-)
    Recommended by:
    MKSinSA, ZedMont

    I mean actual prices people pay, not futures.

    An ambulance can only go so fast - Neil Young

    by mightymouse on Thu Mar 08, 2012 at 06:23:15 PM PST

    •  6 and 1/2 dozen (3+ / 0-)
      Recommended by:
      MKSinSA, Gooserock, mightymouse

      What we pay (spot price) differs from the futures price, but the difference (spread) is relatively stable.  Iran bluster is more to blame.  Once that cools off, prices will fall further.  I should have had that in my initial post.

      •  Cooling off Iran will help price (0+ / 0-)

        Obama's lack of warmongering should help here.

        War betw US and Iran in the gulf would hurt both parties - makes no sense at all.

        However, sanctions by themselves (w/o shooting war) exert upward price pressure. I was reading somewhere than Iranian exports are down due to sanctions.

        Do you know what percent of oil futures contracts are farther out than one month? thanks.

        An ambulance can only go so fast - Neil Young

        by mightymouse on Thu Mar 08, 2012 at 07:03:21 PM PST

        [ Parent ]

        •  But Israel's a wild card here. (1+ / 0-)
          Recommended by:
          mightymouse

          Supply will be disrupted unless Obama can avert a war, rather than just keep us out of it.

          •  yes (0+ / 0-)

            but I believe Obama won't go out of his way to do something completely stupid here. So that's a small plus.

            Hopefully he can get Israel not to be crazy ... If indeed Israel attacks Iran, I wonder what happens.
            If Iran retaliates against US in the Gulf, likely everybody loses (including Iran).

            My understanding is that Israel may conduct a bombing raid on Iranian facilities. Can Iran defend its airspace v Israel? I believe not but don't really know.

            Is there any hope the US would defend Iran from an Israeli air attack? Probably not.

            So what will Iran do if Israel launches a bombing raid?

            Weird game.

            An ambulance can only go so fast - Neil Young

            by mightymouse on Thu Mar 08, 2012 at 08:22:32 PM PST

            [ Parent ]

    •  If the recovery continues, demand for gas in the (1+ / 0-)
      Recommended by:
      mightymouse

      U.S. should go up, and if global demand remains high, higher U.S. demand should result in increased gasoline prices at the pump.

      But gasoline prices (as you have repeatedly hammered into my head, mightymouse) react to global demand, not U.S. demand.

      Since U.S. oil companies are selling gasoline for export to meet high global demand, the current slump in U.S. demand has only a marginal effect, if not a negligible effect, on gasoline prices, and that's why they remain high in what would appear to be defiance of the law of supply and demand, if you only looked at U.S. demand and ignored global demand.

      Now, in the unlikely scenario that U.S. demand rose, but the rise was more than offset by drastically reduced global demand, U.S. gasoline prices could conceivably go down as U.S. demand rose, in the reverse of what is happening now.  I'm not holding my breath for this scenario however.

      In summary any apparent reaction of gasoline prices to U.S. demand is actually only incidental to a reaction in global demand.

      Obviously, increased supply of U.S. oil does not result in significantly lower gasoline prices at the pump, because we are currently producing more crude oil in the United States than in the Bush years, and it is not reducing prices.  

      Increased U.S. oil production is not enough to materially increase global oil supplies.  In spite of the fact that oil production has increased substantially under Obama, there is no surplus of oil.  We are still importing lots of oil.

      But we are exporting more refined products, including gasoline, because there is high global demand for it.  Refiners are not going to voluntarily direct that gasoline into the U.S. market in order to lower U.S. gasoline prices and forego profits in the global market.  They are going to continue to sell it to the highest bidder, because that's what they do.

      Gawd bless Amurka and Exxon-Mobil, not necessarily in that order.

      What'd the devil give you for your soul, Tommy? He taught me to play this here guitar REAL good. Oh son, for that you traded your everlastin' soul? Well, I wuddn' usin' it.

      by ZedMont on Fri Mar 09, 2012 at 06:46:14 AM PST

      [ Parent ]

  •  No need to spread anything. People know how (1+ / 0-)
    Recommended by:
    mightymouse

    much gas costs, now and when they go to vote.

    "I smoke. If this bothers anyone, I suggest you look around at the world in which we live and shut your fuckin' mouth." --- Bill Hicks

    by voroki on Thu Mar 08, 2012 at 06:26:58 PM PST

  •  Gas at the two stations closest to me (1+ / 0-)
    Recommended by:
    mightymouse

    has declined by 4-6 cents a gallon over the past couple weeks.

    I changed by not changing at all, small town predicts my fate, perhaps that's what no one wants to see. -6.38, -4.15

    by James Allen on Thu Mar 08, 2012 at 06:28:55 PM PST

  •  C'mon (5+ / 0-)
    Recommended by:
    paulitics, DRo, mightymouse, Sky Net, Odysseus

    The President has little, if anything, to do with gas prices.

    The bigger factors are China, Japan (more imports after tsunami and nuclear shutdowns), Libya, Peak Oil, Iran, ........

    Oil is a commodity use around the world and priced internationally. While US demand has a degree of influence, right now a whole bunch of other factors are at play.

    Those who make peaceful revolution impossible will make violent revolution inevitable. - JFK

    by taonow on Thu Mar 08, 2012 at 06:29:29 PM PST

  •  This isn't from an improving economy (6+ / 0-)

    the reason gas prices are rising is the same reason why food and import prices are soaring as well. Paper currencies across the world are losing their purchasing power against real assets that cannot be increased by fiat. Of course, the Pollyannas on Wall Street will tell you that oil is rising because of a rebounding economy. However, the facts are that gasoline demand is down 7% YOY, while oil inventories are at a six month high. If the global economy was indeed recovering why is the demand for gas at the pump falling? In reality, the global economy is very weak and the U.S. is very far removed from a sustainable recovery in Q1 of 2011, QEII sent oil prices back to $114 per barrel and gas back above $4 a gallon. Predictably, U.S. GDP once again plummeted, falling from 2.3% in Q4 2010, to 0.4% in the following quarter. Today, oil prices are back to $110 per barrel and gas prices are surging back to $4 per gallon. Expect a slowdown in the economy similar to what occurred every other time gas prices hovered around the $4 level. We received a taste of that slowdown today with the release of the Durable Goods report. Orders for U.S. durable goods fell in January by the most in three years and capital goods expenditures, less aircraft and defense fell 4.5%

    According to the IEA, Total products supplied over the last four-week period have averaged 18.3 million barrels per day, down by 6.1 percent compared to the similar period last year. Over the last four weeks, motor gasoline product supplied has averaged about 8.4 million barrels per day, down by 7.8 percent from the same period last year. Distillate fuel product supplied has averaged nearly 3.6 million barrels per day over the last four weeks, down by 7.6 percent from the same period last year

    •  interesting point (0+ / 0-)

      If US demand is not rising even with the recovery, then US recovery should not push prices up, undoing the premise of the diary ... however, this behavior appears anomalous - usually recovery means more fuel use (more shipments, more people going to work, etc.).

      We'll see what happens to US demand.

      It may be price pays less and less attention to what happens in the US and other OECD countries, as our share of the total pie continues to shrink.

      Global demand has risen all the while.

      An ambulance can only go so fast - Neil Young

      by mightymouse on Thu Mar 08, 2012 at 08:28:40 PM PST

      [ Parent ]

    •  Seasonal: (0+ / 0-)

      Gasoline prices usually rise during the summer driving season and drop after Labor Day. Price rises came early this year because of the futures market reacting to the Iran situation.
        If domestic demand continues to remain low, and if world oil prices decline as concern over Mideast war lessens, prices should come down.
         Israel could throw all that off by attacking Iran, but that is looking less likely based on the reaction of Obama and our military to the idea. Despite their bluster, Israel needs US assistence to pull off a raid that far from home.
         $4.00 per gallon was unprecedented in 2008 and had a big psychological impact. Since we've been above $3.00 per gallon ever since then, $4.00 per gallon doesn't scare people as much and hence won't have the effect on consumers. Of course, the media is trying to scare us with threats of $5.00 per gallon.
        Bottom line: I don't think the GOP will benefit from gas prices.

      •  Prices were below (0+ / 0-)

        $3 until 12/2010. The effect on consumers is not just Psych it is in cash flow as well. This is a loose money policy problem. Flooding the system with dollars leads to money chasing assets, AKA inflation. The only catalyst to drive prices lower would be demand collapse most likely from economic collapse.

  •  Farmers and other fuel users in my area (0+ / 0-)

    were told last fall to brace for $5/gallon by summer. I think any assumption that it has peaked now is premature.

    Fry, don't be a hero! It's not covered by our health plan!

    by elfling on Fri Mar 09, 2012 at 07:12:15 AM PST

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