Monday, July 20, 2009

Lower Gasoline Prices

Purchasing Magazine predicts lower gasoline prices for at least 6 months and maybe longer.

Gasoline prices have been on a recession-defying march in the first half with futures prices rising largely on optimism that a strengthening economy eventually will drive demand higher. However, "it's more hope than fact," analyst Adam Sieminski of Deutsche Bank in New York tells the Associated Press. "Investors think the economy has bottomed and possibly recovering and they're moving to assets they think will benefit from the economic recovery and that includes commodities generally and oil specifically."

The retail price of gasoline may have peaked around $2.63/gallon in early June, according to economists who see prices slipping this autumn. "This run-up in gasoline prices shouldn't last," according to Tom Kloza, chief oil analyst for the Oil Price Information Service in Wall, N.J., who says a repeat of the 2008 record run-up past $4/gallon in July isn't anticipated. "It would take a geopolitical disaster, an earthquake or major hurricane damage to drive prices much higher than they are now," he says.
You have to wonder why the greedy oil companies haven't jacked up prices? After all people were willing to pay $4 a gallon last year. Maybe they do operate on the supply and demand principle after all.

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