Wednesday, April 04, 2007

Gasoline Price Sanity

Right this minute ABC news is making headlines saying the price of Gasoline will soon spike to $4 a gallon. I don't buy it. There are such things as fundamentals that keep this market under control. There is no shortage of OIL. This is all about short term profits. The cure for high prices is high prices.

James Williams has a different View. He doesn't work for ABC news. He makes his living as an energy economist. In other words he actually knows what he is talking about.

He said gas prices could drop about 25 cents a gallon over the next two months because current gasoline margins aren't justified by the price of crude oil. Spring price increases came early this year, he said, because some refiners finished their spring maintenance early. Refiners switch at this time of year from winter blend to summer blend, which costs more because of more expensive ingredients.

Williams also said that crude oil prices may drop, probably next year, but that the maximum decrease would be to $30 to $40 a barrel because of the weakness of the dollar. After three to four years of sustained high prices, he said, consumer consumption patterns are beginning to react and gasoline production is increasing.

I don't trade commodities anymore. I used to. Now I just buy and fill my tank.

I'm not panicky and no matter what ABC says, or anyone else, neither should you be.

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