When a brand name gas station buys its wholesale gasoline it is charged the dealer "rack" price. The "rack" is the basic price that is adjusted depending on factors such as the station's location and volume of gasoline it sells.
Hurricane Irene could end up being a "perfect storm" for high gas prices, with a ripple effect that could turn into a high price tidal wave for California gasoline buyers. Today we saw the first price ripple in what is likely to become a much bigger wave. As we predicted yesterday, gas prices have increased by 1.5¢ in the last twenty-four hours.
We rarely do this, but today we issued a Gasoline Buyer's Advisory at our sister Web site www.ucan.org. My analysis of gasoline prices shows that prices are up from eight to fourteen cents since Monday at the wholesale level. The reason: This is a ripple effect from Hurricane Irene, which is building into a very large price wave. Get my analysis here.
Oil markets have been exceptionally volatile lately, prompting some analysts to predict a repeat of the great oil crash of 2008 when oil tanked from almost $150 a barrel to the high $30's in intra-day trading in a matter of months. In the last few weeks, oil prices have belly-flopped again, nosediving from almost $100 a barrel to as low as $74 a barrel last Thursday. Then, today, they recovered again, surging to a almost $90 a barrel before the markets closed.
Bad news on the stock market today should translate into lower prices at the pump.
Last week we predicted that gas prices would stay about the same or decline. They nudged lower since last Thursday by three-tenths of a penny (just as we predicted). We are now predicting that prices will drop another 1.5 to 3.5¢ by Monday and probably continue dropping through next Friday.
Oddly, a somewhat sunny unemployment report ( see http://natpo.st/ohY2PH) bouyed markets today.
On Monday we predicted that gas prices would probably
increase by today. That prediction came true with a 1.3 cent
price hike. The current average price in San Diego is $3.82
This weekend we expect a continuation of minimal movement.
Prices are unlikely to drop and more likely to rise as much as
three cents a gallon on average.
San Diego gas prices are now at $3.81 a gallon on average, reversing an eight week decline that began on June 2, when fuel prices reached their highest price for the year at $4.25 a gallon. On June Second, the price of oil was $113.50 a barrel on the New York Mercantile Exchange, while today it is hovering at about $95 a barrel.
Why does gas cost more than milk?
|Get the FULL STORY at www.ucan.org|
The California Board of Equalization is showing that its revenues from sales taxes have increased by an estimated 8.5% in the first quarter of 2011. But don't be fooled into thinking that this is good economic news, and that the economy is booming at a level that's 8% higher than last year simply because people are spending more -- much of the new revenue is from gasoline taxes.