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Four reasons why gas prices will continue to plunge


When San Diego's retail gas prices peaked at $4.72 a gallon
on October 8, the average price of wholesale gasoline was 
$1.00 more per gallon than it is today. 
But even though the wholesale price has dropped by $1.00 on 
average, today's retail price is $4.31 - a drop of only 41¢.
In other words, wholesale prices have dropped at a rate of
about 4¢ a day while retail prices have only dropped 2¢ a day.
In the last week, retail prices dropped by 25 cents, or at a rate 
of 3.6¢ a day, so retailers are catching up on their discounting 
as prices drop, but there is still a lag, and the retailers are 
catching up. 
There are four reasons why gas prices are plunging: 
1)  HUGE BUILD IN OIL INVENTORIES - Crude losses extended to a 
    fifth straight NYMEX session and tallied just shy of $5.50/bbl, 
    or a 7% drop in a week's time as of Wednesday. The front-month
    U.S. crude contract has come under pressure as country-wide 
    inventories continue to expand each week
     Energy is reporting the lowest demand figures since March 16.
3)  HUGE BUILD IN CA GASOLINE SUPPLIES -- statistics released 
    yesterday by the California Energy Commission show that 
    California blend gasoline stocks increased by nearly a
    million barrels to 5.781 million barrels last week.
4)  FEAR - the public, political, and law enforcement outcry 
    over the sudden record breaking price spike has made the 
    refineries nervous. There were excuses, but not good reasons
    for the so-called "perfect storm" in gas prices that resulted
    in the highest inflation-adjusted fuel prices in california
    in the last 94 years. And with the first three factors in play
    above, California refiners should be nervous. 
BOTTOM LINE:  Gas prices will continue to plunge at a rate of at
least a penny a day, perhaps as much as three cents a day.