SAN DIEGO - Gas prices are expected to decline in the next few days in the wake of horrible economic news both internationally and locally in California.
Consider these facts:
Brent Crude - down ten cents a gallon in the last week and
poised to bellyflop below $100 a barrel (trading at $102 this AM).
NYMEX Crude - Plunged below the $90 mark earlier last week and
moved decisively into the high $80/bbl today at $87 this AM, down
ten cents a gallon since Monday.
Locally, Indy wholesale prices have gone down 12¢ on average
since Monday, an dthe branded dealers have seen average price cuts
of six cents since Monday. profit margins for locally owned gas stations
are reasonably good right now, so prices should decline.
Then there is "wrong" economic news all over the place that
is hostile to sustained high prices:
1) Unemployment is up in China, manufacturing down.
2) Greece is bankrupted, ready to withdraw from the European Union.
The threat of violence in the streets looms large.
3) Spain is likely to withdraw from the E.U., too.
4) International releases of threats of from major strategic reserves.
5) Finished gasoline supplies for California are at 20-year lows.
This figure is alarming, but demand - a much more slippery figure
to track - may be at a 20-year low, too. If demand was as high as
everybody seems to think it is, we should have seen a superspike.
6) More than 2 million Californians are unemployed officially, and
hundreds of thousands just had their insurance benefits terminated.
7) Saudi Arabia announced that if will be pumping extra crude going
into the November elections. They'll be pumping sour crude and the
only people who really know how to use it are the Americans who have
plenty of oil already.
Bottom Line: Due to slack global demand and horrific on-the-ground
economic problems in California, the mid-term prognosis is that oil
prices will continue to drop. As for the short term, the more you delay
the less you will pay.