[Rhodes22-list] Good News - Gas Prices Falling

[Bill Effros]

Brad,

Which VW are you looking at?

My brother just got a Prius and loves it.  He now likes getting stuck in 
traffic--very good for his gas mileage.

Bill Effros

Brad Haslett wrote:
> Saroj,
>
> Maybe, I don't agree with all the premises of the article but everything
> does line up for a fall, just not as far as the author suggested.  The
> unfortunate repercussion is that it will encourage us to go back to our
> foolish ways.  Peak Oil is coming!  The folks who have the most oil are
> still the same folks who hate us the most.  The two fastest growing oil
> consuming nations, China and India, aren't slowing down. China doesn't 
> give
> a shit about anything but China, and they're cutting deals everywhere for
> every commodity.  I can't make my jet or our equipment burn less fuel, 
> but
> my next car *will *get 50mpg+.  Hopefully it won't smell like shrimp.
>
> Brad
>
>
> On 9/15/06, Saroj Gilbert <saroj at pathfind.net> wrote:
>>
>> That would be good news...
>>
>>
>> ----- Original Message -----
>> From: "Brad Haslett" <flybrad at gmail.com>
>> To: "The Rhodes 22 mail list" <rhodes22-list at rhodes22.org>
>> Sent: Friday, September 15, 2006 9:23 AM
>> Subject: [Rhodes22-list] Good News - Gas Prices Falling
>>
>>
>> <http://seattletimes.nwsource.com/html/home/>
>>
>> Thursday, September 14, 2006 - 12:00 AM
>>
>> *.*
>>
>> **
>> *
>> **Analyst predicts plunge in gas prices*
>>
>> *By Kevin G. Hall*
>> *McClatchy Newspapers*
>>
>> WASHINGTON — The recent sharp drop in the global price of crude oil 
>> could
>> mark the start of a massive sell-off that returns gasoline prices to 
>> lows
>> not seen since the late 1990s — perhaps as low as $1.15 a gallon.
>>
>> "All the hurricane flags are flying" in oil markets, said Philip 
>> Verleger,
>> a
>> noted energy consultant who was a lone voice several years ago in 
>> warning
>> that oil prices would soar. Now, he says, they appear to be poised for a
>> dramatic plunge.
>>
>> Crude-oil prices have fallen about $14, or roughly 17 percent, from 
>> their
>> July 14 peak of $78.40. After falling seven straight days, they rose
>> slightly Wednesday in trading on the New York Mercantile Exchange, to
>> $63.97, partly in reaction to a government report showing fuel 
>> inventories
>> a
>> bit lower than expected. But the overall price drop is expected to
>> continue,
>> and prices could fall much more in the weeks and months ahead.
>>
>> Here's why:
>>
>> For most of the past two years, oil prices have risen because the 
>> world's
>> oil producers have struggled to keep pace with growing demand,
>> particularly
>> from China and India. Spare oil-production capacity grew so tight that
>> market players feared that any disruption to oil production could create
>> shortages.
>>
>> Fear of disruption focused on fighting in Nigeria, escalating tensions
>> over
>> Iran's nuclear program, violence between Israel and Lebanon that might
>> spread to oil-producing neighbors, and the prospect that hurricanes 
>> might
>> topple oil facilities in the Gulf of Mexico.
>>
>> Oil traders bet that such worrisome developments would drive up the 
>> future
>> price of oil. Oil is traded in contracts for future delivery, and
>> companies
>> that take physical delivery of oil are just a small part of total 
>> trading.
>> Large pension and commodities funds are the big traders and they're
>> seeking
>> profits. They've sunk $105 billion or more into oil futures in recent
>> years,
>> according to Verleger. Their bets that oil prices would rise in the 
>> future
>> bid up the price of oil.
>>
>> That, in turn, led users of oil to create stockpiles as cushions against
>> supply disruptions and even higher future prices. Now inventories of oil
>> are
>> approaching 1990 levels.
>>
>> But many of the conditions that drove investors to bid up oil prices are
>> ebbing. Tensions over Israel, Lebanon and Nigeria are easing. The
>> hurricane
>> season has presented no threat so far to the Gulf of Mexico. The U.S. 
>> peak
>> summer driving season is over, so gasoline demand is falling.
>>
>> With fear of supply disruptions ebbing, oil prices began sliding. 
>> With oil
>> inventories high, refiners that turn oil into gasoline are expected 
>> to cut
>> production. As refiners cut production, oil companies increasingly risk
>> getting stuck with excess oil supplies. There's already anecdotal 
>> evidence
>> of oil companies chartering tankers to store excess oil.
>>
>> All this is turning financial markets increasingly bearish on oil.
>>
>> "If we continue to build inventories, and if we have a warm winter 
>> like we
>> had last winter, you could see a large fall in the price of oil," said
>> Gary
>> Pokoik, who manages Hedge Ventures Energy in Los Angeles, an energy 
>> hedge
>> fund. "I think there is still a lot of risk in the market."
>>
>> As it stands now, the recent oil-price slump has brought the national
>> average for a gallon of unleaded gasoline down to $2.59, according to 
>> the
>> AAA motor club. In the Seattle area, prices per gallon have fallen to
>> $2.856
>> currently from $3.071 a month ago, a decline of 7 percent, according to
>> AAA.
>>
>> Should oil traders fear that this downward price spiral will get 
>> worse and
>> run for the exits by selling off their futures contracts, Verleger said,
>> it's not unthinkable that oil prices could return to $15 or less a 
>> barrel,
>> at least temporarily. That could mean gasoline prices as low as $1.15 
>> per
>> gallon.
>>
>> Other experts won't guess at a floor price, but they agree that a 
>> race to
>> the bottom could break out.
>>
>> "The market may test levels here that are too low to be sustained," said
>> Clay Seigle, an analyst at Cambridge Energy Research Associates, a
>> consultancy in Boston.
>>
>> On Monday, the oil-producing cartel OPEC hinted that if prices fall
>> precipitously, OPEC members would cut production to lift them. But that
>> would take time.
>>
>> "That takes six to nine months. If we don't have a really cold winter 
>> here
>> [creating a demand for oil], prices will fall. Literally, you don't know
>> where the floor is," Verleger said. "In a market like this, if things
>> start
>> falling ... prices could take you back to the 1999 levels. It has 
>> nothing
>> to
>> do with production."
>>
>> <http://seattletimes.nwsource.com/news/general/copyright.html>
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