$3 Gas On Horizon This Summer?

CBS ^ | March 28, 2006

[presidio9]

If you've bought gasoline in the last few days knows, you know that prices at the pump are on the rise again.

Trilby Lundberg, publisher of the Lundberg Survey of 7,000 gas stations, told CBS Radio News the average price of all grades combined is up nearly 15 cents over the last two weeks, to $2.52. That's 40 cents higher than last year at this time.

Tom Kloza, an oil analyst for the Oil Price information Service told The Early Show co-anchor Rene Syler Tuesday, "This is pretty much typical for this time of year. It seems a little worse because we're starting from higher numbers.

"But, generally, wholesale prices go up by about 55 percent from, let's say, mid-February to late May — and, as bad as this may seem, we haven't gone up that much right now. I'm afraid this may be the last time you see $2.50, or less than that, for about five months."

Are we looking at $3 a gallon gasoline this summer?

"I don't think we are, unless there's a calamity," Kloza says. But, he warns, "there's a pretty good chance for some calamities this year. This is going to be the summer of hurricane fears, the summer of hurricane worries.

"Oil prices are established by traders, they're established by speculators, and they're established by people who react to fear. And there's no question that this spring and summer is going to be a summer of fear about the tropics. So, I think, without any hurricane impacts or anything geopolitically in Iran, Nigeria or Venezuela, we're looking at $2.50 to $2.75 on average for the next five months.

"If we get an event, that brings $3 and all the other numbers into play. An event would, of course, be a tropical system making landfall near (oil-producing) hardware," or a problem in any of the major oil-producing nations.

"A lot of the gasoline price and a lot of the crude oil price is established by the investment community," Kloza explains. "The investment community is worried about a geopolitical hot spot. It's also worried about refineries breaking down, because we really have no margin of error.

"That investment community is not likely to be selling, particularly since the real peak driving season in the days where we use 9.5, 9.6 million barrels a day is well ahead of us. It's going to be a tough period to go through."

What can we do to help reduce the impact on our pocketbooks?

"Everyone should realize there's really no downside to conservation," Kloza said. "You might not necessarily need to cancel your summer vacations. You probably should take them.

"Measured in personal disposable income, gasoline is still pretty much a bargain, but pay attention.

"I think if you can cut back a little bit, that's a prudent measure, whether we're talking about gasoline or we're talking about appetite for other things. There is a lot of excessive consumption out there. It holds true in gasoline and holds true in a lot of other elements."

[mysterio]

No, it's a completely free and totally fair market with no collusion in which all of the gas stations in an area raise their prices the same amount within five minutes of each other and lower at the same time, too.

I've figured it out, I think, though. They have evolved psychic abilities for survival. They don't contact each other and their parent companies don't either.

[commonerX]

"""2007 4.00
2008 4.50
2009 5.00
2010 5.50

I'm sure your wages are going up in a similar manor. /s"""


Some here would just say, hey it's capitalism and the free market at work, if you can't afford it don't drive.

[John W]

"Great post. Nailed it."

Absolutely.In reference to POST 48.

One way you can tell that nailed it-no responses.

[John W]

Actually, POST 46.Sorry about that.

[John W]

Anyone care to respond to POST 46?

[commonerX]

My wife an I were planning to go somewhere for Vacation this year. But if it goes above $3.00 we will have to cancel just like we had to last year due to gas prices.

We just need to stop living such an extravagant life style.

I have to give up our Pizza on Fridays because we all know that is for the rich. What was I thinking.

[Doctor Stochastic]

I don't think so. Maybe $4.00 or even $4.50, not $3.00.

[DoughtyOne]

Some would. Some would be wrong too. In some instance that could be correct. In others it might be attributing morals to a situation where none existed.

I'm not convinced prices need to go up $0.50 a year. Each year about this time the market is manipulated as far as I am concerned. The oil companies know a retooling must take place, but each year the cost of gas just happens to escalate just before vacation season. Funny how that works.

[commonerX]

"""Some would. Some would be wrong too. In some instance that could be correct. In others it might be attributing morals to a situation where none existed.

I'm not convinced prices need to go up $0.50 a year. Each year about this time the market is manipulated as far as I am concerned. The oil companies know a retooling must take place, but each year the cost of gas just happens to escalate just before vacation season. Funny how that works."""

Yup we middle class people shouldn't be going vacations. We are suppose to work 2 and 3 jobs go home make our own pasta from the garden out back, go to bed wake up and do it all over again. Anything more is living the life of the rich and famous

[DoughtyOne]

LOL, it sure seems that way at times.

Take it easy.


D1

[John W]

Still no responses.

[poobear]

"I'll make a bold prediction: I think in 12 months, you're going to see oil down to $35, $40 a barrel," Forbes said. "In the meantime, it's a huge drain, more a psychological drain (on the economy), but it's not forever. This thing is not going to last."
- Steve Forbes - August 2005

Can we hold him to this prediction?

[John W]

Post 46 still hanging, begging for a response.

[xcct838]

"We need to outlaw day-traders.

Buy anything you want, any day you want, but sell orders take 7 days.

That would calm down prices and markets, day-traders could go get a real job."

I disagree. Individual day-traders provide liquidity and if you reduce the number of market participants, then the effects of market-manipulators become even worse.

70-80% of trade volume is done by computers of UBS, Goldman Sachs, Merrill-Lynch, etc. and the hedge funds. The problem is that the regulation of the financial industry is practically non-existent. The SEC fines a few, just for show, but the bad-guys just consider it a cost of doing business. They need to go to jail.

I am a longtime Rep, but it is amazing, even on here, that so many defend the actions and ideals of out-and-out crooks in the name of business freedom and Republicanism.

I am against high taxes; they are a tool of the Dems to buy votes from stupid people. I am against most Federal regulation. But as a purpose of government is to defend this country militarily, so it should be a purpose to defend against the greedy bastard banker types that want to take all your money.

If you want a real eye-opener, check into the practice of "naked shorting" (Very different from just shorting) to see the extent that the crooks will go. The SEC does nothing about it. Here's a web site: http://www.thesanitycheck.com/

[Beagle8U]

"I disagree. Individual day-traders provide liquidity and if you reduce the number of market participants, then the effects of market-manipulators become even worse."

I'll have to disagree with you.

I think that day-traders add instability to the markets and little more. They push the market up every morning, and back down by 3 pm.

The net effect is that by the end of the quarter any gains that 401k's and roth Ira's might have shown, have mostly been skimmed by day- traders.

The people working real jobs, to put real money into the markets, are the big losers.

I agree that sitting in front of a computer 6-8 hours a day can be a real job if its adding value to a business, but if that time is spent screwing up the books every morning, to fix them by 3pm, that isn't a value added job.

Sorry, we'll just have to disagree.

[xcct838]

We disagree because you don't know of which you speak.

DTs do not push up the market every morning. That is from overnight market orders placed by retail, Joe AverageGuy.

Again, 70-80% of volume is big company computers.

It is the hedge funds that sell into that rally that bring the prices back down. So HFs are the DTs you are against. The volume from actual little-guy DTs is small compared to hedge funds which now control over 1 trillion dollars.

But hey, that's what makes a market. You need a seller for every buyer!

And if you think you see a trend up and back down by 3pm every day then you should be very wealthy.

[Beagle8U]

I'm sure I likely am wrong, but its fun to pick on Day-Traders.

To most people they are just a step above Telemarketers or an Amway salesman...lol

Seriously though, In the past 10-15 years the gains in the markets haven't been shared with the little guys with the 401k's, someone is gleaning those profits.

[xcct838]

"Seriously though, In the past 10-15 years the gains in the markets haven't been shared with the little guys with the 401k's, someone is gleaning those profits."


Now that I agree with! Goldman-Sachs alone PAID OUT $12 BILLION bucks to their employees as bonuses for 2005. That should tell you where your 401k money went. The industry paid out $21 billion for 2005 bonuses.

Day-Traders get bad PR, but they are very small and don't move the markets. The big guys just don't like too many of them so they can manipulate the markets easier. In fact, that is why the big guys got the industry/SEC to slap a $25,000 minimum on day-trade accounts. They don't like ANY competition.

Pick up a Barron's sometime and look in the back to see who is doing the most program trading; usually UBS by a long shot.

Also, just saw T Boone on CNBC saying oil could go to $150. I don't know why they let that rat-bastard on. He has a huge hedge fund that is partly responsible for the speculation on oil. Oil should be about $40, but they use every excuse in the book to justify these prices. Of course, now it is the Iranian scare. Oil is where Goldman made a ton of money this year--on the backs of the American consumers. People HAVE to cut oil usage. That's the only way to trap the speculators. But they are betting that people will pay $3/gal for gasoline before they even think of cutting back. Not me, I cut back alot, and I turned down the furnace this winter until the whole family was mad at me (they can wear sweaters). lol

[Beagle8U]

The problem with oil, some people can't cut back any more than they have.

I have a newer home with 6" walls, modern windows, very fuel efficient, my heat bills have been running $600 a month last winter. Heat set at 68 deg.

No natural gas service in my area, all you can get is propane.

I also have to drive a 4x4 to get out of my driveway and down my road( that often doesn't get plowed for days).

Oh well, markets will adjust at some point.

[xcct838]

"...Heat set at 68 deg"

Get an auto-setback, programmable. Put it on 63 at night.

" I also have to drive a 4x4..."

So do I, but I bought a little car to drive in warm weather.


Or, we could just storm the New York Merc Exchange carrying lots of rope!!!