How far will gas prices fall?

[TwinsBrewersWorldSeries]

Simple logic would indicate that $4.30 gas (at $140 a barrel) would eventually fall to $2.15 gas (at $70/barrel), but somehow I doubt the market will allow that. Gas prices fell to about $2.69 last September IIRC, and i'm hoping we fall to those levels for a few months this fall/winter.

 

Per MilwaukeeGasPrices.com, prices have fallen to an average of $3.01 in Milwaukee (as low as $2.89 in some places). Anyone expect the prices to fall further (maybe to last fall's levels) or is this just a hiccup before we're back up at $4.30/$4.50 per gallon?

[mothershipconnection]

At this point, prices at or near $4 are just not sustainable in the world economy - it's not just us feeling a crunch right now. Something a quarter on either side of $2.75 probably seems most likely at this point. I don't see $2.25-ish as very likely since sellers know that if they maintain careful control of supply, people will pay $3 without changing their consumption a whole lot. That said, if the economy continues to worsen, prices could continue to fall as those in weaker economies will need to really cut back on their use.

[dadofandrew]

Rumor has it China has not bought a drop of oil since the Olympics ended...shortages are already apparent, and many think rationing will be installed soon. I would guess that barring a terrorist attack, it'll be under 3 for much of the winter.

[Tailgat0r76]

Well if we look at it strictly mathematically:

 

The last trade on light crude oil as of tonight for November delivery was $80.85 for a barrel.

 

There are 42 gallons in a barrel (80.85 / 42 = $1.925)

Then add in all the gasoline taxes (Wisconsin has about 51.3 cents of tax on each gallon) so we're looking at around $2.50.

 

Now considering the refining process isn't 100% effective, and that only about half a barrel is made into gasoline; I would expect gas to hover around $2.99 all winter long, barring any major supply/demand obstructions.

[pitchleague]

just wondering, is oil actually placed inside of 42-gallon barrels? Or do they just use barrels as a standard of measurement for pricing purposes?

[sgtcluels]

The 42-US gallon oil barrel is a unit of measure, and is no longer used to transport crude oil - most petroleum is moved in pipelines or oil tankers.

[davego]

Saw 2.99/per Sunday afternoon. I guess economic collapse does have an upside.

[sgtcluels]

Isn't opec going to have a meeting and talking about reducing production? i'd assue that'll cause the price to rebound.

[DatHoser]

OPEC is planning on meeting Nov. 18. Still got time for it to drop a little more.

[PlayerHader]

The effect of OPEC dropping production will be negligible unless they make drastic cuts, which is unlikely due to how fragile the world market is right now.

 

I'd expect gas to sit around 2.80 a gallon most of the winter barring any spectacular event. Then again, I'm not expert and those who claim to be admit it's nearly impossible to tell.

 

Also, the price of crude oil makes up only about 1/2 of the price of gasoline. Just an FYI for anyone trying to (in vain) to compute.

[dadofandrew]

Weeks is correct, the labor and transport makes up much of the price of gas...and of course, to be exact, oil is not gas, so the price of oil is not a direct correlation.

[fondybrewfan]

Most pundits have predicted gasoline bottoming out at around $2.50 or so with oil bottoming out around $60-70 a barrell. However none of these pundits predicted the current decline, they were actually predicting $150-$200. So take their opinion with a grain of salt. Their was one dude on CNN who said oil could get down to $35-$40 a barrel but I don't see that happening.

 

The only thing that is certain in the oil market is that no one really has a clue as to what is going to happen next.

[Chio151]

If you take a look at the historical context of oil prices as it relates to other factors like inflation, it should be about 50/barrel.

 

The amusing thing is that Iran and Venezuela need oil at 95/barrel to keep their budgets. Saudi Arabia only needs about 60/barrel and they basically control OPEC. So, low oil prices = our enemies lose.

[Roscoe Chill]

At this point, prices at or near $4 are just not sustainable in the world economy - it's not just us feeling a crunch right now.

Gas is way more expensive than $4 a gallon in other countries, and has been well before the last six months. So, your theory on gas prices rising all over may be true, but in the Netherlands it's closer to $10 than it is $4.

[DuWayne Steurer]

Some time ago fishermen in Spain and Portugal went on strike when gas went over $11 a gallon in those countries.

[mothershipconnection]

I just filled up for $1.97 a gallon. Yeah, it's not a drunken typo, that really is a ONE at the beginning of that price. Funny thing is, the gas station 100 yards away was still at $2.35. What kind of moron would go to a gas station a half block away and pay an extra $7 to fill up?

[PlayerHader]

If you take a look at the historical context of oil prices as it relates to other factors like inflation, it should be about 50/barrel.

 

The amusing thing is that Iran and Venezuela need oil at 95/barrel to keep their budgets. Saudi Arabia only needs about 60/barrel and they basically control OPEC. So, low oil prices = our enemies lose.

Regular inflation rate doesn't take into account the rapidly increasing demand in developing countries like China and India, though.

[BrewCrewForever]

I just filled up for $1.97 a gallon. Yeah, it's not a drunken typo, that really is a ONE at the beginning of that price. Funny thing is, the gas station 100 yards away was still at $2.35. What kind of moron would go to a gas station a half block away and pay an extra $7 to fill up?

Dude, where was gas $1.97? That is insane! I filled up for $2.39 yesterday in Germantown and thought that was sweet.

[mothershipconnection]

Dallas

[Team Canada]

Yeah, I'm hearing other sub-2.00 prices as you head south, like Kansas. Kentucky was in the 2.20's a few days ago, but I'm sure that's dropping. Hoorah!

[craigharmann]

Dallas

Yeah, it's right around $2.00 here in San Antonio. Less taxes on gas prices and no minimum markup law is a good thing!

[ReverendBrewmeister]

Even the East Coast is seeing a massive drop in prices. We've got a wide range of prices here in Pennsylvania: $2.30-$2.50 toward Philadelphia, but mostly in the $2.00 to $2.20 range here near Harrisburg. (It's amazing to see the range within a metro area depending upon station location.) The fuel does have 10% ethanol added due to air quality issues.

 

Haven't been to New Jersey lately, but stations in Camden and Trenton were usually running about $0.20 cheaper than Philadelphia, so it could be reaching the $2.00 mark there. Was near Baltimore on Friday, and fuel was in the $2.30-$2.40 range.

[bork]

I've heard it should be under $2 in Milwaukee by Thanksgiving. It's crazy to think that gas prices will be cut in half in just a few months time.

[Katuluu]

I have seen it as low as $2.03 here in Minneapolis.

[T B0NE 10]

I'm defiinately not an expert on economics, so what is the reason prices are falling like this?