Gas Prices Plummeting

$2.50 a gallon gasoline might be right around the corner:

Gasoline prices are falling fast and could keep dropping for months. “The only place they have to go is down,” says Fred Rozell, gasoline analyst at the Oil Price Information Service (OPIS). “We’ll be closer to $2 than $3 come Thanksgiving.”

And just in time for the fall elections, too!

I blame Bush. Or Rove. And Halliburton is mixed up in it somehow. Whomever–it’s a Republican conspiracy.

Either that, or just the market at work.

The end of summer. Driving slows, reducing demand for gasoline. And federal requirements for clean air, summer-blend gasoline end next month, making gasoline cheaper to refine and import.

Sluggish demand. Gasoline use in the first eight months of the year is up 1% vs. a year ago, less than the 1.5% to 2% growth that’s typical, says Michael Morris, analyst at the U.S. Energy Information Administration. “Wholesalers are trying to get rid of product. The growth in demand for gasoline has really tapered off,” he says.

Wholesale prices are falling faster than retail gasoline prices, meaning stations are making more money than when prices were $3. Wholesale prices Tuesday ranged from $1.77 to $1.79 a gallon, well below the $2-plus prices typical until recently.

Petroleum traders, worried that prices are too high to last, are selling their holdings. That pushes prices down. They also believe hurricanes won’t disrupt Gulf of Mexico production, OPIS senior analyst Tom Kloza says.

Crude oil, which accounts for roughly half the price of gasoline, ended New York trading Tuesday down 90 cents, at $69.71 a barrel. That’s the first time it’s closed at less than $70 since May 4.

That’s pretty complicated, though. I’d go with Bush-Rove-Halliburton.

UPDATE: Steven Taylor reports that it’s down to $2.6something in Alabama. I paid $3.19 in Alexandria, Virginia yesterday for 93 octane; I believe regular was $2.89.

FILED UNDER: Economics and Business, , , , , ,
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. James’ previous post on this looked at the falling gasoline prices and argued that it is a good thing for President Bush as the midterm elections approach. I even pointed out that this news, coupled with additional news about the economy slowing down could mean good news …

  2. Econbrowser says:

    was quite a bit of attention to the declaration by Fred Rozell, gasoline analyst for the Oil Price Information Service, that U.S. gasoline prices will be below $2.50 a gallon by Thanksgiving. Picking up this story, for example, were BloggingStocks, Outside the Beltway, Environmental Economics, Conservative Outpost, and Jay Reding. This is actually an easier call than might appear. U.S. gasoline prices have a clear seasonal, often falling at the end of the summer driving season. Gasoline also follows crude oil,

  3. commenting on this too. Though the drop may be coming to an end due … Trackback by Pros and Cons — Thursday, August 31, 2006 @ 8:15 am Hide Comments | Add your comment Pros and Cons linked with $2.52… Outside The Beltway | OTB linked with Gas Prices Plummeting…

  4. [IMG working] [IMG Outside The Beltway | OTB] Gas Prices Plummeting Beltway Traffic Jam Carter Agrees to Hold Talks With Khatami Snakes on a Blog Omeed Aziz Popal Kills One, Injures 14 in Vehicle Rampage Matthew Yglesias Consolidates Blog Empire Harry Anderson Leaving New Orleans

  5. Asiali says:

    He is inefficient, not through lack of industry, but from lack of opportunity or of ability to concentrate his energy upon the single task at hand He is inefficient, not through lack of industry, but… Gas Prices Plummeting Gas prices are falling fast: Gasoline prices are falling fast and could keep dropping for months. The only place they have to go is down, says Fred… Where conditions admit, pacemakers should be retained in various groups to key up the other men

  6. You forgot the fourth horse man of the GOP apocalypse, Armitage. He’s the really crafty one who eluded the Fitzmas firing squad.

  7. Steve Verdon says:

    You forgot the fourth horse man of the GOP apocalypse, Armitage. He’s the really crafty one who eluded the Fitzmas firing squad.

    Well it figures, wasn’t he a special forces operator in his younger days?

  8. You also left out the reason why Armitage would want to lower gas prices in time for the election.

    Remember the OTB post on the correlation of gas prices and Bush popularity? So do the math and you see if the correlation was perfect $2 gas would push Bush approval rating above 50%. Since the correlation is only .7, it would probably push Bush only up to 48/49%. Still, not a bad place to help ‘influence’ the election.

    Could Armitage be overreaching to try and actually increase the GOP majorities in the house and senate? For a Vietnam era covert OP guy, would you put anything past him?

  9. vnjagvet says:

    I say it’s “BIG OIL”.

    Yeah, that’s the ticket.

  10. Steve Verdon says:

    I say it’s “BIG OIL”.

    Yeah, that’s the ticket.

    Sniff

    How provincial.

  11. Old War Dogs says:

    Bill’s 2006.08.30 Short Shorts — An experiment (Updated throughout the day, bumped occasionally)…

    Gonna try something new here. Maybe y’all can give me some feedback in the comments. Historically I’ve written at least 90% of the posts on this blog, mostly short Go read this stuff, trying to keep our readers from not…

  12. Herb says:

    I wonder if the investigation of BP Oil for manipulation of oil and gasoline market prices has anything to do with falling prices.

    I bet other “Big Oil” companies are under the microscope also.

    IT’S ABOUT TIME.

    People are just sick and tired of being ripped off by big oil and they are also sick and tired of those who “MAKE EXCUSES” for them.

  13. Anderson says:

    The thing about these explanations is that, while they’re certainly plausible, I believe that if gas prices were instead going up, there would be plausible explanations for that, too.

    It’s like the stock market report: “unrest in __ drove stock prices down today.” Says who? Is that just a guess after the fact?

  14. Kent G. Budge says:

    “Bearish Market Driving Stock Prices Down”

  15. vnjagvet says:

    LOL, Anderson.

    I have always wondered when a billion shares change hands in a day how “the market” speaks so clearly to some.

  16. clearwaterconservative says:

    You shouldn’t make a joke of high gas prices. At 2.50 or at $3.00 millions of Americans are having trouble paying the high gas prices.

    Regardless of who we think caused the price hike, we republicans would do better in November if we showed a little passion and a lot less cynicism.

  17. vnjagvet says:

    cwc:

    Passion towards what, pray? It seems to me like it would help your outlook if you developed your sense of humor a bit.

    Personally, I can’t be serious all of the time.

    It isn’t often that Anderson and I can have some fun with each other, since we usually don’t see eye to eye.

  18. Anderson says:

    vnjagvet, I am guessing that clearwater was chastising JJ for laughing about the gas prices, not you.

    In any event, “I laugh, that I may not weep.” Dems have a lot of practice at that.

  19. vnjagvet says:

    You’re probably right, Anderson.

    The lad still needs a humor transplant.

  20. McGehee says:

    You shouldn’t make a joke of high gas prices. At 2.50 or at $3.00 millions of Americans are having trouble paying the high gas prices.

    Likewise, people shouldn’t make jokes of humorless idiots. There are millions of them out there, suffering the indignity of hearing all these jokes and not getting them.

  21. CGHill says:

    $2.50 isn’t right around the corner from me, but $2.479, as of today, is only a couple miles away.

  22. Gas Heading a Good Way – Down…

    Nice to see gas heading the better way —- down! Several around the country are hoping for gas to hit $2.50 in their area. Up the street from us today it dropped to $2.51, with a national average around $2.80…

  23. Bithead says:

    A couple of years ago we were treated to George Soros openly telling the world that he would manipulate the energy markets so as to make President Bush look bad.

    Just recently we’ve had an entire string of reports about how the hurricane season didn’t end up being nearly what we were originally told it was going to be, at the beginning of the summer.

    A lot of those dire predictions about how bad the summer was going to be in terms of hurricanes came from the global warming crowd. The Al Gore’s of the world for example…and the MoveOn types… those directly getting funds from Soros and company… and of course the press willingly lapped it up, and regurgitated it as fact.

    Do you suppose that kind of news had any kind of affect on the trading for oil and gasoline futures? Hmmm?

  24. Mac says:

    Either that, or just the market at work.

    ROFLMAO…

    Or… it might just be that CFTC Probe into price fixing.

    Or… it might just be that congressional investigation right around the corner.

    clearwaterconservative:

    Regardless of who we think caused the price hike, we republicans would do better in November if we showed a little passion and a lot less cynicism.

    You’re precisely right… but I’m afraid it’s probably too late. Republicans have sold out to K-street interests and listened for too long to disenfranchised libertarians (who haven’t been able to elect so much as a DOG CATCHER in 25 years) and they stand to pay for it with both houses in the fall.

    The upside is that once they’ve been stripped of power, there will have to be a house-cleaning (pun intended), and hopefully they’ll get back to their true conservative roots, and abandon Free Market Extremism.

    Mac
    http://www.brownsludge.com

  25. Steve Verdon says:

    Mac,

    Give us all a break with that intellectually dishonest nonsense.

  26. Anderson says:

    JJ, why are you buying the 93 octane?

    Is it really that much better, or will your Lamborghini not run on anything else?

  27. […] That’s the price of gas at the Liberty station in Mitylene, Alabama today (I pass it on my drive to work). Steven Taylor (Poliblog) and James Joyner (Outside the Beltway) are commenting on this too. Though the drop may be coming to an end due to concerns on Iran. […]

  28. Daily Summary…

    NEWS: – Many Americans fear another terror attack – Bush to renew defense of war strategy – Iran’s president defiant ahead of U.N. deadline – Bush Team Casts Foes as Defeatist – Army Meets Annual Re-enlistment Goal – New California……

  29. Tano says:

    Comment in violation of site policies deleted.

  30. Where’s the dramamine? Part Six…

    Here’s a gas price prediction for you- The price of gas won’t be the same on election day as it is today. Now take that to the bank or Las Vegas whichever is your preference….

  31. James Joyner says:

    Anderson: My car’s owner’s manual suggests 91, which is incredibly hard to find. 93 is the default.

    It’s the SVT edition of the 2000 Ford Contour, sadly, rather than a Lamborghini.