Gas price rally may be running out of fuel (gas prices, gallon, Congress)

[afoigrokerkok]

Gas price rally may be running out of fuel - Oil & energy- msnbc.com

COLUMBUS, Ohio - After rising nearly every day for the past two months and climbing 67 percent so far this year, it looks like gasoline prices may be ready to take a break.

Gas prices were up for a 54th straight day Sunday, by 0.1 cents, to a new national average of $2.693 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

The recent run-up exceeds anything that oil analysts say they have seen since the 1970s. But the streak should end Monday or Tuesday, Tom Kloza, publisher and chief oil analyst for OPIS, said Sunday.

......

The bigger supply has pressured wholesale prices across the country, as demonstrated by a 10-cent drop to $1.93 a gallon Friday on the New York Mercantile Exchange. Prices on the West Coast fell 27 cents last week to $1.931 a gallon and were down 15 cents to $1.94 in the Chicago area that serves the upper Midwest. Those declines eventually will pass through to the consumer.

The question now is whether prices, which usually peak in the U.S. around the July 4th holiday, will backslide into the fall or if geopolitical problems in Iran and Nigeria will drive oil — and gasoline prices — even higher after a short dip.

[roysoldboy]

Prices in my town run from $2.63 to 2.75 at self-serve stations and our one and only full service one is at $2.88. Boy will I be glad when it starts going back down.

[tallrick]

I believe that gas prices are controlled by speculation as a direct result of the dollar losing value. While prices will fall again after the summer, I believe that they will increase again next year as a result of a torrent of funny money.

[truthseeker2012]

Originally Posted by tallrick

I believe that gas prices are controlled by speculation as a direct result of the dollar losing value. While prices will fall again after the summer, I believe that they will increase again next year as a result of a torrent of funny money.

agree!

[mcmastersteve]

For those who may be curious as to where the price of gas is going, I offer the following economic lesson.

If supply were out of sync with demand - that is, if the oil price weren't based on solid fundamentals (which include, of course, the American dollar that's exchanged for oil), inventories would be rising. That's what happens during speculative booms. Happened in housing, happened in tulips...etc., etc. - which is one of the big warning signs of a speculative bubble. Here, they aren't.
BBC NEWS | Business | Oil price up as inventories fall

Remember prices are ratios.

First U.S. Dollar with an explanation U.S. Dollar Index - Wikipedia, the free encyclopedia

Now compare it to...
oil
gold
Euro
Japanese yen
British pound
Canuck buck
Australian dollar
New Zealand dollar
Swiss Franc

Over time markets do trend, if you step back and ignore the day to day fluctuations.

What is 'the big picture' on every last one of those charts? Since more-or-less the first of '09, they're all trending upward, except for currencies which have been bailed out by their governments, see the Canada dollar, and the Euro, in which case they are holding against the gradually devaluing American dollar.
What does that mean for gas, insofar as the dollar is concerned? Gas is becoming more expensive relative to the dollar; the dollar is falling against gas unless we see an increase in supply.
Now look at the short term energy outlook.

"The average U.S. price for regular-grade gasoline, at $2.62 per gallon on June 8, was almost 60 cents per gallon higher than its price at the end of April. Regular-grade gasoline prices are expected to reach their summer seasonal peak in July, with a monthly average close to $2.70 per gallon. The annual average regular-grade gasoline retail price in 2009 is expected to be $2.33 per gallon, rising to $2.56 in 2010. The annual average diesel fuel retail prices are expected to be $2.40 and $2.67 per gallon in 2009 and 2010, respectively".

EIA - Short-Term Energy Outlook

"EIA projects that regular-grade motor gasoline retail prices, which averaged $3.26 per gallon in 2008, will average $2.33 per gallon this year, up 21 cents per gallon from last month’s Outlook projection. These prices are projected to rise to $2.56 per gallon in 2010, 26 cents above that projected in the previous Outlook. Diesel fuel retail prices, which averaged $3.80 per gallon in 2008, are projected to average $2.40 per gallon in 2009, up 14 cents from the previous Outlook. Diesel fuel retail prices are projected to average $2.67 per gallon in 2010, up 19 cents per gallon from the previous Outlook".

To restate, the price of gas will only come down if the American dollar regains value.
Saudi Arabia supply increase won't cut prices due to the weak U.S. Dollar.

Now ask yourself if the congress has passed any legislation over the past year that may have increased the money supply and possibly devalued the dollar?
I will leave that one up to you.