Tuesday, October 04, 2005

Gas Prices Reduce when Use Reduces!

An economic reality being reported FINALLY! This will be good. I hope it keeps people from sending me the one day gas boycott emails. This article lays it out pretty clear that long term use reduction will reduce oil prices. Supply and demand, hmmmmm.

Anyway, I'm gonna keep this in my email for the next round of "Let's Reduce Oil Prices by Boycotting for a day, or a particular company, etc."

Drivers May Have Seen Highest Prices as Gas Use Drops

Gasoline prices may fall as the shock of $3 a gallon at the pump prompts U.S. motorists to drive less.


Demand for gasoline in the four weeks ended Sept. 23 was 2.8 percent below a year earlier


Demand for gasoline in the U.S. has increased steadily for the past 15 to 20 years, said Tom Bentz, an oil trader with BNP Paribas in New York. ``In the last five years it's grown even more because of the American consumer buying SUVs.''

Rising fuel consumption pushed gasoline to all-time highs even before the storms. Retail gasoline prices rose almost 50 percent from the start of the year through mid-August. Katrina made landfall on Aug. 29.

``For a long time everyone's been waiting for when the high energy prices would affect the economy,'' Bentz said. ``Maybe we're finally seeing it now.''

Higher energy prices may cut 0.4 percentage point off of U.S. economic growth, Deutsche Bank economist Peter Hooper said last month.


ON THE OTHER HAND
Some analysts remain bullish on gasoline, predicting that the unprecedented scope of the refinery disruptions will push prices to new highs soon.

``Pressure on gasoline prices is going to continue because there's no solution in sight,'' said Luis Giusti of the Centre for Global Energy Studies. He said he expects U.S. pump prices to jump to $4 a gallon by the end of this year.


``We are running into an energy crisis,'' said Charles Maxwell, senior energy analyst at Weeden & Co. in Greenwich, Connecticut. He said conservation, whether prompted by public service announcements or pump prices, might not bring supply and demand back in balance longer term.

``We have had four recessions as a result of the last four energy crises,'' Maxwell said. While many people believe the economy has absorbed the high energy costs, Maxwell said, high prices will eventually cause a recession.


AND THE AMERICAN REALITY!
Oil trader Bentz also said there is a possibility that the slackening demand that is beginning to appear won't last. ``People have a short memory,'' Bentz said. ``If prices dip we might see them go right back to their old ways.''

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