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Why Crude Is Up, But Gas Is Down

Contributed by mm | August 19, 2004 11:52 AM PST



Record-setting crude oil price is making headlines at CNBC these days. At one point of time this morning, it has approached $48.10. Apparently, this is not good news for the economy, whose growth prospect is now in question after back-to-back dismal labor reports?

However, have you feel the stick shock at pump yet? According to SeattleGasPrices.com, we at the State of Washington are buying gas at almost 20% below the $2.30 record set in mid/late-May. I am quite sure the same happens in the rest of America, because I saw no media is reporting about high gas prices in the last couple of months. (BTW, Seattle gas price is higher than the national average, and here is why.)

So, what gives?

BusinessWeek offers its two cents: refineries are operating at full capacity throughout the summer and, on the other hand, drivers have cut back their summer plans, effectively alleviating the shortage.

However, we may soon see $2.00/gallon again. Many factors are collectively brewing another wave of high gas price: 1) gasoline and oil inventory is declining, 2) more people will drive during the Labor Day weekend, and 3) more refineries are switching to heating oil to prepare for the winter season. Be prepared for a heart attack the next time you drive to a gas station :-)

(P.S. Just found out MSNBC ran a good article on this too.)

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This post has 1 comment. Read and share your opinions.
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Comments
>>> Paul Commented on August 19, 2004

The decline in inventory is what will really get the prices up. I believe I saw that this is the 2nd week in a row that the inventory levels are lower than normal.

And where I am in the northeast, the winter fuel season will be here soon enough. The cost of heating fuel is already at it's usual january level. That can't be a good sign for the winter.


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Read More ... 36 Posts In The Same Category

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