Enjoy Today's Cheap Gas Because It's Soon Headed Over $3 a Gallon

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Enjoy Today's Cheap Gas Because It's Soon Headed Over $3 a Gallon
Today's relatively "cheap" gas won't last, says Stephen Schork, editor of the The Schork Report. This summer, gas will likely be back over $3 a gallon again.

Why?

Because refiners, the folks who make crude oil into gasoline, are getting killed. Speculators have driven the price of crude oil up well beyond where it should be on a fundamental basis, says Schork. Meanwhile, prices at the pump are much lower than they should be given that oil is now more than $80 a barrel.

The result is that the folks in the middle, the refiners, are getting squeezed. And they're responding by cutting capacity.

If the economy continues to recover, says Schork, demand for gasoline and crude oil will gradually increase. This, combined with refiners cutting back on capacity, will eventually drive gas prices higher.

And what will $3+ gas do to the economy?

The Maginot line for demand-destruction, Schork says, is $3.30 a gallon. If gas hits that level, you'll see Americans start to consume less of it, and the high price will begin to act as a brake on the economy.
 
It almost always goes up at the end of winter, once the threat of people freazing to death is over.
 
Topspin said:
It goes up in the summer due to driving demand.
Gas is dirt cheap in needs to be a lot higher.
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So heating usage does not make it go up in the winter? Is there really that much less driving in the summer? Come on!
 
Topspin said:
It goes up in the summer due to driving demand.
Gas is dirt cheap in needs to be a lot higher.
Click to expand...

Yep, bet that would really help a struggling economy. I really don't know as I'm not an economist.

I do know that when gas gets over $2.50 a gallon I usually shut down the extra driving and boating. So when it goes over three bucks...well, I'm usually already shut down to the minimum of what I will purchase anyway.
 
leaningright said:
Yep, bet that would really help a struggling economy. I really don't know as I'm not an economist.

I do know that when gas gets over $2.50 a gallon I usually shut down the extra driving and boating. So when it goes over three bucks...well, I'm usually already shut down to the minimum of what I will purchase anyway.
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there is zero doubt that it's a drag on the economy, there is also zero doubt that an improving economy will drive up demand and price.
 
Topspin said:
Heating oil goes up in winter from demand, same as driving demand in summer makes gas higher.
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They come from the same source and the limiting factor is not demand but political will.

Gas is cheap, the price is set by how much they can charge without getting the population upset enough to demand monopoly busting.
 
Jarod said:
They come from the same source and the limiting factor is not demand but political will.

Gas is cheap, the price is set by how much they can charge without getting the population upset enough to demand monopoly busting.
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Wow Jarod....this is as close to a statement that I can agree with that you have typed in some time. I tend to think exactly the same way a lot....as far as that last thought is concerned. I think they do charge right up to the brink of what the public will stand for. I know that sounds almost as loony as desh's and BAC's 9/11 conspiracies but that is the way I think, sometimes.

For everyone else, why aren't we working harder to develop alternative energy? It seems that no matter who is the president or which party provides the political leadership of the day we still progress in this area at the same snail's pace.
 
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