Tuesday, 28 August 2012

Crude Oil & Gas Prices

Having had a recent trip in Chicago, I was shocked by one gas station with a listed regular unleaded gasoline price of $4.59 per gallon.  So lets take a quick look at crude oil (Brent shown).

While there was a huge spike during the spring with the Iran tensions peaking at $108/barrel, crude has dropped down significantly to $78 before recovering back to its current price of $93.  Thats almost a 20% spike from the middle of June, a very large jump.

However, its still below the peaks of the last few years and it seems in general that the economy has adjusted somewhat with the new expectations of higher gas prices.  Normally, such a high oil price will tend to slow growth significantly.  It likely has to some degree but the recent glut of cheap, abundant (too abundant in some views) natural gas is likely to mitigate some of the pricing factors.

From a consumer standpoint however, with such a high unemployment, expect gasoline prices to remain a drag on discretionary income and limit retail demand.

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