Gas & Oil

Tanked up this weekend — and for the first time in a long while, I paid over $3 for a gallon of gas (93 octane premium).

Crude is now ~$63 a barrel.

Of course, energy has nothing whatsoever to do with inflation (ex-inflation), so thats no worry.

Whether this goes any further is still unknown. Since the GSCI weighting change, Oil has been unable to surpass $64. Indeed, as the 6 month chart below shows, Crude Oil has substantial resistance right at that point. So unless something very significant happens — Iran and Brits? Pakistan falls? Iraq gets even worse? — we can expect that it will take something very significant to help energy prices blast thru that level.

Note that the longer term (3 year) chart is far bottom, and implies a trading range of $56-64.

CRUDE OIL Daily chart 6 months
Crude_day

CRUDE OIL Weekly Chart, 3 years
Crude

What's been said:

Discussions found on the web:
  1. BMBull commented on Mar 26

    Right now, I’m not sure crude oil is the problem, but rather gasoline. Futures were at 2.07/gallon today, up from 1.35 mid-January. Near a 50% jump in two months.

  2. Michael Schumacher commented on Mar 26

    Gas has been over $3 here for most of the month. Remember we have “special” needs here in California.

    When I’ve shown people the whole GSCI thing and how it was used as an election tool it never elicits any response…just something like “oh…that’s nice” and they then go fill up the SUV-Stupid Urban Vehicle for about $100.

    I must see about this struggling Formula One Team that keeps calling me.
    Ciao
    MS

  3. KP commented on Mar 26

    The Saudi’s must want to bitch slap Ahmadinejad right about now. They want prices ~$55. Low enough to piss off Iran and low enough so that Joe Q Dumbass’ in America will keep buying Tahoes instead pushing for alt energy.

  4. Gary commented on Mar 26

    The commitment of traders report is showing a large build in shorts for both oil and gas. Expect a sell off in the near future. That will signal a great buying opp in the energy sector.

  5. Will commented on Mar 26

    And don’t forget the weakening dollar. Not the major factor, but a factor nonetheless. At $1.20/euro, 50 euros would buy a $60 barrel of oil. As the dollar weakens to $1.40/euro, the same 50 euros would buy a $70 barrel of oil. The euro of course is a less- than- ideal “third point” to use as a reference… just a reminder that we’re looking at a combination of the oil being worth more dollars AND the dollars being worth less oil.

  6. Bob A commented on Mar 26

    The same folks that brought you Enron and Iraq have a stranglehold on gasoline production so it shouldn’t be any mystery as to what the future holds.

  7. Al_K commented on Mar 26

    Gas hit $3.99 a gallon for REGULAR here in Silicon Valley today. News media was there because they couldn’t believe it. Only person to buy gas was a little old lady who couldn’t see across the street to a discount station selling it for $3.11.

  8. cm commented on Mar 26

    I saw 3.499 for Premium at an SF Bay Area Shell station this morning. I say we have a good chance of Premium hitting $4 not long from now.

    AI_K, where is that 3.99 supposed to have been? I cannot find a reference on the Internet.

  9. The Learning Curve commented on Mar 26

    Dancing with the Randoms

    Barry on Gas and Oil. Or “channeling crude dot com.” You know, BR, I don’t think folks are phased at $3 gasoline. Or even $3.50. We need it.

  10. S commented on Mar 27

    $3 gas and endless negative headlines associated with housing and mortgages.

    I’ll take the under on today’s consumer confidence number.

  11. costa commented on Mar 27

    I have to say as much as it sucks to pay $245 for my LIRR ticket and metro card, I would hate to have to shell out all that money for gas driving to work each day

  12. MJ commented on Mar 27

    BR: The focus on oil is silly. What % of your comsumption basket is gas fillup? I bet it isnt even 1%.

    Inflation is a broad monetary phenomenon. Adjusted for quality the costs of most of what I buy is LOWER. If anyone has a problem with house prices — go live in upstate NY or Detroit. If you have a problem with healthcare — go “off-patent”.

    Oh no! “1997-style” healthcare. That’s like Africa right?

  13. Jim K commented on Mar 27

    [ MJ ] – “BR: The focus on oil is silly. What % of your comsumption basket is gas fillup? I bet it isnt even 1%.”

    MJ, remember that oil accounts for a large proportion of energy creation, the majority of transport costs, the basis of most pharmaceutical, plastics and other man-made chemicals (including pesticides), not to mention runs the military and goverment via taxes.

    The ‘fillup’ cost is a function of how far you have to travel and how big your car is, whereas oil costs must be absorbed first by primary industries before filtering through to manufacturers and value-added middlemen.

    As such, any increase in oil has a big and immediate effect on those who use more petrol/diesel first, then on the costs of plastic-heavy or chemicals or services will lag a few weeks/months. Then a whole growing season later, your bread, corn, processed food gets more expensive. Next year, your taxes go up to pay for the increased costs to the economy as a whole for government/military uses.

    The modern, industrial world is built on oil. Sure, it’s highly leveraged in terms of the amount of GDP created for each barrel input, but that does not for a second mean it isn’t absolutely critical.

    Oil (and natural gas) is the big inflater over the next half decade. It is a foundation of the world economy.

  14. ronnyrag commented on Mar 27

    That looks like an inverted head and shoulders to me.

  15. Al_K commented on Mar 27

    Kenny_Boy_had_a_cast_of_a_thousand.

    The local T.V. station doing the story said it was a Shell station on Campbell avenue.

  16. worth commented on Mar 27

    “Pakistan falls”? Yes, I’d say that would be significant and just might impact the price of oil. Presumably to India, not the Taliban, right? Or to its own disgruntled military? Cheney may not be a model for even-handed diplomacy or transparency, but he sure was able to keep The General in line from the outset of the Afghan operations!

  17. cm commented on Mar 27

    Al_K: Thanks.

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