Prices at the gas pump have taken the way-backseat in the old news cycle lately, but WTF — in the face of actual face eating, Chinese body parts mailed to all over by a Canadian (in Brazil, a wife kills, then cuts up husband, a “crime of passion,” she says), Scott Walker buying his way back into power, slaughter of the innocent in Syria, the pope’s butler did it, and on and on and on — so who’s worried about a dip in the cost of running foolish errands.
This week saw pump prices fall 1.5 cents to a national average of $3.57 a gallon for regular, while overall demand has slid 3.7 percent, even during the past Memorial Day weekend — drivers pumped 1.7 percent less gasoline than the same time last year.
(Illustration found here).
Couple of days ago, I put another $20 worth of gas in the old Jeep, and jeepers, the price had dropped three whole cents since the last time, down now to $4.43 a gallon for regular — it’s been a long while since it’s been this low.
Just my three cents, but the whole gas/oil bullshit has taken a peculiar tumble.
In the U.S., benchmark WTI contracts fell drastically after having peaking above $110 per barrel in February, even clocking in a 20.6 percent decline in May.
On Tuesday, WTI was selling for $84.22.
International prices, captured by Brent contracts, slid from $128.40 on March 1 to $98.72, and could fall further.
One trader told me WTI prices could fall as low as $75 while Brent could slide to the low nineties by the end of the month.
According to a report by the Energy Intelligence Group, picked up by Business Week, global oil consumption fell to 88.5 million barrels a day as of the end of April, from 90.4 million in late December.
At the same time, supplies have been rising for more than a year.
OPEC noted in its May report that â€œhigher non-OPEC supply and rising OPEC production has resulted in total supply exceeding market needs.â€
And even with these pump prices, US peoples are still way-cautious about taking any chances as according to an AP-NORC Center poll, not even one in five ranked a summer trip or the latest gadget as a priority, while nine in 10 people said they had taken some action in the last year to save energy (reducing electricity use and making homes energy-efficient) — people are worried.
Or all alone: “I’m by myself, I’m a widow,” she said. “I wouldn’t have someone to go on vacation with.”
However, when the average for an average summer vacation in the US is at $1,180 per person (for a family of three or four — WTF) and maybe that’s for the lower part of the 1 percent, or 99 percent of the upper middle class, or 100 percent of no one else.
Patrons of my liquor store would gag on a half-pint of Ancient Age at those numbers.
Or even comprehend what that supposedly-awesome mineral Gold has become in reality and how sugar-coated is our current economy.
David Einhorn, founder of Greenlight Capital, deciphers (via BusinessInsider):
â€œA jelly donut is a yummy mid-afternoon energy boost,â€ Einhorn explained.
â€œTwo jelly donuts are an indulgent breakfast.
Three jelly donuts may induce a tummy ache.
Six jelly donuts, thatâ€™s an eating disorder.
Twelve jelly donuts is fraternity pledge hazing.
â€œMy point,â€ Einhorn elaborated, â€œis that you can have too much of a good thingâ€¦ Chairman Bernanke is presently force-feeding us what seems like the 36th jelly donut of easy money and wondering why it isnâ€™t giving us energy or making us feel better.
Instead of a robust recovery, the economy continues to be sluggishâ€¦â€
â€œAs a result,â€ Einhorn concluded, â€œI will keep a substantial long exposure to gold, which serves as a jelly-donut-antidote for my portfolio.â€
How the rich handle wealth — hummmm…
Outside just now taking a smoke break and there’s faint light forming in the east — another day in a world that seems to be getting more dangerous and weird (zombies, cannibals and people who cut up loved ones) and gas in the fuel tank is just another brick in the wall.
These low prices might be a forecast of a blighted future.
Kevin Drum at Mother Jones:
Generally speaking, we’re finally living in the world of peak oil.
Or call it plateaued oil if you like, since we seem to have hit a rough plateau in oil production that’s likely to continue for quite a while.
This is the world of the vicious circle: when the economy gets better, demand for oil goes up and oil prices spike.
This causes the economy to tank, which sends demand for oil down.
Rinse and repeat.
Add to that the effect of external events on oil prices (the Arab Spring, pipeline breakdowns, embargoes on Iran, etc. etc.) and world economic growth is likely to remain both sluggish and unstable for the foreseeable future, held hostage to OPEC oil production until we get serious about alternative energy.
And since, in this brave new world, the price of oil gyrates frequently and erratically, it’s hard to get people serious about this.
If oil were, say, permanently above $200 per barrel or so, we’d be building wind farms and installing PV solar at breakneck speed.
But whenever the price of Brent falls below $90 or so, everyone gets nervous and wonders if wind farms and solar arrays are really such good investments after all.
The uncomfortable truth is that we’d probably all be better off if the federal government simply taxed oil variably at a rate that set the all-in price at $200 no matter what the market price was.
That would be high enough to get everyone serious about more reliable energy sources and stable enough that investors would be falling all over themselves to fund alternative energy projects.
And since it’s oil price spikes that hurt the economy more than high oil prices per se, this probably wouldn’t even have a major impact on growth.
It’ll never happen.
But something like it probably should.
There’s enormous upside both economically and environmentally, and the revenue would help address the federal deficit problem everyone pretends to be worried about.
Conversely, the downsides are pretty modest and manageable.
Wouldn’t it be nice if any of this actually made a difference in Washington DC?
Nothing seems to make a difference in DC.
And now I just want the Jeep to crank.