Gas

Depending on where you live in the country, the price of gas will vary.  There are a number of factors that play into the regional price – local emission requirements, demand, refinery capabilities – but overall the price should be semi-reflective of the oil consumption/demand of the nation (or world) in general.

Have you noticed that the price of oil has dropped within the last year?  Damn right you did, because you say the price of gas drop significantly. Within the last month, however, have you noticed that the price of gas is starting to slowly creep upward?  You may not have noticed yet, but I’m guessing you will shortly.

In Chicago, the price of gas is ranging from $2 to $2.25.  Seeing that the price of oil is range bound from $35 to $45, doesn’t it see peculiar that the price of gas is starting to rise?

The rise in gasoline is directly tied to the oil companies – this time.

When the price of oil was at $147/per barrel, the oil companies had no choice but to raise the price of gas.  To place blame on those organizations for the jump was unfair as they had very little control over the energy market, the futures traders and investors did.  This time, it seems, the oil companies are moving the price up due to technical issues, as well as the decision to cut refinery capacity due to “a lack of demand”.

Such action on the part of oil companies appears as if they are testing the limits of the consumers.

Unemployment

Yep, the nationwide unemployment rate hit 8.1% this past February.  That is a jump of half a percent from January’s 7.6%.

Quite scary, no?

Here is something even scarier: If you are black, unemployment is now at 13.4%

“Unfortunately, the black unemployment rate is typically about twice the white unemployment rate,” said Algernon Austin, director of the Washington, D.C.-based Economic Policy Institute’s Race, Ethnicity and Economy Program.

“In recessions, you typically see a black unemployment rate increase significantly.”

The coming week doesn’t have a lot of economic data, but the market will continue to look for evidence of a recovery.  My guess would be that the market will continue to bounce around current levels.

Things to watch

I have the last Futurama Movie, “Into the Wild Green Yonder” in my possession and hope to watch and review at some point this evening.

I’m rather torn about watching this movie, as I believe this will be the last in the series.  The initial DVD Movie Release did very well despite the fact that the effort was sub par. The second movie was… just weird… while the third returned Futurama to the glory fans used to know. I would love to see the show continue on, but I fear the writers are trying too hard…

On to another show…

Season Three of Venture Brothers is coming out on 03/24/09.  If you’ve never experienced the joy that is Venture Brothers, I suggest you start with Season 1.  You’ll find some of the best comedic writing on television, hands down.

Do you, or your man, need a mirdle?

A London department store is hoping to cash in on the lucrative men’s underwear market Thursday by launching a throwback to the Victorian era, a gut-cinching garment that designers say will help men make it through these belt-tightening times.

The stretchy contraptions resemble normal sleeveless tank tops or long-sleeved T-shirts — only shrunk down two or three sizes in a special blend of Spandex, nylon and polyester. Control underwear will be launched later this year.

“It makes waists look trimmer, improves posture and helps men get into the latest slimmer-fitting suits,” said Gavin Jones, head of the Australian company Equmen, which launched its male shapewear line in Selfridges on Thursday. “Men are under a lot of pressure right now to perform financially, socially and romantically. Why shouldn’t we have the same products that women have had for years to make us feel better?”

Really?

It’s called eating less and working out.  Look into it.

UPDATE: 03/09/09

Yeah, no Futurama “Into the Wild Green Yonder” review this envieng.  I got caught up in another project I was working on.  I’ve added it to my list to do for tomorrow! Now I’m off to play some Bioshock.

I’ve written about the price of oil and gas a few times, and by no means am I an expert, I do have some experience on my side that allows me to objectively – and intelligently – discuss the subject.   That said, let’s get the main point out now: The price of oil is too low.

When previously talking about gas and oil prices (12/6) the price was right about $40, and as of today, December 27th, a barrel of oil fetches $37.71.  So, what is going on?

News concerning the global economy, the massive drop off in spending, and credit issues has energy traders selling as if a drop of oil will never be used again. Much like there was a dramatic upswing this past summer, the market correction is moving dramatically – and unrealistically – in the other direction. Even when OPEC announced a cut of 2.2 million barrels starting in the new year, the price oil moved lower.  In many ways it feels as if people are treating oil as if it a renewable resource all of a sudden – it’s not.

Isn’t oil a supply and demand commodity?  Yes, but the market is trading oil as if the demand falling at a rate greater than the cuts OPEC has recently announced.   As it stands today, oil is trading as if the expansion of the economy in the last 5 years never happened.  It’s acting as if the population of the world has not grown, as if China and India never grew, and as if there are less cars on the road, worldwide, today than 5 years ago. Energy traders, in the bearish mood and focus they have, are simply guessing at what a potential reality may or may not be when it comes to the price of oil in the current environment.

With price falling we can expect another impact on the economy – oil producers shutting down exploration rigs. Basically, the decline in oil price has lead to a marketplace it has become unprofitable to produce as much as they had previously.  

If downward pressure continues, which it looks as if it will until there is a catalyst to change the mood of the market, the consumer will be able to enjoy low gas prices.  Just remember, oil is not a renewable resource… the price is bound to rise once again.

Remember how I mentioned that oil was dropping uber fast, and that if the decline continued gas has the potential to hit $.99 again?  Do you also remember how I mentioned the only way to prevent the decline is with some major event?  Well, there is one on the horizon – OPEC has signaled “significant” production cuts in hopes of stopping the potential slide.

Via Bloomberg:

A “severe” cut may be needed to halt the decline in prices, group president Chakib Khelil told the Associated Press in a Dec. 6 interview.

The members of OPEC believe that a reasonable price for a barrel of oil is roughly $75, but obviously the market doesn’t agree with the thinking right now.  But why does OPEC hold this view?  The countries that have membership in OPCE obtain most of their government budgets from the profits pulled in from oil sales.  The lower the price of oil, the less funding available.  The less funding available, the less money for things such as roads… schools… and military spending.

In case you were curious as to what countries made up OPCE, here you go:

• Algeria
• Angloa
• Ecuador
• Indonesia
• Iran
• Iraq
• Kuwait
• Libya
• Nigeria
• Qatar
• Saudi Arabia
• United Arab Emirates
• Venezuela

As it seems I have no “normal” hobbies, I tend to do a lot of reading about the financial markets (finance, commodities, stocks) and I feel safe saying most people have no clue just how low gas has potential to get in the next few months.  While this low will be temporary, you still will be surprised.

Essentially, the bottom has fallen out of the entire commodities market.  Metals, Oil, Natural Gas and Agricultures are falling as if people will never need to drive, build or eat again.  For example, the price of oil has fallen from almost $150 this past spring to roughly $40 this past Friday and, obviously you’ve see the price of gas at the pump fall too.  All of this can be tracked back to the recession; the “pop” of the speculation bubble and the financial melt down.

Historically there is roughly a 6-week lag between the price of oil and the price of gas at the pump.  So, while oil has dropped $25 in the last month (from roughly $65 to $40) the price of gas still has more room to drop.  Based on the close price of oil today ($40), one could reasonably expect to see the U.S. average for a gallon of gas to drop to around $1.35 within the next 4 to 6 weeks.

As with all things financial market related, market “corrections” tend to over swing both ways.  Oil at $150 was way too high for current condition and supply (part speculation bubble) and oil falling like a rock is the correction of that bubble.  Where is going to stop, no one knows… but if it continues to fall, say to the level of $20 per barrel, the U.S. could see $.99 for a gallon of gas once again.

This could change at any time – an unexpected war, production interruptions, terror attack – but as long as oil continues to fall hard, gas is going to follow.

Think I am making this up?  Jan 09 Unleaded Gas Futures are now at .90

I had been expecting oil to rise as Ike moved into the Gulf, but for a range of reasons that is not happening.  What did happen is the spike in Gas prices:

“The wholesale price of gasoline ranged from $4 to nearly $5 a gallon at the U.S. Gulf Coast on Thursday…That is up significantly from about $3 to $3.30 a gallon on Wednesday…The wholesale price of gasoline is what refineries charge retailers. Retailers then mark up those prices for the customer so they can make a profit — so if these wholesale prices hold, it could mean that pump prices for U.S. drivers easily break through the July 17 record of $4.114 a gallon.”

If the storm continues to head north, I would expect Gas, Oil and Natural Gas to increase in price.  Who knows these days, it’s a wild market right now!