Persistent Glut Points to More Gasoline Price Cuts Lundberg: Price may look low, but it feels high
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CAMARILLO, Calif. -- The February 5 U.S. average retail regular grade gasoline price is $2.66.50 per gallon, down 5.76 cents from January 22, according to the most recent Lundberg Survey of approximately 5,000 U.S. gas stations. This make for a modest 7.18-cent slide during the past four weeks. The price may look low, but it feels high—nearly 75 cents per gallon higher than a year ago.
Crude oil was the cause, as an 8-cents-per-gallon equivalent drop was translated quickly to the street. This is a partial reversal of the 14-cents-per-gallon rise of crude and gasoline in the three-week period of December 18 through January 8.
The role of the dollar versus other currencies and the fear of government overprinting of money and rising debt continue to be volatile factors in oil prices. What seems to be more enduring is the glut, brought on by persistent demand damage from recession and unemployment. Prices for both crude and refined products seem to want to fall.
If oil prices don't rebound, or weaken further, then lower gasoline prices will probably prevail—even though U.S. seasonal gasoline demand will soon be building.
At $71 per barrel for light benchmark oil, most producers aren't in dire straits and are in fact faring well. U.S. refiners, though, have now shut in 22.3% of capacity. They are the ones left holding the bag, to make sacrifices and ride out the gasoline and diesel glut—until oil prices crash or employment rises to start healing demand.
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If oil prices don't rebound, or weaken further, then lower gasoline prices will probably prevail—even though U.S. seasonal gasoline demand will soon be building.