How many more times will you hear some MSM talking head tell you that gas prices are the lowest in a year? Do you know why? Because gas prices always bottom in Dec/Jan. It is the lowest consumption point in the year and the winter blend is less expensive. What you won’t hear from these nitwits is that this December’s average price of $3.30 per gallon will be the highest December price in U.S. history. This is after Americans have paid the highest annual average price in U.S. history. This is after 2011 had been the highest average price in U.S. history. So much for that U.S. energy independence storyline. Below is an eight year chart of gas prices. They go up and they go down, but the path is unequivically higher.
Let’s examine the trend in December prices over the last eight years:
December 2004 – $1.70
December 2005 – $2.20
December 2006 – $2.40
December 2007 – $3.20
December 2008 – $1.85
December 2009 – $2.80
December 2010 – $3.10
December 2011 – $3.20
December 2012 – $3.30
Gas prices have already begun to rise in the last week as the price of oil has surged from $85 to $91 in the last month. The fact that oil prices are still above $90 per barrel, even though Europe is in a depression, the U.S. is in recession with petroleum usage at a 16 year low , and China has slowed dramatically, should tell even a CNBC bubble headed bimbo that something doesn’t make sense with the plenty of oil storyline they mouth on a daily basis. Peak cheap oil is a fact. Saudi Arabia and Canada need prices at $90 per barrel to get a return on their investment. Even a worldwide recession will not drop prices much below $80 per barrel.
The mantra about shale oil saving the country is bullshit. The oil siphoned off from fracking also costs $80 a barrel to extract. The wells deplete more rapidly than traditional oil wells. Bakkan has a lot of oil and gas, but at a steep price. Imagine the price of oil and gas if the U.S. economy was actually booming. And there is the Catch-22. If the economy ever got going again, the price of gasoline would surge past $4.00 and immediately kill the recovery.
Being on the downward side of peak oil is a bitch. So, enjoy those “low” gas prices, because 2013 will be another record breaking year for gas prices. I can’t wait for that energy independence I heard so much about during the presidential campaign.
backwardsevolution says:
I remember years ago when everybody in my area was converting their cars to natural gas. The Energy Minister was on a radio show, and the host of the show said, “That’s great, low prices for everyone.” The Energy Minister said, “No, it doesn’t work like that. We need revenue for the government, and if people lessen their usage of gasoline, then the price of natural gas will just go up as we’ll tax it more. We need a certain amount of revenue, and we’ll get it one way or the other.”
Add in “return on investment” considerations, and you really can’t win.
Death and taxes.
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27th December 2012 at 1:16 pm
Hope@ZeroKelvin says:
It was nice to fill up the beemer for <$50 the other day, sigh.
Seriously, as the economy continues its collapse, demand will drop. As demand drops, so will oil production with all that cascading negative economic effect.
Just wait. Have you checked out the Baltic Dry Index lately?
It is back to 2008 lows. So much for that idea of QE driving demand…..
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27th December 2012 at 1:29 pm
Hope@ZeroKelvin says:
ooh, my chart did not come through, check it out yourself:
http://www.dryships.com/pages/report.asp
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27th December 2012 at 1:30 pm
sangell says:
Yeah the ‘emerging economies’ will keep supplies tight no matter what. There is a transportation continuum with people. They walk till they can afford a bicycle then they peddle. As soon as they can afford more they get a small motorcycle. Next step is the car even if its one of those postwar European micro cars with 25 hp engines.
In 1929 90% of all the privately owned cars in the world were in North America. Today, North America , Western Europe and Japan are car satiated. We may even see a decline in the number of vehicles on our roads as our populations age. One car will do for a retired couple. OTOH China is now and will remain the largest new car market in the world. They could triple car ownership there and still remain far behind the levels of Europe or North America. India has barely begun to switch from pedal and motorcycle power to the auto and the same is true for other large population nations like Brazil and Indonesia.
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27th December 2012 at 1:50 pm
DaveL says:
Just paid $2.97 to fill up at Fry’s, here in the valley.
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27th December 2012 at 3:15 pm
Maddie's Mom says:
“One car will do for a retired couple. ”
ha…not on our street!
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27th December 2012 at 5:02 pm
Anonymous says:
New York’s main contract, light sweet crude for delivery in February, shed 12 cents to $90.86 a barrel.
Brent North Sea crude for February lost 58 cents to $110.49 a barrel in London midday deals.
Bah, gas prices here went from 2.99 this morning to 3.05 this afternoon because demand and oil prices are down!
Crock Of Crap
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27th December 2012 at 5:27 pm
Muck About says:
Gas prices in Florida up $0.20/ gallon over the past week and still below national average.
It’s time to run it up again in the CBOE pits..
My DOG and SH are showing profits – I expect to see a lot more down the line.
My puzzle: How the hell is the FED managing to hold down 20 year rates when everyone in the whole damn world knows that they are printing 85 billion a month to finance the Treasury and buying over 40% of all Federal Debt.
One would think the rest of the world would run away as fast as possible from such an unsustainable action. Oh well.. I’m short long treasuries (TBF) and will be short ten year treasuries (TBX) when the time comes to do it.
When the Treasuries tank, I suspect they will merely suspend trading in any Treasury short ETF’s just to try and stretch out the lying and stealing another the week or two.
MA
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27th December 2012 at 7:25 pm