[oldcutlas]

Any strategy that involves fighting over the available fossil fuel resources is just rearranging deck chairs on the titanic. It's guaranteed to fail.

love the analogy!!! mind if I use it??

[oldcutlas]

I believe that the collective wisdom of the world oil market (speculators included) is a better predictor, on average over time, than any of us.

yeah letting the market be the predictor and manage itself worked so well with the housing market and credit default swap business. let's let the market decide everything!!

[Lore]

Once again the “cheetah traders”, those collective zombie investors (ie speculators), are thrashing about trying not to skin their knees on the slide in commodities. Looks like the April jobs number though will stop any further dumping however and give them a new bone to gnaw on.

If the collective markets were really informed though they would hang in there, especially in light of what’s coming down the pike in later 2012 as fundamentals really start to kick in.

[Plantagenet]

..letting the market be the predictor and manage itself worked so well with the housing market ..

The sub-prime loans were loans made to poor people as a matter of liberal social policy. These were people who couldn't afford regular loans, but liberals created the sub-prime market and it was overseen by federal regulators and underwritten federally subsidized programs Fannie and Freddie right up to the moment it collapsed.

Obama himself, back when he was a community organizer, went to court with a group of Chicago civil rights lawyers to force banks to give loans to people with poor credit histories on the grounds that it was racial discrimination for banks not to offer sub-prime loans.

[copious.abundance]

Looks like the April jobs number though will stop any further dumping however and give them a new bone to gnaw on.

Or, maybe not.

Couldn't fight off a dollar that rose about 3/4th of a percentage point today.

Are we still expecting $6 gas by summer?

[Cog]

Demand destruction won't allow $6 gallon gasoline. It won't even allow $4 gallon gas much longer.

[Pretorian]

Demand destruction won't allow $6 gallon gasoline. It won't even allow $4 gallon gas much longer.

Aside of a small possible drop ( kind of like one in the late 2008 when the gas was $1.9) the $4 gas is here to stay, I say up to $4.7-4.9 this summer.

[Lore]

Six dollars may not be all that likely this year. Will it ever be likely? I believe we have to answer that in the affirmative.

Demand destruction due to higher prices at the pump along with the U.S. reserve currency fluctuation, geopolitics, speculation and finally supply all play their part. Even though we gave up 2% in total gas consumption in the recent month, eventually there is only so much you can conserve before it starts cutting into necessary utilization. Wringing this amount out of the system is rather easy and maybe a few percentage more, but wait till it starts cutting to the core.

The flip side no one ever mentions is that conservation is up, but how does that affect economic growth? It’s a catch-22, yeah great, prices are coming down and people are not making unnecessary trips and going out to restaurants and home centers. We want it all and are going to realize that it just won't be possible.

[Pretorian]

Jeeze, just watch your TV on PC and you have saved 30 gallons a month or more. How many do you need? A haircut cost 3-4 gallons of gasoline plus some sad doggy eyes for another 1 as a tip. Put your wife to work. These complains about $4-5 gas are sickening me. Nearly everyone else is paying more and earning less yet Americans are only ones to whine. I would gladly pay $10-15 per gallon if that would mean less cars on the roads.

[Lore]

Jeeze, just watch your TV on PC and you have saved 30 gallons a month or more. How many do you need? A haircut cost 3-4 gallons of gasoline plus some sad doggy eyes for another 1 as a tip. Put your wife to work. These complains about $4-5 gas are sickening me. Nearly everyone else is paying more and earning less yet Americans are only ones to whine. I would gladly pay $10-15 per gallon if that would mean less cars on the roads.

Everyone, everywhere feels the pinch of higher gas prices regardless of what they now pay, because those prices are relative to any given life style. Just as millionaires can go broke as fast as any blue collar worker on an assembly line by spending a bit more then they make. It all comes down to what disposable income you have left to pay for what is now a disproportionate amount more then you’re use to for the energy you require.

[vtsnowedin]

Oil has dropped about thirteen dollars this week to below $100 and the local paper ran a story in the Sunday edition saying gas would drop 50 cents/gallon by summer. Other then OBL being shark bait I see no good reason for crude to stay down and I would not be surprised to see a rebound to say $110 that lasts through the summer USA driving season. That would give us $4.00 gas not $6.00 but $4.00 is bad enough.
For real demand destruction to kick in gas has to get high and stay high long enough to convince consumers to buy very efficient cars or to move closer to their jobs etc. Just a few weeks spike doesn't cut it as consumers only trade cars every six years or so and move from one housing situation to another even less often. With a car your halfway through the payments on and the job where it is in relation to your housing all you can do is car pool or cut out discretionary trips and that might amount to less then ten or fifteen percent of your driving.

[diemos]

For real demand destruction to kick in gas has to get high and stay high long enough to convince consumers to buy very efficient cars or to move closer to their jobs etc.

Fast demand destruction occurs when people lose their jobs and stop commuting or businesses shut down and no longer need to move product. i.e. recession.

[vtsnowedin]

For real demand destruction to kick in gas has to get high and stay high long enough to convince consumers to buy very efficient cars or to move closer to their jobs etc.

Fast demand destruction occurs when people lose their jobs and stop commuting or businesses shut down and no longer need to move product. i.e. recession.

Surely a valid point but even in a strong recession between eighty and ninety percent of people still have a job and if you look only at those that had a car before the recession began the number is even higher. Ten percent that stop driving altogether vs. eight percent that cut back as much as they can and keep the job.
At any rate we need to get off oil both in recession and through recoveries. If we don't then there can be no recovery. A clear direction from leadership could save people a lot of money and oil in the long run.

[Pretorian]

Jeeze, just watch your TV on PC and you have saved 30 gallons a month or more. How many do you need? A haircut cost 3-4 gallons of gasoline plus some sad doggy eyes for another 1 as a tip. Put your wife to work. These complains about $4-5 gas are sickening me. Nearly everyone else is paying more and earning less yet Americans are only ones to whine. I would gladly pay $10-15 per gallon if that would mean less cars on the roads.

Everyone, everywhere feels the pinch of higher gas prices regardless of what they now pay.

Apparently they don't feel it bad enough, because about 3 hours ago I almost rammed my SUV into the side of a small truck with a passenger in there. 3 feet is all I lacked.

[evilgenius]

8) Oil has dropped about thirteen dollars this week to below $100 and the local paper ran a story in the Sunday edition saying gas would drop 50 cents/gallon by summer. Other then OBL being shark bait I see no good reason for crude to stay down

Don't forget what happens when deflation kicks in. When that happens a dollar has far more purchasing power, but people have even fewer dollars. Gas would be a lot cheaper and yet cost the same relative to what people have to spend as what $6 a gallon looks like today.

If people knew what the coming storm meant they would pray for QE3!

[Pretorian]

8) Oil has dropped about thirteen dollars this week to below $100 and the local paper ran a story in the Sunday edition saying gas would drop 50 cents/gallon by summer. Other then OBL being shark bait I see no good reason for crude to stay down

Don't forget what happens when deflation kicks in. When that happens a dollar has far more purchasing power, but people have even fewer dollars. Gas would be a lot cheaper and yet cost the same relative to what people have to spend as what $6 a gallon looks like today.

If people knew what the coming storm meant they would pray for QE3!

Are you saying people would prefer to have a paycut to an unemployment spike by 2-3%? Dream on. May be those whose chairs are burning while they jerk around at employer's dime would.

[steam_cannon]

I went into the gas station today and prepaid $1 and then I got 34 cents change.

[evilgenius]

8) Oil has dropped about thirteen dollars this week to below $100 and the local paper ran a story in the Sunday edition saying gas would drop 50 cents/gallon by summer. Other then OBL being shark bait I see no good reason for crude to stay down

Don't forget what happens when deflation kicks in. When that happens a dollar has far more purchasing power, but people have even fewer dollars. Gas would be a lot cheaper and yet cost the same relative to what people have to spend as what $6 a gallon looks like today.

If people knew what the coming storm meant they would pray for QE3!

Are you saying people would prefer to have a paycut to an unemployment spike by 2-3%? Dream on. May be those whose chairs are burning while they jerk around at employer's dime would.

Obviously you have never read, or don't recall Keynes discussion on this in the General Theory. People have been quite happy to accept lower pay relative to inflation throughout history. Holding onto some income while the rest of the world wilts in a sea of unemployment is not exactly a choice or a preference. It is survival.

[AgentR11]

Don't forget what happens when deflation kicks in.

That the Fed used QEx at all pretty much tells us that they will not permit deflation in any way shape or form. As much folks see the retail side of deflation; the real disaster is in inventory accounting; a deflationary spiral causes LIFO bookkeeping to send reported profits right into the dumpster; and you don't get to change from LIFO to FIFO just because you feel like it. We go deflation side, companies will rapidly start reporting huge losses; and the equities markets will go belly up very, very quickly.

Conclusion, there will be no deflation.

[JohnRM]

Deflation simply will not happen due to the simple fact that if the demand isn't there, factories and stores will close their doors immediately. They will not take losses to save jobs. So, as demand declines, so will supply, at a very rapid pace. That is what happened in the industry that I work in (aluminum). During the last recession, a third of the cast houses that produce aluminum log and ingot shut down, permanently. When the economy began to pick back up, we were caught terribly short of supply. We had to pay incredibly high prices for log and pig, and some other competitors were priced out of the market, for the time being. From what I have heard, that is the same story across many industries and is only now just starting to balance out.

Wherein $6/gallon gasoline is concerned; I don't think that the economy can survive $6/gallon gasoline. The economy has changed since the last recession and I believe that we have increased our resilience to higher gas prices tremendously. I believe that prior to the last recessionary period, we had a limit of roughly $3.00-3.25/gallon before the damage was being done and now I think that we're much closer to $4.00/gallon. There was a lot of uncertainty about the changes that would occur with gasoline prices that high and now that we've experienced it, consumers are confident that they can manage it. They have adapted. Now, beyond $4, I think we will still see significant damage to consumer demand and the economy, at large.

So, in the long-run, $6/gallon is possible, but not for a while, yet. Such a rise in prices this summer would trigger another recession and prevent prices from rising that high. At this time, I would say that our maximum is around $4.25-4.50 before the consumer buckles under the pressure. If prices remain high ($3.75-4.25) that will slowly rise.