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We've been saying it for two weeks now: Gas prices should start to firm up in December, when demand usually starts to climb, but this is another week of Gasoline Limbo, where the Master of the Dance asks "How Looooooooow Can They Go?" ... |
Oil prices continue to slide downward on skids greased by economic uncertainty and lower business and consumer demand. Oil closed on the NYMEX today at $40.81 a barrel. The last time oil cost less than $42 a barrel was four years ago on December 12, 2004.
Our insiders tell us that California refineries are dumping fuel at a "loss" of 25 cents a gallon (that's $10.50 for every barrel of oil turned into gasoline - and the quotes around the word "loss" are intentional). The next big benchmark is if oil slides down into the thirty-dollar-a-barrel range.
Just to put things in perspective, UCAN's estimated breakeven for a gallon of gas sold by an unbranded cash-only dealer this morning was pegged at $1.41 a gallon. On Monday, it was $1.64 a gallon.
We think the gasoline limbo will continue through at least next week delivering a return to massive prices slides (you're gonna feel this) of another 18 to 30 cents a gallon by next Friday.
A word on Limbo ...
It is worth noting that there are two definitions for "Limbo." The first is the popular West Indian dance ... and the second is the realm between Heaven and Hell where the souls of the lost await judgement.
For the speculators who drove the price of oil to $147 a barrel on July 3, that judgement is yet to come.