There seems to be some disconnect in the energy markets…
While the price of crude oil had been on the rise on fears surrounding an antiterrorist sweep in Saudi Arabia and uncertainty of the supply coming out of Nigeria, today it fell back around USD$66 a barrel as these concerns eased up a bit. However, the price of gasoline continues to go up as more declines in motor-gas inventories are reported.
From MarketWatch: “[Gasoline] futures prices are lower in the distant delivery months than in the nearest delivery months. ‘Add to the mix the seasonality of the market to rally through mid-August and gasoline could move to historic price levels this summer,’ said Darin Newsom, an analyst at DTN of Omaha.”
Gas inventories have fallen for 11 weeks in a row, as continuing refinery problems – not to mention the geopolitical concerns and high demand – add to the concern over gas supplies.
Not great news heading into peak driving season…and could you imagine if we threw a hurricane into the mix? Less people would be packing up and heading to Aunt Gertrude’s house for a visit this summer, that’s for sure…especially since the alternatives to the gas-fueled car aren’t looking too compelling.
“I went to buy a new car this past weekend,” a friend recently confided, “and I really wanted to get a hybrid – but I had no idea how expensive they are! I guess the smaller ones are a bit cheaper…but with a six-month old, I really need more room, and just could not justify paying close to double on a hybrid than I would on a regular car.”
More and more problems are coming to the surface with these hybrid cars that were thought to be America’s salvation from high gas prices…and ethanol certainly isn’t all it’s cracked up to be (more on that tomorrow).
The Daily Reckoning Australia