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Does anyone have an explanation for this? Don't say Obama...

Speculation over the Natural Gas boom?

Barack?

Hussein

This is my interpretation as well, expecially since we are seeing a similar pattern in a number of commodities and stocks. I was hoping for someone more experienced to explain the recent cause of the deflation.

Fracking.

They're fracking up our water supply.

Its not deflation.  Its a supply and demand issue.  The supply isn't as low as was previously thought (fracking etc putting new oil into the supply).   The demand is lower because the price is high and the economic slowdown.  Also it seems the rampant speculation in oil that was artificially driving it up has tapered off somewhat.

election year

All the Iran rumors drove it up in a time of waning demand.  Nothing happened and now all the reserves are full, so the market returned to reality from rumorville.

Ha,

Ok, so we have

1) Speculation due to news about alternative energy sources (natgas)
2) Trolls
3) Deflation due to banks paying off interest to other banks
4) Increased supply due to fracking, decreased demand due to deflation (see 3)
5) Election year... this basically means Obama, how so?
6) Speculation due to news about possible war with a major oil producing country which would influence future supply.

All of these are probably contributing factors, the deflation argument seems dominant to me just because other assets have been falling vs the USD for the last couple months as well. I still don't understand what the president of the US could be doing to have such a massive influence on oil prices.

Are you kidding about the gas price being low? It does fluctuate. This is traveling season and if the price stays too high, people won't travel and businesses will fail. If businesses fail, then people won't be buying fuel. We've already seen a drop in fuel consumption over the last decade. The people profiteering off the war-based energy markets we have now are smart enough not to purposely kill the economy. This is the time of year they spend their 'hard earned' profits to vacation and give the slaves a short respite before they tighten up the bit again.

http://66.70.86.64/ChartServer/ch.gaschart?Country=Canada&Crude=f&Period=96&Areas=USA%20Average,,&Unit=US%20$/G

I remembered prices always rising in the summer, I guess the ramp up usually lasts until about May.

People are using less gas...

Simple...

Less demand = less prices

I doubt the supply has increased much...

It's Econ 101: supply and demand.

Energy prices in general have been falling, including gasoline.  Falling energy prices indicate declining demand for energy.  Energy demand is linked to economy activity and growth.  Global economic activity has decreased due to the financial crisis that came to a head in 2008.  As a result, global economic growth has basically stopped and the corresponding demand for energy has decreased.

Energy is used for manufacturing and transportation of goods.  If people aren't buying things then there's no need to make or transport them so energy demand goes down.

Gasoline's price action is not independent of energy in general.  It's linked directly to overall energy demand.

I think you're overcomplicating it.  The USD is still the world's reserve currency in spite of reports of its demise.

Econ 101 doesn't change; supply and demand are 90+% of it.  Energy demand is linked to economic growth:  No growth = no energy demand.  Simple.

Everytime that dimwit spoke on tv, I seen the gas prices jump. Had obama stopped speaking on tv lately?

Oil isnt 100% neccesary for economic growth, certain things require more oil than others... Manufacturing for example... But as a general correlation at the moment, less growth could be related to less oil demand...

Regardless to cause, I'm lovin' the lack of pain at the pump. Driving 400 miles a week in a shitty sedan isn't cheap.

Until tax season. ;D

It is not deflation!  It is the electric car.  They notice when gas prices go down, electric car sales stall.  Thus, they have to keep the prices down.

Simply less demand and too much supply. Dont worry the oil companies and OPEC will slow production and drilling to make it go back up.
ITS WHAT THEY DO.

Gasoline prices will continue to fall.  The trucking industry, which accounts for 1/3 of all US oil consumption, can be converted to run on natural gas, and Obama has signed legislation to support this.  Natural gas can also be converted into oil very profitably at the current price ratio with GTL technology, and Shell and SASOL competing to build these facilities in the US.  Additionally, the price of solar panels has dropped by 75% in the last three years.  Solar is now competitive with daytime electricity rates, and it will continue to get cheaper.  But putting solar panels on roofs is just the tip of the iceberg.  By mid-century, most of our power will come from space.  Space-based solar panels are much more efficient as the sunlight is 5.5 times stronger in space, and the panels always operate at 100% with no night.  The power will get beamed to earth in the form of microwaves.  Private enterprise will lower the cost of space launch enough to undercut other methods of power generation.  Much to the environmentalist's delight, oil is on its way out.

I recently read "Private Empire" ( http://www.amazon.co.uk/Private-Empire-ExxonMobil-American-Power/dp/1846146593/ref=sr_1_1?ie=UTF8&qid=1341579850&sr=8-1 ), which despite the name turned out to be a rather level-headed read. Among other interesting tidbits, it outlines Exxon's recent studies into the future of energy, namely, whether they should be looking at alternative energy sources seriously or not. Their conclusion was that everything that could threaten the status quo of fossil fuels as the main source of energy (overwhelmingly by the way, check out some stats for global energy production...) requires several near-miraculous discoveries in the near term.

Now, Exxon isn't exactly unbiased, but still, solar is so small now that even assuming yearly growth rates in the double digits, the industry will be hard pressed to gain more than a few percent of total global energy production within the next few decades, as energy consumption is projected to grow as well...

As for gas prices currently, the news outlets here say it's simply because of the global economic fubar. Consumption is down.

There is a difference between profitable to the individual and profitable to a large multi-national organization. I know personally that my energy usage could go way down without significantly affecting my quality of life... and I don't really use that much (relative to the stats I've seen from others). If people were generating their own electricity, and budgeting their activities accordingly, it is possible that "global energy usage" would drop dramatically.

Also, my understanding is that: global economics fubar = consumption down = USD deflation

Its complex and its not always easy to value the dollar, but my opinion is that its mostly reduced demand causing the gas prices to fall at the moment...

Deflation?  You mean deflation of the money supply?  Sounds unlikely, at least it sure would be unlikely if I had the keys to the printing presses ;)  OK perhaps deflation of that money supply which is drawn on by to the primary purchasers of gasoline, but even that I find difficult to believe. 

Much more likely in my opinion:  price fixing and backroom decisions based on political and generally boring goals (making some extremely rich people even richer).  The major public players in this market are the Pentagon, OPEC, Rockefellers.  Most likely there are some other major players I don't know about. 

If free market microeconomics dominate control of the price of gasoline, can you explain to me the price discrepancy between different European nations (E.g. Germany and Switzerland), between different American nations (e.g. between Venezuela and USA), or between different middle eastern or Asian gas stations?     

That's because the oil prices are falling, due to lower demand.

Looks like the difference is 90% due to taxes and subsides... do you have a good dataset containing historical gas prices for multiple countries? Also in terms of macroeconimics: Why do all of these lines look so similar?


http://i47.tinypic.com/34exkrq.png
http://i47.tinypic.com/2z4z5op.jpg

Perhaps rising gas cost increases commodity shipping and mining costs?

Gas is RISING again!

I love these gas prices!  its time to start drivin the v8 again  :D

You are showing your age. I remember when gas was under $2 a gallon!

You're making me feel old because I do too.

Lol??
I stopped driving it when it was close to $4

Let me show my age.  I remember when gas was less than $1/gallon.

I also remember when gas first went over $1/gallon:  People were totally freaked out and thought the world was ending.

My hats off to you sir!

FILL'ER'UP!

I remember when I bought a bike and stopped driving almost anywhere besides work. Best expenditure ever.

Extremely on topic side-note; Gas is back up again, and it's ridiculous.

Gas prices are completely accountable for.  I mean look, if you look at it, oil prices are extremely low compared to 40+ years ago.

Just 10 years ago, 1 oz of gold could pay for ~250 gallons, while 1 oz of gold can now pay for upwards of 500 gallons.

Also as we all know, gold is what truly sets the price.

The reason we have rising gas prices is due to a inflationary US dollar from overprinting and nothing truly backing it up, such as gold.

In fact, if you base oil on gold completely as the trading currency, gas prices would have to be above $6.50 a gallon to truly justify the inflation of the US dollar.

We're quite lucky for having the prices this low at the moment.

This happens every time a presidential election is coming up.

Seems to me the price of gas has been going down for years...but that's because I price things in silver.  ;)

Exactly my point  ;)

Not to mention oil and natural gas probably doesn't come from 100 million year old dinosaurs.  That's a little far fetched since they would decompose to nothing.

http://www.sciencedaily.com/releases/2009/11/091104123032.htm

Also there's a crapload of natural gas in OCEANS on Titan, a moon of Saturn, due to the low temperatures allowing the gas to liquify. There was no life there, was there?

I tl;dr the URL, though many years ago Titan was somewhere else. There could have been life there at some point.

this:
Is probably the reason for this...

lern 2 science.

There could have been life on Jupiter, Saturn, and Neptune too right? They actually have a significant amount of natural gas in their atmospheres too.

Also if you read the article, you would clearly find that natural gas can result from purely abiotic chemical reactions.

Natural gas can also be strung together into higher chains of hydrocarbons from heat and pressure.

That Exxon report is from 2005 looking ahead to 2030, and they are way off on their estimates for the growth of solar.  The report appears biased, as they estimate the growth of alternative energy at 10% when solar was 25-40% in the years leading up to the report, and it would not be so optimistic if written after the radical 75% decline in solar prices in the last 3 years, which caused the exponential growth curve to accelerate.  Solar has grown at an average of 59% since 2001, 110% in the last 3 years, and 193% in 2011.  Exxon engineers considered a breakthrough in solar to be unlikely in the next two decades, and they were wrong.

You are right that solar is currently tiny though.  Global energy consumption is 132,000 TWH, while solar is 55.7 TWH, .04% of the total.  This is because it has only recently become financially viable.  But a 38 year time span out to 2050 along with continued technology advances and price decreases will change that.  Keep in mind that one decade of 50% growth means 58 times more solar power.  A decade of 50% growth followed by a decade of 20% growth followed by two decades of 10% growth would grow solar up to the current global consumption using current technology by 2050, but that is just a back-of-the-envelope mental exercise.  Now imagine how fast oil will die when we can launch the panels into space and run them 24/7 with 5.5x stronger sunlight.

http://ftalphaville.ft.com/blog/2012/06/18/1048871/the-exponential-growth-in-solar-consumption/ (http://ftalphaville.ft.com/blog/2012/06/18/1048871/the-exponential-growth-in-solar-consumption/)

gas will start being "too expensive" when we stop using it to fill our cars and start using vegetable oil or whatever alternative is just barely cheaper. it might be more expensive than it was in the golden years of $1/gal, but nothing is going to change until gas hits the threshold where it is no longer worth using. opp costs.