05-11-07 by dugan
Insider tells us there are signs the spike in California is damping down. And in a few weeks, we might be paying "only" $3.35 a gallon. (We should be paying no more than $2.40: see argument below Insider’s post)
"During price spikes, the wholesale prices shoot up dramatically and the effect is that sometimes one firm or another will get too far ahead or behind the others within certain towns or marketing zones due to all the confusion. Reports from dealers show the companies are adjusting wholesales up and down in small increments within cities or zones. This leads me to believe the overall price is topping out on gasoline in California. The small adjustments usually mean the companies are aligning their prices locally within cities to match the competitors.
"I predict the price spike has peaked and prices will level off and then, fall from 5-10 cents over the next 2 weeks. We should sit about there until late June when the summer drive kicks in."
Wow. $3.30 gasoline is the "new normal’? Here’s something to gnaw on: Last November, as prices bottomed out nationally at $2.20 a gallon during Election week, crude oil was about $60 a barrel. Now it’s $62 a barrel, about a 4.5 cent-a-gallon difference. That means prices of $2.25 nationally and, given the historic 15-cent difference, $2.40 in California, would be more like the real normal. Even then, we thought the price was high.