Auto fuel to hit $4.50/gal
- Thread starter EdFred
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fgcason
En-Route
Hmmm. Good point. Thanks for reminding me there's a storm coming.
Off to the petro dump to tanker up everything. (Naturally by doing this, the gas price will temporarily drop through the floor for the next few days but it beats the daylights out of a $400+ fill up in a few weeks)
tonycondon
Gastons CRO (Chief Dinner Reservation Officer)
astanley
En-Route
While the oil companies retain some influence, at the end of the day, it will be speculation within the market by commodities traders that will heavily impact pricing.
Given the last time we saw an event like this, the market will behave in a completely irrational manner and cost will outstrip the actual quantitative factors behind it. For example, it took 11 weeks for costs to return to pre-Katrina medians, but it took only two weeks for gasoline supplies to rebound. Crude tightly hugged a 10,000 kbbl range across the 8 week range of 26-August-05 through 14 October 2005, while prices moved on a $0.50 (20%!) swing.
Demand for gasoline ranged between 600 kbbl and 800 kbbl below pre-Katrina demand, and was 400 to 600 kbbl below September 2004 demand levels.
There are only three possible conculsions:
1) A cartel initiated price controls [did not happen]
2) Commodities trading supported irrational prices, which was not met with a commensurate drop off in demand [did happen] [20% change in price, 2% change in demand]
3) The commodity was innapropriately priced prior to the events of Katrina.
Anyone with commodities experience or knowledge will tell you - the c-markets react to news viscerally and violently, with an apparent complete lack of reason.
Cheers,
-Andrew
Obi Heed Kenobi
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It's almost...as if...the commodities market...is a microcosm of humanity!
Good analysis, by the way.
astanley
En-Route
Thanks. Just 5 minutes with Excel, a little bit of data, and I can make any set of numbers dance to prove a point
What is most interesting, to me at least, is the unified movement of demand and pricing changes through Labor Day, followed by the blow out. What's even more interesting is the variance and wave-like swings of gasoline prices, while underlying fundementals regress back to the mean.
Translation - final product prices (gasoline, a refined product) move in a decreasing amplitude wave surroudning large emotional events that cause a measurable break from the fundementals.
Holy crap, I sound like a quant. I need to go and get some bourbon, stat.
Cheers,
-Andrew
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Thanks. Just 5 minutes with Excel, a little bit of data, and I can make any set of numbers dance to prove a point
What is most interesting, to me at least, is the unified movement of demand and pricing changes through Labor Day, followed by the blow out. What's even more interesting is the variance and wave-like swings of gasoline prices, while underlying fundementals regress back to the mean.
Translation - final product prices (gasoline, a refined product) move in a decreasing amplitude wave surroudning large emotional events that cause a measurable break from the fundementals.
Holy crap, I sound like a quant. I need to go and get some bourbon, stat.
Cheers,
-Andrew
What I thought was interesting is that it looks like price drops while demand goes up and supply remains comparitively stable.
astanley
En-Route
While you note that pattern correctly, Small Sample Size comes and bites us in the bottom.
Looking at the trends in aggregate, over a 16 year period:
and
Cheers,
-Andrew
t0r0nad0
Pattern Altitude
Too... many... numbers... and... graphs!!!! Head... going... to... explode!!!
Tristar
Pattern Altitude
Boy and I felt overwhelmed by my writtens!
K
KennyFlys
Guest
Chill, dude... don't get ahead of yourself!
Obi Heed Kenobi
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Stupid supply and demand. I'll see you in hell, economy!
Demand didn't drop because the outrageous gas prices didn't last long enough. Dropping demand means that people have to dump their Excursions, Tahoes, and Hummers. They can't do that short term. Most can't even change driving habits (much) short term. Let them pay $100+ for fill-ups for 6 months and they'll be lined up buying 25MPG crossovers.
astanley
En-Route
Well, that is a true statement. However, I would argue that, at this point (present day), many consumers would not be able to afford 25MPG crossovers, if the dark clouds of a credit crunch are more than just fear mongering.
Hmm, I wonder if there is a correlation between total consumer debt and fuel prices? Doesn't appear to be, and I'm on step away from having the core versus headline inflation indexing discussion in credit markets...
Cheers,
-Andrew