June 08, 2008
07:51 am
Analysts don’t know nothin’
Get this:
They're wrong. Totally, completely, dead wrong.
I'm here to tell you that I paid $4.68 on Friday (for premium -- all these gas prices that people quote are averages based on regular all over the country, which has absolutely no resemblance to what it actually costs). The calculated national average is just under $4 according to the AAA. Here, it's just under $5.
My prediction is that my corner station will hit $5 by July 4. We're only 30¢ away, and every time the price changes it goes up by 10¢. Check back in a few weeks. If I'm right, I'm just gonna hire myself out as a high-paid analyst.
Get this:
Without a doubt, $5 gas would pose yet another significant psychological milestone forcing Americans yet again to look for ways to scale back their consumption.
Still, most analysts don't think we'll see $5 gas this summer. Americans have been so stunned by this decade's run-up in prices that they've finally started driving less, and the drop in demand for gasoline should keep prices from passing the $5 milestone, analysts say.
They're wrong. Totally, completely, dead wrong.
But no one wants to sound too sure. Not after watching California's average gas price cross $3, then $3.50, then $4 in just three years.
"Five dollars? I don't see it happening," said Denton Cinquegrana, who tracks West Coast gasoline markets for the Oil Price Information Service. "Demand is just so crappy right now. But I've been wrong before."
Even if it doesn't hit $5 this year, it's possible in 2009 unless oil prices drop.
"Maybe not by the end of the year, but certainly within a year we'll get there," said Rod Diridon, head of the Mineta Transportation Institute at San Jose State University.
I'm here to tell you that I paid $4.68 on Friday (for premium -- all these gas prices that people quote are averages based on regular all over the country, which has absolutely no resemblance to what it actually costs). The calculated national average is just under $4 according to the AAA. Here, it's just under $5.
My prediction is that my corner station will hit $5 by July 4. We're only 30¢ away, and every time the price changes it goes up by 10¢. Check back in a few weeks. If I'm right, I'm just gonna hire myself out as a high-paid analyst.
posted by Gene Cowan | category The War with the Customer
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comment on this entry (3 comments) | permalink | e-mail this entry
That's the same Rod Diridon after whom the train station in San Jose is named. He's head of the Norm Mineta Transportation Institute, located a few miles from the Norm Mineta Airport. All very interesting to me...♠
Posted by Ray on 06/08 at 01:42 PM
I saw $4.89 on the way to work yesterday. $4.99 for diesel.
Won't hit $5? Isn't $4.99 point 9 five dollars? Or are the going to quibble about the .1 ?
Won't hit $5? Isn't $4.99 point 9 five dollars? Or are the going to quibble about the .1 ?
Posted by Tim Who? on 06/09 at 09:37 AM
Supply and demand is really just a concept. It doesn't necessarily work in real life. If demand for gasoline drops, the companies will at first have to charge MORE money to make up the difference (gotta make the stockholders happy with increased profits).
Besides, the rationale will be that worldwide demand will increase (China, Europe, etc.).
I think Oil Companies will do the DeBeers thing... keep the supply (production) down so they can charge more.
Besides, the rationale will be that worldwide demand will increase (China, Europe, etc.).
I think Oil Companies will do the DeBeers thing... keep the supply (production) down so they can charge more.
Posted by mike on 06/09 at 03:43 PM
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