Sunday, September 17, 2006

Gas Prices Going Down

Lower Gas Prices are good news for the American Economy.

Excerpt from James D Hamilton - Econobrowser

Gasoline prices will fall even more

"At the start of this month,
I joined others in predicting that U.S. gasoline prices would soon be below $2.50 a gallon. The price has already dropped 20 cents to $2.60 a gallon since then, and it now appears likely to go down at least another 30 cents from here.

crude oil prices can be quite hard to predict, retail gasoline prices are at times a little easier, because it often takes some time for price declines in crude oil or bulk gasoline to work their way down to the retail level. A useful advance indicator of where retail prices are headed is the NYMEX gasoline futures contract, which yesterday traded down to $1.55. This futures price does not include taxes or the wholesale and retail markup, which in recent years have averaged about 60 cents a gallon. Using that 60 cents benchmark, a retail gasoline price below $2.20 a gallon appears to be quite reasonable to anticipate."

1 comment:

JR said...

Very nice. A solid prediction. It just goes to show what goes up, must come down. It is all good for America. Clearly commodities move faster than housing markets, but the same will hold true for them, and ultimately, the correction will be good for America.