Published Sunday, June 01, 2008
'Encouraging' signs in gas price outlook
The Times-Herald
Finally, there is some good news about gas prices.
Last week, the price of crude oil futures actually went down, and there were signs that the dollar was strengthening.
Additionally, the Commodity Futures Trading Commission announced that it is six months into an investigation of possible price manipulation in the oil futures market.
Though crude oil futures actually closed up 45 cents on Friday, overall, they were down almost $5 from the peak price of over $132, said Greg Laskoski, director of public and government relations for AAA Auto Club South, which tracks gas prices.
Crude oil closed at $127.80 Friday on the New York Mercantile Exchange.
"This is encouraging," Laskoski said. "We believe it is encouraging because it is driven by strength gained by the dollar."
From Thursday to Friday, the dollar gained against the euro.
Laskoski said he didn't know what the specific events that led to the rise in the dollar were but "I'm guessing that economists as well as oil industry analysts are looking at whatever has occurred as things that are positive for the dollar versus the euro.
"When you're looking at oil futures, those are the two most important currencies we've got. So it's a good step," Laskoski said.
Things can change day by day.
"It's a little early to say that it is an indication of anything," Laskoski said of the drop in crude and the rise in the dollar. "We're kind of holding our breath right now to see if this is going to be something that might be indicative of a trend."
Crude oil prices fluctuate daily, but the general trend has been an extended rally since the fourth quarter of 2007.
"Lately, it's been gains on almost a daily basis, and that is what has led to the retail price gains we've seen," Laskoski said.
The lower crude oil prices haven't begun to trickle down to the pump, at least not yet.
Prices have continued to rise in Coweta. On Friday, Race Trac was offering regular unleaded for $3.95, up 10 cents from Tuesday. However, the Greenway B.P. at U.S. 29 South had regular for a mere $3.84.
The Atlanta-area average was up 1.4 cents from Thursday, though the average in Athens and Albany had actually dropped slightly.
As for the investigation into oil futures trading, "it's premature for us to comment on it," Laskoski said.
However, "we certainly think it is a step in the right direction."
The investigation "reflects the fact that the federal government sees the extraordinary disconnect between the rising gas prices and the fundamentals of supply and demand.
"Because the supply and demand fundamentals have not been remarkable. And yet, the rising gas prices have been quite remarkable."
Laskoski expects the investigators to find that "speculative investment has driven a lot" of the rally in crude.
"There is no question that crude and many other commodities go up as a result of a weak economy, as well as a weak U.S. dollar," Laskoski said.
"But much that has occurred in oil futures trading has been driven by institutions and individuals that have no intentions of taking delivery of one barrel of crude oil."
It's up to the investigators to determine whether that is aboveboard or not.