Oil Prices Plunge, Making $1 Gas a Possibility

[TitsMcGee]

COLUMBUS, Ohio — Oil prices hit four-year lows Friday as employers cut the highest number of jobs in 34 years. The continuing decline in prices is so dramatic and so sudden that it is raising the prospect that gas prices could soon fall below $1 a gallon.

The worst jobs data in 34 years on Friday just added more fuel to the deepening global recession as U.S. employers slashed a far worse-than-expected 533,000 jobs in November and the unemployment rate rose to a 15-year high of 6.7 percent.

A gallon of gasoline can be had for 50 cents less than it cost just last month, and people are starting to talk about $1 gas.

Granted, gas prices are a long way off from that magic number last seen in March 1999 when prices were at 97 cents a gallon, according to motor club AAA. Prices at the pump fell 1.6 cents overnight to $1.773 nationally, according to AAA, the Oil Price Information Service and Wright Express.

But consider what has happened since July 11 when a barrel of oil hit a record $147.27 and a gallon of gas was $4.117 on July 17. In less than five months, oil has fallen 72 percent.

Just this week, in which the National Bureau of Economic Research determined that the U.S. is in recession, oil has fallen 25 percent.

On Friday, light, sweet crude for January delivery settled at $40.81 a barrel on the New York Mercantile Exchange, down by nearly $3 per barrel. Prices fell as low at $40.50, levels last seen in December 2004.

Gasoline futures for January delivery tumbled to 90 cents.

For gas prices to get close to a $1, oil prices probably would need to fall another $10 a barrel — something that would have been impossible to fathom during the first part of this year as oil prices soared near $150 per barrel.

"Just seeing that '1' up there is just hard to imagine," said Kevin Keating, 65, an attorney as he filled up his Volvo S60 at a station in Phoenix that advertised prices at $1.67. "Wasn't that long ago that we worried about the '4' being up there."

Prices in New York City are well above the national averages, but still well off their highs of nearly $5 this summer.

"When gas prices are OK, we make a little profit," said Mamady Kourouma, 36, a cab driver from Guinea who paid $2.41 a gallon at a station in Chelsea.

With wages stagnant, home prices plummeting and foreclosure rated soaring, dollar-a-gallon gas may help mom fill up in the family minivan and cab drivers in New York City, but prices that low also would truly speak to how rotten the economy has become.

"The economy at that point worldwide would be in a serious, serious deterioration," said Geoff Sundstrom, spokesman for AAA.

Tom Kloza, publisher and chief oil analyst at Oil Price Information Service, said Thursday on his blog that retail prices could fetch $1.25 a gallon soon in parts of the Midwest, including Ohio, Indiana, Illinois and Missouri.

Already, some parts of the country are seeing prices around that level. The Web site gasbuddy.com, where motorists can post local gas prices, motorists can fill up for $1.29 in Neelyville, Mo., a village of about 500 people near the Arkansas state line.

The jobs number suggests that demand for gasoline, which has been running well below year-ago levels even with the cheaper prices in the last several weeks, will fall even more in early 2009 as work-related driving plummets, said Kloza.

"I believe that January 2009 will represent the most 'challenging' and ugly economic month of my lifetime, and my first memory is of Sputnik," Kloza said.

There is plenty of reason to suspect Kloza is right.

Since the start of the recession, the economy has lost 1.9 million jobs, the number of unemployed people has increased by 2.7 million and the jobless rate is up 1.7 percentage points. The meltdown in financial markets has crushed lending, the Detroit 3 are on the brink of bankruptcy without a big government bailout.

Friday's report was much deeper than the 320,000 job cuts economists were forecasting. If there is a plus side it is that the unemployment rate did not climb to the 6.8 percent level economists were expecting.

Kloza does not believe prices will make it to a $1. Gas prices neared a dollar last time on Dec. 18, 2001, three months after the terrorist attacks and the country in its last recession, when prices hit $1.08 a gallon.

Though the weak gasoline prices point how bad the economy is, they also could help it turnaround.

Kloza figures the U.S. gasoline bill at $1.75 per gallon average will be about $20.5 billion this month, down about $16 billion a year ago. Five years ago, the bill was $17.2 billion.

"That could be one important spur to some kind of economic recovery," Sundstrom said.

In other Nymex trading, gasoline futures tumbled 6.83 cents to settle at 90 cents. Heating oil slid 8.26 cents to $1.4265 a gallon while natural gas for January delivery shed 24.7 cents to sell at $5.77 per 1,000 cubic feet.

In London, January Brent crude slipped by $2.42 cents to $39.86 on the ICE Futures exchange.

Now if oil prices could drop that last $10 in the next week, I would be a very happy person on my drive down to see all you lovelys.

[Goth Brooks]

whoever wrote this better have knocked on wood, or i'll ring his neck.

[freydis]

*crosses fingers*

[phee]

*Eats own foot*

[IsleofRhodesEnt]

lol....who missed the part about "loss of jobs" in that letter. Low gas is good..but REALLY low gas is BAD...

[taysteewonderbunny]

lol....who missed the part about "loss of jobs" in that letter. Low gas is good..but REALLY low gas is BAD...

Definitely. And what's weird is that the prices of other stuff is still going up--but SALES are rampant this time of year. I'm still broke, either way.

[Goth Brooks]

lol....who missed the part about "loss of jobs" in that letter. Low gas is good..but REALLY low gas is BAD...

Would you like to point out what gas prices were 8-10yrs ago when the economy was at its strongest?

What? Pretty much what it is now?

Thanks.

[Msterbeau]

It's great... and it isn't. I don't like paying for gas but the economic collapse that's causing it is worse. And yeah... Why are costs still so high on things like food if the transportation bill has gone down significantly? I suppose it takes a while fore the market to react...

[Goth Brooks]

I suppose it takes a while fore the market to react...

i.e. They're going to milk the profits all they can until people start bitching too much.

[Rev.Reverence]

It's great... and it isn't. I don't like paying for gas but the economic collapse that's causing it is worse. And yeah... Why are costs still so high on things like food if the transportation bill has gone down significantly? I suppose it takes a while fore the market to react...

...the Corporate douchebags like the prices high....then...NEXT TIME that there is an oil hike...their prices will go up again...& not drop.

Go ahead...call me paranoid...call me a cynic...that's just what I have seen...prices in the material goods market DO NOT drop in price...

...except where there is a NEW tech -gizmo...& it is outshine by another piece of tech...it's price will drop...

..& then again when it's faddism has passed...

...but I was MORE referring to the price of milk & bread.

[phee]

The answer is cars that run on the blood of the highest tax bracket..... (kidding)

[Msterbeau]

i.e. They're going to milk the profits all they can until people start bitching too much.

I have less problem with farmers and others in the food supply chain making a reasonable buck compared to the energy companies..

[candyman]

High food prices=Ethanol

Ethanol is shitty and is destorying the farming community in Wisconsin. That all leads back to the food production.

[IsleofRhodesEnt]

High food prices=Ethanol

Ethanol is shitty and is destorying the farming community in Wisconsin. That all leads back to the food production.

really?..cuz its almost SAVING the farming in Indiana and other states...course it would help if wisconsin didn't have such shytty weather for crops.

[Rev.Reverence]

The answer is cars that run on the blood of the highest tax bracket..... (kidding)

(not kidding)

(oK...maybe I am)(.....)

[candyman]

really?..cuz its almost SAVING the farming in Indiana and other states...course it would help if wisconsin didn't have such shytty weather for crops.

Yeah...that whole bunch of surplus corn came from...oh yeah it fell from the sky.

As soon as our state started messing with ethanol things went to shit. If farmers gave their corn to the producers they recieved all sort of tax breaks and goodie bags from the state. However, if the farmers did not send a portion of their crops to be turned into ethanol they got taxed and recieved no benefits.

I would hold biodiesel up next to ethanol right now but its like holding a gold statue up next to a polished turd.

Farmers here use the corn to feed to their cows so that the cows may have something to eat. The government wants the corn so that they can spend more energy making it than it will ever give off. As for the environmental spect of ethanol the only reason that it can ever be considered a "green" product is because of all the money changing hands.

Farms should never have to depend on the government for help because if that were the case they were not vvery good at farming to begin with. Most of the farms in Wisconsin icluding my friends small family farm and a multi-million dollar farm in southern wisconsin don't give any corn to the government to make ethanol with and are pretty much self-sufficient. The farms either make their own biodiesel or are part of a group that will take you surplus, make the biodiesel, and then give you the biodiesel to use on your farm. Many other farms have methane generators which cost nothing to run because cows tend to shit alot and these generators run on...you guessed it...COW SHIT! A few of the larger farms even produce enough power to sell to the grid.

Now...if our farms suck so much how is this possible? Why are their farms that are almost completely self-sufficient?

The big question here is why is the government of Wisconsin letting these evil farmers fo their best to save money on production allowing for cheaper prices for their products as an end result? OH THE HORROR!!!

[SaGa]

It's great... and it isn't. I don't like paying for gas but the economic collapse that's causing it is worse. And yeah... Why are costs still so high on things like food if the transportation bill has gone down significantly? I suppose it takes a while fore the market to react...

on the note of food. some places just rape you with prices, and some people scream out the mantra of brand names. when they could be saving a bunch of money. theres a lot of ways to save that money when it comes to food.

plus there is always a growing demand for food. thats the one demand that will always be. fast food on the other hand, i whouldnt mind seeing that die out.

but yes gas prices going down. THIS FAST is the only good thing thats the cause of a VERY bad thing. now loosing a half a million jobs in november. thats just keeping the recession wheel spinning downward. and i hope something gets done in detroit. or we might all be stuck in a slum city of homeless people. ok well worse then we are now.

[IsleofRhodesEnt]

Yeah...that whole bunch of surplus corn came from...oh yeah it fell from the sky.

As soon as our state started messing with ethanol things went to shit. If farmers gave their corn to the producers they recieved all sort of tax breaks and goodie bags from the state. However, if the farmers did not send a portion of their crops to be turned into ethanol they got taxed and recieved no benefits.

I would hold biodiesel up next to ethanol right now but its like holding a gold statue up next to a polished turd.

Farmers here use the corn to feed to their cows so that the cows may have something to eat. The government wants the corn so that they can spend more energy making it than it will ever give off. As for the environmental spect of ethanol the only reason that it can ever be considered a "green" product is because of all the money changing hands.

Farms should never have to depend on the government for help because if that were the case they were not vvery good at farming to begin with. Most of the farms in Wisconsin icluding my friends small family farm and a multi-million dollar farm in southern wisconsin don't give any corn to the government to make ethanol with and are pretty much self-sufficient. The farms either make their own biodiesel or are part of a group that will take you surplus, make the biodiesel, and then give you the biodiesel to use on your farm. Many other farms have methane generators which cost nothing to run because cows tend to shit alot and these generators run on...you guessed it...COW SHIT! A few of the larger farms even produce enough power to sell to the grid.

Now...if our farms suck so much how is this possible? Why are their farms that are almost completely self-sufficient?

The big question here is why is the government of Wisconsin letting these evil farmers fo their best to save money on production allowing for cheaper prices for their products as an end result? OH THE HORROR!!!

uh huh.....maybe A: the farmers should have paid better attention to what was going on...and B: Cows have no problem eating and digesting the "waste" of a harvest

[Rev.Reverence]

I would hold biodiesel up next to ethanol right now but its like holding a gold statue up next to a polished turd.

*THREAD JACKING IN PROGRESS*

Did you know that polished turds are actually quite shiney?

...& that a diet of meat (processed into dung) can hold a higher sheen.....

...THANK YOU MYTHBUSTERS!

*WE NOW RETURN YOU TO YOUR IRREGULARLY UNSCHEDULED DEBATE*

[IsleofRhodesEnt]

*THREAD JACKING IN PROGRESS*

Did you know that polished turds are actually quite shiney?

...& that a diet of meat (processed into dung) can hold a higher sheen.....

...THANK YOU MYTHBUSTERS!

*WE NOW RETURN YOU TO YOUR IRREGULARLY UNSCHEDULED DEBATE*

lol...freakazoid....lol

[candyman]

uh huh.....maybe A: the farmers should have paid better attention to what was going on...and B: Cows have no problem eating and digesting the "waste" of a harvest

Yeah well something that people mentioned was the fact that the price of produce hasn't dropped and in some cases is starting to go up. So I responded with something that is part of the cause.

Ok so farmers were supposed to pay better attention to what? You mean doing what farmers have been doing for years? And if you want to have a good product then no cows shoud not be eating the waste of a harvest. Must be all those stupid breeders and vets that are running around testing the cows and formulating feed to help produce the ideal health for the cow in order to produce the best milk or meat. My bad.

If you want to make ethanol fine waste all that energy. However, you can also make ethanol out of the waste material of these harvests. So why aren't these companies doing that? The Biodiesel people are using their harvest waste along with their harvest surplus and are getting more than enough diesel to run all their equipment.

My point is, and holy shit is has to do with the topic, that there is little to no reason for many farmers to be self sufficient. They are outsourcing for more and more items needed to run their farm. Its not hard to make your own biodiesel considering it will save you money. Its not hard to set up a methane generator that will allow you to run your farm on shit. But no the government is subsidizing all these farms which basically lead to fewer farms producing meat, milk, wheat, soybeans, etc. End result is that there is a drop in the amount of those products therefore the price stays up. I guess I should take that back considering the prices have dropped here is Wisconsin. It really blows when you get more milk for cheaper because its heavy and tears the bags.

There is also the comparison of ethanol and biodiesel. To make ethanol it take about twice as many BTU's than it will give off. It offers nothing that will save the environment and saving on money when used in automobiles. Biodiesel is hardly made here in the states and that is sad because of how cheap and easy it is to make. I wonder what would happen if trucking companies would be able to fuel their trucks for around $2 a gallon? I wonder what the still high as fuck diesel prices are doing to the price of shipped produce?

Sorry but maybe that study that the did in the University of Wisconsin Agricultural department about how farms across the country have become weak and helpless and turning to government subsidation which leads to the decline of the amount of produce which leads to the increse in food price...deep breath...was wrong. But, I am guessing it wasn't considering the trend in almost all aspects of out country for people to turn to the government in pure laziness saying "please tell me what to do".

Oh yeah and I was partly responding to this:

"...the Corporate douchebags like the prices high....then...NEXT TIME that there is an oil hike...their prices will go up again...& not drop.

Go ahead...call me paranoid...call me a cynic...that's just what I have seen...prices in the material goods market DO NOT drop in price...

...except where there is a NEW tech -gizmo...& it is outshine by another piece of tech...it's price will drop...

..& then again when it's faddism has passed...

...but I was MORE referring to the price of milk & bread. "

When I go back to Wisconsin should I bring back some cheaper goods? Maybe sell them on the black market?

[IsleofRhodesEnt]

Candyman...I know the struggle of the american farmer. Hell..I spent 16 years of my life growing up on a farm of over 1000 acres in northwest Indiana.

It's not JUST Ethanol...in fact..before Ethanol came along as a production product, corn by the bushel had hardly risen at all since the Great Depression. After the introduction of Ethanol, and for farmers that continued to sell corn for Ethonal Production, the price of the bushel keep hitting records highs, until a few years ago.

And Wisconsin is a Dairy state....like I said...they should have thought about it...

[Hellion]

Brazil is doing well being self sufficient

http://www.rigzone.com/howitworks/heavyoil...ht.asp?i_id=192

[13th Floor Productions]

The King of Saudi Arabia said that oil should be at $75 a barrel, more than it is now ($47 at the time of this posting) and OPEC said that they'd talk about that at their next meeting. If you know about this stuff, you know that the King has much pull so let's not plan for sub $2 gas quite yet.

[Gaf The Horse With Tears]

It's been sub $2 a gallon for about a week.