How About Those Gasoline Prices? Another Election Season Dip?

I'm sorry I haven't had anything new in over a week. Been busy. Today was a rather dreary day. Rain. Sun. Rain. Sun. More rain. At least the Yankees managed to beat the Red Sox (apologies to any of my readers who might be from the Boston area!).

The two year anniversary of this blog is coming up on September 30, so I will of course have to do the obligatory post on that.

But on to the topic at hand, which is gasoline prices. A couple of weeks ago, I noted a rise in the price of gasoline after having declined noticeably for the previous several weeks. The increase was attributed to the effects of hurricanes Ike and Gustav, which shuttered refining activity in the Gulf of Mexico. In that post, the most extreme rise in price was at an Exxon station down the road, which shot up 40 cents a gallon virtually overnight.

In the comments section of that post, I noted that a week or so later, the station suddenly changed from Exxon to Gulf, and the price also dropped. As of today, it is back where it was prior to the increase, at $3.70 per gallon. I stopped by there today and it only cost me $12 to fill the tank from three quarters to full.

The question now is, can the price at the pump get any lower? In 2006, there was a big dip in the price around October and early November. I recall that some conspiracy theorists claimed that it was done on purpose by the oil companies to help the Republicans maintain their control of Congress. Well, the Republicans lost their majorities in both the House and the Senate, so it didn't work, assuming the prices were artificially rigged. And sure enough, the prices did start to rise again shortly after Election Day. Then again, I also remember the price of gasoline noticeably dropped in the autumn of 2005, when there were no presidential or congressional elections going on, so it seems to me the fluctuation in price is more of a seasonal thing, though if that is the case, then last year bucked the trend.

Still, I am going to go out on a limb a bit and predict that we will continue to see a decline in the price of gasoline, absent some catastrophic event, in the next 3 or 4 weeks. American motorists are driving less, and the prospect of a prolonged downturn in the economy will also serve to depress demand. I believe it is possible that the price per gallon here in my part of Nassau County might even dip below $3.50 per gallon for a brief period. However, it won't last for a number of reasons. One reason, the approach of winter means that more of our petroleum supplies will be refined into home heating oil.

Furthermore, with the weather getting colder and the sun setting earlier, fuel conservation efforts will suffer. From my own perspective, it will harder to do errands by bicycle or walk to my local supermarket for food shopping on days that are cold and rainy. In such situations, driving is much more attractive.

If we have a very cold winter season, the price of home heating oil could go through the roof, and it will take a heavy toll on the budgets of many homeowners. Things could get ugly.