Saturday, December 06, 2008

Gulf Oil CEO Predicts $1 Gas, $20 Oil in Early 2009

PITTSBURGH TRIBUNE-REVIEW -- Gasoline prices may fall to $1 a gallon by early next year, Gulf Oil CEO Joe Petrowski said this week. Oil prices, which rose to a record $147.27 a barrel in July, were driven up by speculators (MP: according to Petrowski), and "there is a chance the market will overshoot on the way back down," resulting in much lower prices at the pump, Petrowski said during a talk in Newton, Mass.

Petrowski said that oil, which settled at $43.67 a barrel today, may fall to $20 a barrel. Average gasoline prices nationwide slipped under $1.80 a gallon yesterday, a four-year low. Just four months ago, crude oil prices shot close to $150, and the average, per-gallon cost to consumers was more than $4. Crude has fallen nearly $27 in one month.

Petrowski correctly predicted on Oct. 14, 2007, that oil, then trading at $83.69 a barrel, would rise to $100 within six months.

Update (anonymous comment): "Soon, we'll be seeing the CEOs of the oil companies lining up for their bailouts, too."

10 Comments:

At 12/06/2008 10:55 AM, Anonymous Anonymous said...

"Oil prices, which rose to a record $147.27 a barrel in July, were driven up by speculators, and "there is a chance the market will overshoot on the way back down," resulting in much lower prices at the pump, Petrowski said during a talk in Newton, Mass."

Why are free markets said to be so efficient? Why do they overshoot on the way up and down? Or, is it just that there is just no better alternative known? Maybe someone could find a better alternative if they looked for one.

Oh, yeah, here's where I read that speculators didn't cause the oil spike....

http://mjperry.blogspot.com/2008/06/oil-prices-double-futures-contracts.html

Is it true or not?

 
At 12/06/2008 11:03 AM, Blogger Andy said...

What's wrong with the obvious explanation that demand for oil/gas decreased? Thus prices have dropped.

The same was true when demand was increasing and prices went up.

 
At 12/06/2008 11:32 AM, Anonymous Anonymous said...

Soon, we'll be seeing the CEOs of the oil companies lining up for their bailouts, too.

 
At 12/06/2008 12:26 PM, Blogger John B. Chilton said...

Bailout. That's the reverse of a windfall profits tax. I believe that the other day Obama nixed his proposal of a windfall profits tax on the oil companies.

 
At 12/06/2008 5:35 PM, Anonymous thomas blair said...

How about those 79-cent cigarettes? I'm paying $3.30/pack.

 
At 12/06/2008 9:29 PM, Anonymous Anonymous said...

supply and demand is always the rule and the fact. but, when things get revved up, and they do, speculation always carries things to extremes.

speculative hype. if this was not so, why are there always heaps of worthless penny stocks pumped and selling for much more than they are ever worth? InvestorVillage.com's DGRI, BSIC, and currently... MDVX boards for example.

 
At 12/06/2008 9:31 PM, Anonymous Anonymous said...

Yea, ditto the Speculative hype. example. anything from Qualtiystocks.net.

just check the check the disclaimer.

 
At 12/07/2008 12:03 AM, Anonymous poor boomer said...

Re:

"How about those 79-cent cigarettes? I'm paying $3.30/pack."


Heck, I remember when I was a kid, cigarettes were 33 cents per pack at my neighborhood candy store (and gas was approx 30 cents per gallon).

The owner worked the register all day, ka-ching, ka-ching, ka-ching.

And on the side of the register he had a cabinet full of valuable coins for sale which had come into the store.

It was like owning a money machine.

 
At 12/07/2008 12:27 AM, Blogger randian said...

Why are free markets said to be so efficient? Why do they overshoot on the way up and down?

This is not a condition of free markets per se (though they do overshoot), but is an endemic problem of any market in which supply has very long lead times but demand does not. Oil production can't be turned on and off on a dime, it takes months from the time demand is evidenced before it can be met. Thus there is significant lag and undersupply during rising demand, and similar lag and oversupply during falling demand.

 
At 12/08/2008 7:27 AM, Blogger 1 said...

"Why are free markets said to be so efficient? Why do they overshoot on the way up and down?"...

Which 'free markets'?

The real question is, 'just how UNfree are US markets with local, state, and federal governments ham fisted intervention into the market place?'...

"How about those 79-cent cigarettes? I'm paying $3.30/pack"...

Well thomas blair this is for you: Several states are continuing to raise excise taxes on cigarettes and other tobacco products in order to increase revenue. The rates shown do not include the federal cigarette tax of 39 cents a pack. Chicago is the most expensive place to buy cigarettes. When you add the city tax, the Cook County tax and the state tax, the total is $3.66 per pack. Evanston and Cicero (Illinois) also have city and Cook county taxes. The top nine states with the highest state tax on cigarettes are: New Jersey ($2.58), Rhode Island ($2.46), Washington ($2.025), tied for fourth place are Alaska, Arizona, Connecticut, Maine, Maryland, and Michigan ($2.00). Counties and cities may impose an additional tax ranging from 1 cent to $2.00 on a pack of cigarettes. About 82% of what consumers pay for a pack of cigarettes (average cost $4.63 - including statewide sales taxes but not local cigarette or sales taxes) ends up going to the government in taxes and other payments rather than for the cigarettes...

 

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