Gas Prices Expected to Stay Low
Prince George, B.C. – A local economist is predicting consumers will continue to enjoy lower gas prices for the next two months.
“It’s very hard to predict but I guess for the short term it’s going to – if not go down further – remain low over the next couple of months,” says UNBC Associate Economics Professor Dr. Jalil Safaei.
“It’s very unpredictable because it’s all related to politics of the region (Middle East) and how the chasms that are there between the countries of OPEC are going to shape up.”
He says the “political divisions that have been sharpened in light of unrest in the Middle East”
means OPEC is no longer working in unison and has therefore led to “some kind of price war between them.”
Safaei also notes other factors in price such as a seasonal decline in things like construction activity and an increase in supply from non-OPEC countries like the U.S.
All of this as the average price of gas has dropped about 4 cents from last week to an average of $127.2 per litre (gasbuddy.com) in Prince George.
Comments
What happened to those predictions about running out of hydrocarbons by now?
The west understated the numbers for years so they could drive up the price of oil, then they magically find 300 years worth out of the blue.(RIGHT) Now that Russia is being a bully, they will drive the price down to cripple Russias economy. Simple economic manipulation which has been going on for decades if not centuries.
The funny part is $1.27 isn’t low.. $0.85 is. We where paying $1.31 when it was over $130 a barrel, now its$80 a barrel. We are getting gouged hard core right now and the gas companies and “economists” are trying to make us feel good about it.
Mean while in everywhere other than Prince George, folks are enjoying the new, “reasonable” gas prices. In Prince George the racketeers are stiffing people right left and center for “no real reason” other than shear greed.
Anyone who thinks prices are too high, boycott all gas stations! Uh, wait a minute…
Too bad Canada is in a bind as we seem to have no oil resources of our own and thereby control our own prices! Come to think of it, we could even thumb our noses at the endless convulsions in the Middle East!
Professional you should check out gasbuddy.com then repost.
China’s usage is decreasing and do to fracturing the US imports are also decreasing.
Stay low? When the barrel was at $81.00 we were paying under $1.00 per litre, I believe it was .89.9
The crude oil prices are a factor of ‘supply’ and ‘demand’. There are mathematical simulation models which have been used to predict the supply (e.g. Hubbert method)over the past 60 years. With the high prices over the past few months/years, there is definitely ‘over-supply’ and no prospect of growth for demand. Countries like Kuwait and Saudi Arabia in OPEC do not want to reduce the supply now and there is talk of further decline to 76 U$ by Kuwait.
Based on chart technical analysis, oil could drop another 10$ if it goes lower than 80$. As I wrote yesterday, that will drag down the Canadian Dollar with it further. The decline will negatively affect Alberta oil industry as P Val mentioned before, but it will be good for Canadian non-oil exports and the effect of it on Chinese buyers of real estate in Vancouver and Toronto has been decline of their investment ‘value’ although the CDN prices have gone up this year. It may encourage some to exit the market and encourage newcomers to enter the market. Price per liter is just one aspect and the value of retirement pension of Canadians is another aspect, especially for snowbirds.
How are you going to see lower prices at the pump until current inventories which the gas station paid for at a higher price are gradually replaced by new inventory at a lower price? Gasoline prices at the pump will always be quick to rise when the price of a barrel of oil rises, because the gas station operator who has to replace cheap inventory with more expensive inventory has to use what would have been his profit to pay for that more expensive inventory. They’ll be slow to fall when oil goes down because he can’t get his costs back out of a cheaper gas price, let alone make anything for himself on it.
Prof, mathematics only work if you put the right numbers into the correct equation. I remember in the 70’s when we were running out of oil according to the worlds best predictors.
We are always going to be gouged by oil companies.
P Val, we can calculate oversupply and demand in the immediate future, but predicting it long term is a big challenge. There is no silver bullet for predicting the future of oil supply and demand long term. Mathematical models are just simple approximations of a more complex system. The simple curve fitting math models of 50’s (used for predicting 70’s) are not adequate and the more complex models after that (e.g system dynamics)require large data (not fully available) and assumptions which can change due to rapid advances in technology or unpredictable political events like war and uprising.
But it is important not to loose sight of the value of models and understand that other physical, geological, political and engineering aspects play a role, which are not taken into account by the models. We also don’t have a model for ‘competition’ among oil producers or for ‘substitution’ of coal into oil/gas and oil/gas into other energy sources; or for ‘human factors’ for war/riots. C’est la vie.
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