Here & There Column 8-7-07

Heavy Brew As Klatsch Discusses Gasoline Price Puzzle


We have a pretty intelligent coffee klatsch........if I might brag a little.........our latest discussion took over three pots of home brew (coffee that is) and over 36 home made donuts....... which is a standard menu for the seven of us who include three Democrats, three Republicans and one Independent and our heavy discussion recently was the price of gas and what in the world could be going on with this finicky and sometime secretive industry.
Once just has to read and listen to recent reports that our nations refineries are not up to snuff and then there is one hundred other excuses why the price of gasoline is where it is today.
One of out members pointed out that during the week of July 23 the gasoline headlines read, "gas prices, energy futures fall." And at that time is was actually reported that gas prices dropped below a national average of $3 a gallon during the previous weekend, while energy futures were having their own decline at the same time on suggestions that OPEC may increase its output.
Several of us jumped all over that statement because OPEC in the past months were talking about cutting back on production. Makes one wonder what kind of words game everyone is playing and who can one believe.
One of our members who looks very closely at the stock market and its goings on said reports now out show that oil is fairly valued at $60 to $65 a barrel, which he said leads some to conclude the cartel may be open to reversing its long-held position that oil supplies are adequate.
All seven of us don't believe this sudden change of heart by OPEC.
We also questioned the price of gasoline in the tri-county area with prices ranging from $3.05 to above $3.15..... so how come this region is not seeing gas prices below a national average of $3 a gallon?
The gasoline industry is saying that the prices are down partly due to a cooler summer which they claim is reducing demand for gas........we determined that the combination of high supplies and low demands could send prices much lower in time for the winter heating season.
What scared several of us are predictions that the market appears poised for additional price lows.
One of our members who is retired from the oil industry pointed out that the so called energy traders are now looking at the prospect that OPEC could boost output and that prior to this time there was a lot of criticism of OPEC for cutting production this year.
'It's a game they play with our money and it stinks," said the majority of out coffee klatsch.
We all also agreed that one should not hold their breath hoping for OPEC to increase their production.
We all generally agreed that as the price of a barrel of oil trends higher......and the pump price for gasoline has actually decline,......then what could be at play is oil companies now desire to keep a lit on profits so Congress does not import additional taxes.
A real tough topic and so many questions still remain and as we finished off our coffee and donuts we all agreed that a close watch of this industry is required with a system of checks and balances being regulated by someone who has more responsibility then out present leaders in Washington are showing.