Global Energy Crisis: Will Venezuela Torpedo the American Stock Market?
By Adam Lass
In this article
Gas prices are down…for now.
Average gas peak is still come.
Could be 4% higher… or 40%.
Global Energy Crisis: Will Venezuela Torpedo the American Stock Market?
“Gas prices are down!” Can it really be true? Are we really paying less at the pump? Should I pull the tarp off the `66 Mustang -- with its 289 cubic inches of ravenous Detroit steel -- and take her for a spin?
(Whoa, cowboy: before you get a second mortgage in order to afford feeding that monster, perhaps you should qualify “down” just a bit.)
As per those erstwhile bean counters at the U.S. Energy Information Administration, the average price for all grades in all states is $3.07 a gallon, certainly a bit cheaper than last week's $3.20 or the $3.25 from a week before.
So what happened to bring such blessed relief? Basically, we have fallen even deeper into the thrall of overseas suppliers.
When our own stateside refiner's ailing plants proved inadequate to the task of providing drivers with adequate fuel, and thus pushing prices at the pump to all-time record highs, it suddenly became profitable for overseas suppliers to provide us not only with raw crude but also with refined product.
This flood of instantly deployable foreign gasoline has forestalled the ever-spiraling rate increases -- for a while, anyway. But probably not forever. In fact, probably not much longer than a few weeks, when we can expect that march upward to resume.
After all, we are still nowhere near the usual seasonal price peak. To reveal when -- and how high -- that will be, let's take a quick tour through the historical tables.
Even with this “relief” in pocket, current prices are still 4.07% higher than they were a year ago. But (now brace yourself), they are 117% higher than they were five years ago.
As long as we are looking at 2002, let's note that price climbed another 6.38% by the late October peak. In 2003, that climb from June to the early September high was 16%.
In 2004, the bump was 2.37%. 2005 saw a whopping 43%, and 2006 gave us a more “normal” 4.47% rise from mid-June to the August peak.
Looking back over the past decade or so, the peak appears to fall in early September, and if you disregard statistical “outliers,” it comes in about 4.5% over mid-June's pump price. So we can most probably look forward to some $3.26 a gallon.
Now you could cry bitter tears that this will represent yet another new all-time high. But perhaps your time would be better spent lighting a candle or two in the hopes that we don't see another year like 2005.
Because any “outlying” event such as a storm in the Gulf of Mexico, or a really irritated Iranian oil minister with a bone to pick, or an uppity Venezuelan President who wants to make a point with his new Russian submarines could yield $4.39 a gallon in no time flat.
***
Adam Lass is the founder and manager of the WaveStrength Group, and is a contributing editor for Taipan Financial News. As the creator of WaveStrength's proprietary analysis system, Adam's expertise has shaped a franchise of successful investment newsletters and services, including WaveStrength Options Weekly and WaveStrength Apex.
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