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Inquiring Minds…

Tom Kloza of OPIS answers questions you wish you could ask, and that media should be asking.

Where are gasoline prices headed for the rest of the year?

On a short term basis, they are clearly headed lower, particularly in some high priced states such as California, Alaska, Hawaii, New York, and Connecticut. There is enough current momentum to drive nationwide retail prices toward a $2.30-$2.40 gal range, perhaps by Columbus Day.

Prices do typically find a seasonal bottom in November, December, or January, and I suspect that bottom will be somewhere between $2.20-$2.30 gal.

But there’s an interesting caveat: within another 45 days, we will see 2009 street prices that are higher than the pump prices on the same days in 2008. That says much about the severity of the 2008 decline which was indeed unprecedented. Street prices dropped from $3.62 gal on October 1, 2008 to $2.18 gal by November 13.

2010 is hard to predict. Major banks predict $55 or $95 per barrel. Either one or both could be right.

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