Insights into current fuel market conditions
May 28, 2010
By Greg Corrigan and Greg Stanford
The news about the Deepwater Horizon accident and subsequent oil spill in the
While the magnitude of the ecological disaster is still playing out, there has been no impact to the oil and gas markets from the accident and its aftermath. The platform was not yet in production and other production wells have not been taken off line, so there are no direct effects on supply. Shipping in the Gulf, including incoming crude oil, may be slowed a bit as precautions are taken to keep traffic that may have passed through the slick from contaminating port waters.
On the price side, fuel prices have bucked historical trends recently. Prices have crept up since February from $2.65/gallon ($CA 0.99/litre) to just over $2.90/gallon ($CA 1.05/litre) before falling since mid-May. To this point, we have avoided the massive $0.75/gallon ($CA0.20/litre) price run-up before the summer driving season as experienced in the past. With average fuel prices falling nationwide in the last few weeks, what can we expect going forward?
Ultimately, what our drivers pay at the pump is driven by the world price for crude oil - and crude prices are falling rather dramatically of late. What gives? The answer to the crude price decline is found in global economics. Driving the markets right now are the consternation and turmoil regarding the debt crisis in