One by-product of unemployment is supposed to be a drop in the price of gasoline. It has come down some from $3.98 per gallon of regular to $3.95. That is not much relief for cash-strapped consumers. Certainly, it’s too expensive for the jobless.
West Texas crude is still near $100, and the weakening economy has not brought that down as expected. The May jobs numbers may pressure prices, but many oil experts believe poor economic figures are already built into the current price.
The culprits for high fuel prices have, up until now, been China demand, a growth in US GDP, and unrest in producer nations like Libya. Those reasons have lost some of their power. OPEC has emerged as a villain. Recent comments by oil ministers of some members are that crude production levels are fine, although Saudi officials think crude production is about 1 million barrels per day too low. Observers of the cartel say that its members may not be able to ramp up production to that level quickly. If not, the next meeting of OPEC will not mean much.
The beginning of the last recession coincided with a drop of crude prices from $140 to under $50. That collapse does not seem to be in the early stages of repeating itself now. The US economy is about to face stagnant employment and high gas prices, a combination which most economists did not imagine just a month ago.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks