It’s the Economy Stupid

New week, new action, what are fuel prices going to do this week. The Sokolis still believes that there is room for prices to move lower, of course if we were as smart about the fuel market as we are about fuel management the company would be worth tens of millions of dollars. Here is why we believe prices will fall lower. This week oil prices fell as data showing a big rise in U.S. unemployment deepened the gloomy outlook for the world’s biggest oil consumer. U.S. employers slashed payrolls by 524,000 in December, driving the national unemployment rate to its highest level in almost 16 years, a government report showed, suggesting the year-long recession was deepening.

As we all pretty much know that much is not going to turn the economy around until at least January 20, 2009. Even then, we need to give our new President and Congress several months to get their agendas together and put in place.
Yes, top exporter Saudi Arabia plans to cut oil output by up to 300,000 barrels per day below its agreed OPEC target, a proactive step to prop up a collapsing market, industry sources said on Sunday. “We’ve been told Saudi Arabia will cut to about 7.7 million in February,” said a senior oil executive. “They want to prevent a huge stock build up and a further decline in the oil price.”

As the headline says, it’s the economy stupid. The jobless rate rose to 7.2 percent, the highest since January 1993. Analysts polled by Reuters had predicted a reduction of 550,000 jobs in December. The rest of the world’s economy is no better than ours because for the most part what we make or buy the world takes or sells. So until our economy starts to move a little, the whole world’s economy will be in this slide.

Now, what happens when all of these billions of dollars of proposed plans and tax cuts kick into place, not only here but across the world? Supercharged economy will be a term people will be using for awhile. Fuel prices will spring back to the $80-$100 a barrel mark, putting gas at $2.75 and diesel around $3.25 but with growth at the rate these packages should generator, we should all be fine. If your thinking about hedging (price insurance) now is not a bad time to buy. Fuel will go a little lower but don’t try to time the market. Just but some caps, kick back and enjoy your fuel budget being under for 2009 and possibly 2010.