And that if no serious oil supply shortfall developed, the gasoline market would go back to sleep, crude willing.
Now, [image-nocss] we have just 0.08-cents-per-gallon decline from two weeks ago, with the current price of $2.6891 a virtual no-change from September 10.
Crude was willing on an ordinary supply-demand basis, but the value of the dollar was changed via federal policy, propping oil up. The gasoline market did wake up and wanted to head down thanks to serious glut, but couldn't thanks to the dollar's effect on crude and to higher ethanol prices. Logically, the price should have fallen about 7 cents in the past two weeks but oil and ethanol ate the decline.
On September 21 the Federal Reserve in effect weakened the dollar against other currencies which by the September 24 added more than four-cents-per-gallon equivalent to crude. Ethanol continued its rising price spike, adding more than two cents to a blended gallon of gasoline over the past two weeks.
The Fed is arbitrary, and U.S. ethanol, with its sales mandate plus protection from foreign supply via the tax barrier, is artificial. These two federal policy-driven price influences joined in the past two weeks to offset a natural gasoline price decline responding to underemployment and oversupply. If ethanol and oil prices change little from here, then gasoline prices can't.
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