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BOOM!! US$1.69 / Gallon & New Record In Daily Gasoline Prices Decline



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Dec 23 2014
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As we have promised, there would be more bitching and grumbling about global oil prices ever since Russia got itself deeper and deeper into an economic meltdown. Christmas will not be pretty and fun in Kremlin this year. Under Vladimir Putin’s instruction, Russian central bank has been propping up local currency Ruble in order to pacify panicky Russians. Of course, Godfathers in U.S. and Saudi Arabia are not pushing it too much for now, just in case.

Russia Trust Bank - Bruce Willis Ads Board

In a latest twist, Trust Bank, Russia’s 32nd-largest financial institution by assets that run advertisement with Bruce Willis saying “When I need money, I simply take it”, is getting a bailout to the tune of 30-billion-ruble (US$552 million; £350 million; RM1.93 billion). This makes Trust Bank the first casualty of Russian currency crisis. Perhaps this is the proof that stubborn Putin needs to be convinced that hiking interest rate to 17% will not work.

Russia Trust Bank - Bruce Willis - When I Need Money I Simply Take It

And why Putin thought he could win the expected economy onslaught before he unleashed his military prowess in annexing Crimea? That was because the ego Putin regards highly of his US$414 billion war chest in reserves. By now, he should had spent close to US$100 billion in defending the Ruble. Presently, he is left with about US$300 billion to bail out his government, the banks, the Ruble, and of course his cronies in other sectors.

 

In comparison, Saudi Arabia has a whopping US$750 billion war chest of dollars. Together with United States, who can print unlimited amount of dollars, you don’t need to be a rocket scientist to know who’ll lose this game. The only country that can help Russia is buddy China. But why would China, with a deep pocket of close to US$4 trillion in reserves, helps the Russian and in the process offends the superpower U.S. and picks a fight with Saudi Arabia?

Stacks of US Dollars

While Russia is suffering and China watching with popcorns, the Americans are getting ready for a very happy Christmas. And it’s not hard to understand why. The steady decline in gasoline prices means they have tons of extra money to spend. The best news for American consumers is that the decline in the price at the pump has accelerated during the previous week.

 

According to AAA National Average Prices, the pumps are now US$2.376 a gallon for regular gasoline. So, what is so great about this figures? Well, for a start, this is the lowest average price per gallon since May 2009. Secondly, gasoline prices have fallen every day since September 25 to today’s US$2.37. This means the gas price has now declined for 88 straight days, longer than the previous record of 86 days set in 2008 during the height of the Great Recession.

USA National Average Gas Price Comparison - 2011-2014

The current averaged price of $2.37 per gallon is 45 cents less than one month ago, or 87 cents lower than it was a year ago. The current week-over-week drop of 15 cents is also the largest such decline in more than six years. If the above is not enough to insult your intelligence, consider this – American consumers are saving more than US$450 million (£289 million; RM1.57 billion) every day on gasoline compared to the highs earlier this year.

 

There’re only 2 states where the average price for gasoline remains above the US$3.00 per gallon threshold – Hawaii (US$3.57) and Alaska (US$3.20). All other U.S. states are selling gasoline below US$3.00 per gallon, with the lowest selling states being Missouri (US$2.05) and Oklahoma (US$2.07). Heck, you can actually get US$1.69 a gallon in Oklahoma now, the lowest in the U.S. And there’re tons of pumps that are selling for below US$2 per gallon.

USA Oklahoma Lowest Gasoline Prices - 23Dec2014

But why is this new record low in daily gasoline prices decline so amazing? That’s because such a stunning event happens when America is “not” in recession. You do not normally see such cheap fuel prices during good time. With the United States economy improving, the low price in gasoline will only help the country’s economy to strengthen even further. And don’t get fooled by the crude oil stabilizing at above US$55 a barrel now.

Gasoline Pump at US$1.87 A Gallon

It’s just taking a short nap, just like how it did at US$80, then US$75 and US$68 a barrel previously (*grin*). You may think this is the best time to buy some currencies which had been weaken lately, but Ruble is not one of them. It would be safer to long US dollar than to buy Ruble. And do we need to remind you that a wounded Putin could impose some crazy capital controls, out of a sudden?

 

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