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Forget $1 Gasoline, It’s Happening — 46-Cents A Gallon In Michigan



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Jan 19 2016
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Remember the unbelievable predictions that crude oil would go to US$10 / barrel (cheaper than water) and gasoline would go for US$1 / gallon? Well, forget them because it’s already happening even though officially the crude WTI and Brent are trading above US$20 / barrel. However, the fact that both crude oil prices have gone under US$30 go to show the worst is not over yet.

 

If you think US$20 / barrel of crude oil is a fantasy to consumers and a nightmare to oil producers, think again. In Canada, the producers would be more than happy to sell it for US$10 / barrel. Last Tuesday, Canadian oil sands producers were selling their bitumen for US$8.35 / barrel. Bitumen is selling at cheaper rate because it has to be diluted with more-expensive lighter petroleum.

WTI Crude Oil vs Canada Bitumen Oil - 2-Year Price Chart

Just like normal crude oil which has since tumbled to US$20+ from more than US$100 a barrel roughly 18-months ago, oil sands bitumen suffers the same fate – plunging to US$8.35 from US$80 a barrel less than 2-year ago. And if you wish to buy ultra low quality (high-sulphur) crude, you could literally get it for “free”.

 

As a consumer, you’re not interested on crude oil, of course. What consumers want now is cheap gasoline or petrol. Well, guess what, you don’t have to wait for WTI or Brent to go to US$20 a barrel to enjoy gasoline at below a buck / gallon. Over the weekend, some stations have already started the price war.

Beacon and Bridge Market in Houghton Lake Michigan - Gasoline Price 78-Cents A Gallon

Beacon and Bridge Market in Houghton Lake Michigan - Gasoline Price 47-Cents A Gallon

In Michigan, three Houghton Lake stations brought cheer to motorists when they slashed their prices to below US$1 / gallon. The Beacon and Bridge Market in Houghton Lake went bonkers when it slapped a crazy price tag – 47-cents a gallon – at its station, followed by Sunrise Marathon (station across the street) which cut it by additional 1-cent to 46-cent a gallon.

 

The mad price on Sunday attracted so many cars that police were called in to direct traffic. The 3-day weekend mad sales started when prices dropped from 95 cents, to 78 cents and eventually to 46 cents before the “price war” ended. However, by Monday the prices returned to “normal”. Both Beacon and Bridge Market and Sunrise Marathon’s latest price was US$1.31 / gallon.

1973 Flashback - Gasoline at 47-Cents A Gallon

1973 - Elvis Presley and Bruce Lee

The last time gasoline sold at 46-cent a gallon was in 1973 when President Richard Nixon was the commander-in-chief at White House and the King of Rock and Roll – Elvis Presley – ruled the music world and sold over 1-million copies of his “Elvis” album. It was also the year the legendary Bruce Lee reaches his peak but dies at age 32.

 

It’s unknown if those stations involved in the price war would do it again this coming weekend. The Michigan price war could be a one-time publicity stunt to attract customers. The present average gasoline price in U.S. is US$1.884 / gallon. The lowest price is US$1.26 / gallon in Oklahoma with an average price of US$1.550 / gallon.

American Consumer Pumping Gasoline

Still, if you’re not too far away from the three Michigan stations – Citgo, Beacon and Bridge Market and Sunrise Marathon – this coming week-end, you may want to try your luck. At US$0.46 / gallon, that’s roughly US$0.12 a litre (£0.084 a litre; RM0.527 a litre), which is quite insane.

 

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