Oil price moves this week were violent, but the violence was manifest mostly to the downside. Some people were even convinced that it might be time to write the epitaph for the 2008 price spike.

   The change is welcome but the fat lady of oil price expansion has yet to sing her final aria, I fear. This year has provided more “false tops” than have been adorned by William Shatner and Burt Reynolds in their combined adult lifetimes. Note: I have been accused of being a “hairist” by some readers who dispute my status as the most well-coiffed oil analyst. If hair is not enough to distinguish me from colleagues, I may consider adding some tattoos. I have yet to see a tattooed oil pundit.

  Any way, here’s a scorecard at the 200 day mark for 2008:

-         The average price of benchmark WTI crude so far this year is $113.60 bbl. We saw two days this month surpass the $145 bbl mark, and the low for the year was just above $87 bbl. Those might be borderline stable top & bottom numbers for blood pressure, but aren’t desirable vital signs for the economy.  

-         The average retail price of gasoline for the country year-to-date is $3.49 gal. Based on average demand of about 388-million gal, we’ve spent an average $1.354-billion on gasoline per day. Today’s cost is $1.611-billion based on an average nationwide price of $4.105 gal and July demand of perhaps 392.5-million gal per day.

-         The low point for retail gasoline this year came on February 11 when gasoline cost $2.9526 gal. The high point was yesterday when we hit $4.114 gal.

-         The average price of diesel in 2008 is $4.099 gal. Today’s price is $4.842 gal, down just a fraction from yesterday’s $4.845 gal record.

Bull & Bear Markets

    I’d be wary of people who claim that we now have entered a bear market for oil, just as I’d be wary of cheerleaders who believe the stock market has commenced a new bull market. There is a tendency for analysts to gravitate to extreme positions. The siren call of public attention is quite strong.

   A few months ago, I wrote a column that pointed out that achieving a $4.00 gal price was akin to batting .400 in baseball. I thought that as we approached $4.00 gal, demand would be destroyed and that would pressure prices lower. Well, we surpassed $4.00 gal on June 8 and have spent some 40 days there.

   The appropriate metaphorical reference for the moment is future baseball hall-of-famer Chipper Jones. His batting average was above .400 for much of April, May, and June but more recently has dipped to about 0.375 or so. That is still a spectacular number and if the U.S. averages anywhere near that number for motor fuel this year, we probably won’t enter the economic version of Cooperstown.

Downdrafts & Updrafts

   Most of the data warehouses that purport to follow gasoline demand imply that U.S. motorists are using about 1.5% to 3% less gasoline than they did a year ago. I think the deficit is closer to 3% to 5% and on the upswing.

   Here’s why. Consider some of the events that will hit U.S. consumers in the next 30 days. Most of the stimulus checks have been delivered if not spent. The next important pieces of mail will include 401 K statements for the quarter ending June 30, 2008. Those statements should come with an antiseptic or some gauze.

   Consumers also face higher prices for groceries and just about everything else that is transported in the physical world. And in less than 30 days, there are the demands of back-to-school shopping for primary and secondary schools as well as universities.

   There will be plenty of updrafts on fuel prices as well, and they’ll be mostly in the form of threats to supply. The tropics are becoming more active, and U.S. refineries have had an incredibly smooth 2008 in terms of no events that have cut operations. Supply fears haven’t vanished yet.

   Bottom line: I think we may see sub-$4.00 gal gasoline as more common than prices over that number some time in the last 12 days of July. But we are not about to return to cheap fuel just yet.

Speaking of Universities

    Of all the unpleasant mail one receives, the most depressing missive of all arrives soon for those of us who have children attending college.  I am speaking, of course, of letters from the Office of the Bursar.  Fear that office if you are a parent with children between the ages of 17 and 22. The letters requesting payment of tuition and room & board can inspire grown men to weep openly.

   In some recent interviews, I’ve expressed gratitude that oil executives no longer occupy the top spot in the public’s “most depraved” list of occupations, and suggested that bankers - - thanks to their wonderful 2007-2008 performance - - have moved to that ignominious pinnacle. On a personal level, anyone associated with the NYU or Pace University offices of the Bursar are at the top of my list.

   But the public’s viewpoint has probably migrated to the following.

1.      Evil Bankers

2.      Oil speculators

3.      The Taliban

4.      Tobacco company executives

5.      Telemarketers