Mike Beversluis

Thursday, November 20, 2008

Gas is going to get very cheap

Americans driving less, unmoved by lower gas prices
By Haya El Nasser and Paul Overberg, USA TODAY

Americans are driving less despite falling gas prices, reflecting the deepening recession and signaling a shift in lifestyles and driving habits that could outlast the current turmoil.

Drivers logged 10.7 billion fewer miles in September than they did the same month a year earlier — a 4.4% decline, according to data issued Wednesday by the Federal Highway Administration.

I don't believe their argument that this time is different, and that these changes are permanent. People are very pessimistic right now, and until they feel optimistic again, there will be less driving. This rapid drop in demand is going to drive oil down to the minimum level OPEC can hold. Which is probably less than $45 a barrel, but that's a WAG on my part.

MORE: Fall in Gas Prices + Less Driving

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