This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
$1 buys you full access to ALL of TheStreet's Subscription Services! Learn More

Spiking Summer Gas Prices to Ding Home Sales, Consumer Confidence

Stocks in this article: RDS.ACOPSUN

Kolko adds that high gasoline prices would especially dissuade home buyers from purchasing in outer suburban areas, where commutes are longer. This could, in turn, hurt government plans to rent out foreclosed homes, as many of them are in outlying areas, the economist points out.

Rich Ilczyszyn, chief market strategist and founder of iiTRADER.com expects retail gasoline prices to average $3.90 this year.

Barring any major event from Iran, Trey Cowan, Rigzone's senior market research analyst, expects retail gasoline prices to average $3.50 or less during 2012, which is roughly a 2% decline from the previous year's prices, due to weaker demand; Citi Futures Perspective's Evans, would see retail prices closer to $3 than $4 when excluding Iran.

"If ... gas prices come down to $3 a gallon, then I think once again you could see the consumer do better in the second half, much as occurred in 2011," says Feroli of JPMorgan.

Predictions of easing gasoline prices are also being driven by views that there could be potential oil supply overhang concerns coming up in the absence of a strong and immediate message by the successor of Saudi King Abdullah, reinforcing the adherence to self-imposed production limits by OPEC (Organization of the Petroleum Exporting Countries) members. "Abdullah will be 88 years old in 2012 and the question of Saudi succession will likely need to be clarified relatively soon," Walters of A.T. Kearney says of the top oil-exporting nation.

The offsetting of refinery shutdowns in the Northeast by, for instance, the expansion of Motiva Enterprises -- a joint venture between Shell (RDS.A) and Saudi Refining -- of its Port Arthur, Texas refinery to 600,000 barrels a day, may also help prevent supply-constraint driven gasoline prices spikes.

Meanwhile, Harry Tchilinguirian, BNP Paribas' head of commodity markets strategy, says that lost European product output can be met by production by plants elsewhere in Europe; while other analysts say that during the summer, European imports may not make much of a difference on supply any way, as their conventional blends do not match the Environmental Protection Agency's summer blend requirements for some of the high demand areas of the U.S.

"A lot of people overreact, and they think this will be the year where there's not enough gasoline -- and you get these rallies," warns Tom Kloza, chief oil analyst at the Oil Price Information Service.

-- Written by Andrea Tse in New York.



>To contact the writer of this article, click here: Andrea Tse.

Readers Also Like:


Copyright 2011 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,828.24 +0.49 0.00%
S&P 500 2,067.56 -5.27 -0.25%
NASDAQ 4,791.63 +4.3130 0.09%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs