Global economy weakens gasoline prices

June 10, 2010

BY Rick Kment

May 24—Debt troubles halfway across the world are creating significant headaches. The energy markets are being hit hard by the European market issues which surfaced following uncertainty on Greece's handling of its growing debt. The European Union has vowed to support Greece and other struggling European countries with over $1 trillion. This move helped to stabilize the market for a couple of weeks before it started to tumble again. The Dow Jones index has fallen below 10,000 points and with it, energy prices have tumbled to lows not seen since October 2009. This weakness came at a time when driving patterns traditionally push gasoline prices to seasonal highs and supplies remain tight. The overall concern is that the challenges in Europe, and the falling value of the euro, will weaken economies around the world, including the U.S., and damage economic recovery and slowly rebuilding consumer confidence.

Gasoline prices over the last month have fallen 30 cents per gallon due to the sharp decrease in futures price and combination between fund market liquidation and concerns that overall summer demand will be significantly lowered. Ethanol prices on the other hand are holding strong with the corn market remaining stable and prices of ethanol so far under the price of gasoline that the weakness in the energy market has had very little direct affect on the overall ethanol market to date.

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