Gas prices in San Diego County still hover around $3 a gallon. We're joined on Morning Edition by Phil Flynn, Senior Market Analyst at PFG Best Research in Chicago, and a Fox Business News contributor. Phil, AAA is recording gas prices at about $3 a gallon now, and it's been steady there for weeks, what's keeping the market so stable?
PHIL FLYNN: You know, I think for gasoline it really has been the situation where refiners have cut back. You know, they're not producing as much gasoline because the demand just hasn't been there. I think that's kept the prices hovering around $3 a gallon, but the good news is that nationwide we are starting to see prices break just a little bit. Nationwide prices went down a couple of pennies last week, and that's a good sign going into the big Labor Day holiday this weekend. Demand is expected to be off from where we were a year ago and, you know, I wouldn't be surprised to see those prices edge down below $3 as stations try to attract business as we move into the holiday.
DWANE BROWN: Well, Phil, hurricane season is in full swing. How does the hurricanes affect the markets - the oil markets?
FLYNN: I mean, they can have a major impact on prices. I mean this year, despite the recent increased activity of hurricanes and storms, we've been relatively lucky in the oil patch. Most of the storms have not gone into the Gulf of Mexico, which is really the heart of U.S. oil production and gas production. If they (the hurricanes) stay away from the Gulf of Mexico that's generally good news on prices. But, you know, every time we see a storm develop out in the Atlantic prices can go up a little bit because we have to increase the risk that perhaps it will get into the gulf and cut off production.
RAY: Every time we think we've seen the last of oil - or we kind of reach the max - we find another big oil find. We find Brazil, we find down in the Gulf of Mexico - how do those kinds of finds affect the balance of other oiled nations with, say, OPEC?
FLYNN: Oh, I think it's huge, I think it's historic. I mean when you think about the type of investment and ingenuity that went into this huge oil find in the Gulf of Mexico, it's just astounding. I mean basically BP, and other companies like Chevron and Petrobras, you know, took a gamble and decided to drill over 15 miles deep into the Gulf of Mexico and the payoff was huge. If the estimates that we're hearing are correct, we just increased the U.S. proven oil reserves by at least 10 percent. That's a huge increase in supplies and it really shows that peak oil, that we keep hearing about, keeps getting pushed further back as we get smarter and smarter about drilling and technology. I think this is a big story, and it's a feel good story because it's really a story of technology against the odds. Just like you said, people thought there was no more oil to be found but, you know, the darn fools went ahead and discovered it anyway.
BROWN: Well, we've heard lots about the Cash for Clunkers rebate program and the positive effect it had even for Detroit automakers. Did it have any effect on the oil market?
FLYNN: You know, I think it did. I mean initially it had a very positive effect on the market because it gave the stock market a boost, and, you know, made us feel good about the economy getting a little bit better. But the question is going to be sustainability. I mean yesterday we saw some good numbers on the manufacturing front. We saw some really good numbers on the housing numbers, and you know a lot of that can be attributed, you know, by the stimulus, whether it be Cash for Clunkers or what have you. But, you know, is there going to be life after Clunkers, that's the question you have to ask. I mean sure we saw the manufacturing sector expand for the first time since January, but you know what's going to happen next month when that Clunker money has gone away. Listen, bottom line is the Clunker program definitely helped and gave us a boost when we needed it. You know, the question is, is that boost going to be enough to carry us through without that type of help. You know, that's the big question that the market's wondering about, and at this point they're a little bit skeptical that it's going to be enough.
RAY: That's Phil Flynn, he's a senior market analyst at PFG Best Research in Chicago, and a Fox Business News contributor.
