Pulse Price Report: Dec. 18, 2015

Crop prices (Dec. 14)

Rio Creek Feed Mill – Algoma

Fox River Valley Ethanol – Green Bay

Basis: The difference between the local cash price for a commodity and the Chicago cash price (where the Board of Trade sets national futures price).

Gas Price Averages

United States: $2.01

United States one year ago: $2.55

Wisconsin: $1.93

Wisconsin one year ago: $2.54

Northern Door: $2.09

Sturgeon Bay: $1.98

Other Commodities

Gold: $1,064.30/troy ounce

Silver: $13.72/troy ounce

Oil: $36.32/barrel

Live Cattle: $1.26/pound

Lean Hogs: $0.61/pound

Commentary: Any driver can tell you that gas prices are lower than they have been in years. The reason is the simple math of supply and demand. As countries like the United States, Russia and Middle Eastern nations are increasing their oil production, the world is also getting more energy efficient. Add to that the previously prosperous countries that now battle struggling economies, such as Italy and Greece, and that leads to an oversupply. There is too much supply and not much demand, forcing prices down.

This can have crippling effects on the economy of countries that rely on oil exports, such as Iran, who is set to boost its oil output even further after its global economic sanctions are lifted in coming months. It can also cause turmoil in states such as Texas and North Dakota who rely significantly on oil production as an economic driver.

But in Wisconsin, it is typically good news. Wisconsin isn’t listed as an oil producing state by the U.S. Energy Information Administration. Dropping oil prices don’t have much affect on the Wisconsin export economy. But the low cost for gas means businesses in Wisconsin can lower expenses for production and distribution. Also, in tourism districts such as Door County, the low cost for gas encourages visitors to drive to the area.

You can expect oil prices, and thus gas prices, to stay low for at least the next few months and perhaps even decrease further when sanctions on Iran are lifted, as is expected next month, and the country adds its own barrels to the already overabundant supply.

– Jackson Parr

Sources: aaa.com, agweb.com, gasbuddy.com, cnn.money