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Falling gas prices a bad sign?

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    Does decline signal global economic slowdown?

  • Duration 4:45
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Are some very good news right now what accounts of the gas pump at least relatively speaking.

It could -- -- some bad news down the road the national average for a gallon of regular now three dollars and 41 cents.

That is down nearly ten cents for a week ago and more than twenty cents from a month ago and some analysts say the price could dip below three dollars by Thanksgiving.

But the reason why the prices are low or is possibly keep part of this story Phil Flynn is a senior market analyst at.

Price futures group PFG also Fox Business Network contributor.

And Steve Moore is a senior economics writer for the Wall Street Journal welcome to you both Steve -- share price is lower.

Well -- -- like everyone John I love the I love that idea and less than 350 a gallon -- just made my weekend out but you know I'm.

Part of the reason that the gas prices falling as we are producing more oil and gas in this country which is -- good news part of the story.

The bad news part of the story Jana is that.

Major driving force for this declining gas price -- has been.

The global economic slowdown there's much was business production so industry is using less oil and gas.

And that means as demand has fallen so has the price and that that's the real danger point that maybe this economy is slowing down so much people are gonna pay -- for.

For gas but they may not have jobs.

-- and that's quite a tradeoff fell I gave Steve the first question so we can both salute you.

Because you predicted this way back in February you said this -- that they gasoline prices we're gonna drop below three dollars quicker than they were going to go past five dollars a gallon.

So how party think they're gonna drop.

You know I think -- dramatically in fact don't even go we're out on a limb here and saving you're up high gasoline prices it is all part.

I think the high price you paid this summer in the buildup to the war by -- may be the highest price you ever pay or at least for many many years.

There's been a fundamental shift in the US gasoline market.

And the global market and -- and a slowing in the economy but it goes further than that I think we've seen some long term demand destruction and gasoline.

That may not come back for many many years.

Add to that -- -- US and Canadian oil production and and on top of that new technologies.

In the automobile sector.

I think that those high prices that we saw he'll become your grandkids about it hey I paid almost five dollars a gallon for gasoline one -- wow.

That could be at -- that's happening and we would expect to feel like the back here at the CME that's where a lot of different commodities are trading.

And one of the things that we talked about -- a few moments ago or some higher food prices.

And higher corn prices and all of these commodities so what we're -- oil drop what are we seeing a rise in.

Did that offset some of the value we're seeing from gasoline prices going well.

I think it does it to a certain extent because food prices are definitely going to be higher and this week it's going to be extremely critical especially.

For the US corn crop this year.

The entire world is basically betting on our corn crop to save the day.

I am right now with this drop condition.

The conditions of that crop are very very poor right now.

Take a look at what's what's happened at feeder cattle for example that's an indicator of how much beef there's can be available on the market.

Those prices -- limit down.

What that CNN -- silence are going to be able to feed their cattle they're gonna bring them to market that's going to be tighter supplies down the road higher meat prices down the road.

You also have -- prices that have been soaring NASA flight so.

Food prices definitely hire another thing the economy doesn't need right now is this.

Severe drought in the midwest.

Steve what are the political implications of that -- the gas prices aren't instant thing that you can read every single day -- -- think okay that's better than it was a couple months ago that instills mentioning these other items so how does that play out.

It's a real double edged sword on the one hand certainly low gasoline prices make consumers happy and that will help President Obama -- the short term.

No question about it just as Republicans called -- over the had a few months ago when gas was four -- five dollars a gallon.

He can -- -- -- lower gasoline price numbers and by the way out -- reduction in the price of gasoline at the pump.

Jenna has the affect of like a tax cut for American consumers it means they compiled by either gasoline.

And then they have money left over to buy other things the problem gets back to this issue of are we in a global slowdown that's really now hitting the -- us where factories are not producing as much.

That's the real question and that's the real fear right out that we're just not seeing the -- -- -- that that we'd like to seat up for August sustained recovery.

More on this as we continue to watch the breaking news on the economy -- Steve -- have you both with us today.

Thank you Graham must go without penalty and got it is still up your time this is I well maybe -- greatest Eric stockpiles were not the point yet that's a different conversation.

Different it's different -- completely let me get this stuff out that our guys -- keep him.

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