“Pump gas will be back to $3.60 by summer 09′. And returning to $4.00 in 2010. ”

I suggest you read what one and only one lone stock analyst was saying while all the others were getting caught up in the hype of the speculators who were predicting $200 a barrle when it topped out at about $140 before taking the constant slide to where it is now below $60 a barrel.

This guy said the prices were all out of whack with reality and being driven by the traders and speculators who were creating an artificial market because they were allowed to under the current administration.

The reality he suggested was that after the summer months where usually demand was highest that gasoline would steadily drop till it dropped to at least below $2.50 a gallon on election day. This all happened because the eventual call for investigations by some members of congress gave the boys at Exxon some call for concern since very shortly they would no longer control the Whitehouse, and be able to hold off the previous investigation into price fixing. The truth is that regardless of what the Spot Price of the day paid by futures traders the big guys like Exxon are actually buying Oil from Fields they have already secured years back on longer term contracts that most likely only reflect an actual cost of anywhere from $35-$55 a barrel crude price. The prices for the refined products are justified by the Traders daily prices so the likes of Exxon was very happy to see the Speculators get crazy and drive prices sky high as their profits tracked accordingly. The simple explanations of increased profits due to volume don’t track as this last quarter Exxon posted it’s highest quarterly profit ever when actually demand in the US has been not just flattened but has shrank by 7% this last year due to increased conservation by consumers.

Why do you think Exxon is laying off 3,500 people when they are at their highest profits ever? I would say it is in preparation for the future where they know the likes of “W’ won’t be there to give them the ability to rape the consumer for obscene profits in a time when this country is at it’s lowest point in 80 years economically.

Get real guys gas will probably go back up to about $2.50 a gallon by summer 2009 which the same analysts I quoted earlier said it would. This guy’s has been spot on so far so I suggest we all plan for that, and Bob Lutz and the boys at GM have planned for this as well because in an interview he said that as long as fuel stays above $2 a gallon all the more efficient vehicles still have a market in the USA, and this is a market GM will be able to address quicker than many people think as they already build these kind of vehicles in Europe under the Opel Brand.

#42 Ed M says,
“I think the 6.9 billion is sitting in the sales lots of America.
Vehicles that GM built last spring and summer are quickly becoming write offs….The wages and materials costs for these unsold vehicles have been paid I would presume but there’s no way to recover these costs. I’m not an accountant but that’s my take on the losses.

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I was not going to mention this, but it has come up a few times now.

Automakers book revenue as soons as they ship vehicles to dealers, not when the dealer sells them. GM revenue is contingent on dealers buying more product for their lots.

That is the original reason why GM formed GMAC as a wholly owned subsidiary (in like 1919), to be able to have a standard, easy access way for dealers to access credit to buy from GM.

Now that GM has sold the majority off to Cerberus, they no longer can control it…and Cerberus, through GMAC, is cutting off many dealers access to credit completely in the last three months(rendering them the ‘walking dead’) and ALL of the rest have to pay 5% per month on any new inventory purchase, with the full 100% due in 180 days.

That is a major reason (along with the loss of incentives and consumer leases from GMAC) sales were off 45%. Dealers are desperately trying to sell inventory to just make payments to GMAC, or to line their own pockets before they go bankrupt, not inventory replenishment.

Lot sales right now are not translating to re-orders to GM. A far greater percentage of sales to GM are now being generated from specific customer orders. Lot inventory discounts/reductions actually hurt customer orders for the short term future (and GM corporate) until the remaining dealers can find alternative sources of financing other than GMAC, or they can trim their lots to be a viable, on-going concern.

If GM gets bailed out (or somehow survives another few months), the next wave of news is massive closures amongst the dealers, which will continue to translate to huge year over year loses in sales.

Note to Matt: No ‘lol’ or ‘hehe’s in that one for you. I did not spell check it though.