Prices could plunge:

…many of the conditions that drove investors to bid up oil prices are ebbing. Tensions over Israel, Lebanon and Nigeria are easing. The hurricane season has presented no threat so far to the Gulf of Mexico. The U.S. peak summer driving season is over, so gasoline demand is falling.

With fear of supply disruptions ebbing, oil prices began sliding. With oil inventories high, refiners that turn oil into gasoline are expected to cut production. As refiners cut production, oil companies increasingly risk getting stuck with excess oil supplies. There’s already anecdotal evidence of oil companies chartering tankers to store excess oil.

All this is turning financial markets increasingly bearish on oil.

“If we continue to build inventories, and if we have a warm winter like we had last winter, you could see a large fall in the price of oil,” said Gary Pokoik, who manages Hedge Ventures Energy in Los Angeles, an energy hedge fund. “I think there is still a lot of risk in the market.”

As it stands now, the recent oil-price slump has brought the national average for a gallon of unleaded gasoline down to $2.59, according to the AAA motor club. In the Seattle area, prices per gallon have fallen to $2.856 currently from $3.071 a month ago, a decline of 7 percent, according to AAA.

Should oil traders fear that this downward price spiral will get worse and run for the exits by selling off their futures contracts, Verleger said, it’s not unthinkable that oil prices could return to $15 or less a barrel, at least temporarily. That could mean gasoline prices as low as $1.15 per gallon.

I, of course, blame George Bush. Like the booming economy, it’s all part of the evil Rethuglican plot to maintain control of the government, and not relinquish power this fall. Speaking of which, maybe I should put up a Bruce Gagnon countdown clock. It would be updated daily, counting the number of days that Bruce remains correct, and the number of days that Bush has continually refused to relinquish his power since January, 2001.