Higher Unemployment = Lower Gas Prices?

Gasoline futures plunged to an 11- week low on speculation that fuel demand will decline, as a jump in U.S. jobless claims to a 5-month high signaled a slower economic recovery. This may well result in lower prices at the pumps come this winter.

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Gasoline for September delivery sank 4.28 cents, or 2.1 percent, to settle at $1.9548 a gallon on the New YorkMercantile Exchange, the lowest settlement for the front-month contract since May 25.

Prices have fallen six of the last seven trading days to lose 11 percent since August 3. Crude oil had lost 8.2 percent during that period while heating oil has dropped nine percent. The investment appeal of gasoline and other dollar- denominated commodities was lessened as the dollar strengthened. The U.S. currency gained 0.3 percent against the euro as of 4.02 p.m. in New York and has jumped 3.4 percent in a 4-day rally amid concern that the U.S. economic recovery is faltering.