I just filled up at $2.20/gal. A few weeks ago I paid over $3/gal. The price increases inspired massive media attention, and riotous cries against evil petro companies. The price decrease has occured quietly. Competent economists point out that when prices rise, people rush out, fill up, and cry foul; when prices drop they respond tepidly. This explains why prices tend to rise faster than they fall.
Who was it that predicted this price drop, anyway? Oh, yeah: people who understand economics, including me. Expect $1.50/gal again in the next year or so.
2006-09-12
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http://www.usatoday.com/money/industries/energy/2006-09-11-gas-prices_x.htm
Experts predict that a lack of a hurricane will bring prices down to $2. But what about the conspiracy of evil petro company greedheads, stuffing their mattresses with dirty profits?
http://www.iowastategasprices.com/
2.05$/gal in Iowa. Should we now praise the oil company honchos for demonstrating compassion? Or, is their relentless pursuit of profit the real source of these low and falling prices?
"The driving season is over. There's plenty of gasoline in inventory and crude oil prices have been dropping a lot. It's mainly market fundamentals."
Suppose that all those wicked profits caused oil company officials to look harder and faster for more crude, refine it, and make it available to retailers?
http://www.ft.com/cms/s/51ec2e78-40da-11db-827f-0000779e2340.html
The Arab petro barrons worry about the price drop. I like the reference to a big price drop in 1997 brought on by economic trouble in Asia, which reduced demand. This created a big boost to Clinton's economy.
"Expect $1.50/gal again in the next year or so."
Not if the US invades Iran.
The gas price drop is a function of the commodities market that determines oil prices. One Gulf Coast hurricane or a new flare up in the Middle East could result in higher gas prices.
All of this is arbitrary because changes in those areas do not affect the gas that has already been refined and is on its way to our pumps.
It's all a racket.
Nadir: You do not understand economics if you believe that prices of already-produced and in-place goods are not legitimately, logically, and predictably affected by news. If you had already rented the Majestic Theater and printed tickets for $10 to your show, then 5 days before Prince comes to town and declares on the radio that he's going to stop in a jam with you, the value of your tickets will increase, and there's nothing you can do to stop people willing to pay more for them (and people who already purched them becoming willing to sell them for more than what they paid!) except go on the radio and announce that the Aryan Nation from Westland has planted bombs in the theater.
If the US invades Iran, and you own a petro station that just yesterday filled its tanks with petro that you can sell for $2/gal, with what money are you going to purchase the refill? You might say: "With the future windfall profits of the more expensive petro." That takes us to my next question: When petro prices recently dropped, at what price do you reckon the local merchants purchased that product? Answer: more expensive prices. Ergo: You must take your profit on the "front end" to pay for your loss on the "back end."
Combine this with the proven phenomenon of people ("the market") responding to a price increase by rushing to make purchases ("increased demand"), but responding to a price drop by waiting ("decreased demand") to see if the price will drop further.
There is nothing "arbitrary" about these relationships and behaviors. They combine to compomse a science, "economics", known as "the dysmal science."
And thank god for the evil "commodities markets", which pull investments into this a portion of the economy. If you have ever complained about high petro prices, just read an economics textbook then imagine how high prices would go without commodities investments. The befuddled lament that "commodities specuation" represents, say, 20% of the petro price of $3/gal; well, that's better than 0% of $5/gal, wouldn't you say?
http://seattletimes.nwsource.com/html/businesstechnology/2003257679_oilconsumers14.html
$1.15/gal?
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