Earth

Saturday, May 7, 2011

Will Prices at the Pump Decline With the Fall in the Price of Crude?

The price of gas at the pump has risen lately.  In fact, it has skyrocketed in the last year or so. To some extent, this is reasonable and to be expected.  The world economies have strengthened considerably over that same period of time.  This growth has been been evidenced by the increased demand in crude oil, a source of energy that powers many aspects of the global economy.  That natural demand, coupled with the rapid decline in the value of the US dollar due to the easy money policies of the US Federal Reserve, lead us to the high price of crude oil which is where we now stand.  So, although it hurts every time we all fill up our gas tanks, at least it makes some sense as to why the gas prices have shot up. 
Photo Courtesy incrediblemiracles.com
However, over the last week, the price of crude oil has plummeted, from $114.83 to $94.63.  That's a decrease of 17.59%.  So, if the price of gas at the pump really is so closely linked to the price of crude oil as so many fraudulent gas station owners have led people to believe, we would assume that the price of gas should drop that same 17 or 18%, right?  That would mean that the national average of about $4/gallon would drop to $3.29 in the coming days, if what we're being told is really true.  If you think that's going to happen, at least at the same pace that the price of gas gone up, you're only kidding yourself.
Photo By Gasbuddy.com
The state attorneys general are supposed to be the authority regulating this type of issue.  But, as any average American would tell you, somebody is evidently not doing their job.  If we want the US economy to continue to grow and stay on track from the depths of the recession, price gouging the cost of a product that nearly everyone uses on a daily basis could be extremely detrimental.

7 comments:

  1. Oil prices are driven by demand, OPEC, corrupt speculators, paper traders, and foreign economies. It would be nice if the pres would open up domestic drilling to give US a chance at keeping this money and creating jobs. EPA and Libs are the main reason this won't happen and we will keep supporting al Qaeda and foreign countries.

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  2. If the us opened all of it's reserves, it would only lower gas prices by about 3 cents. And why not put people to work in the green energy sector instead of drilling?

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  3. How do you come up with 3 cents? I'm all for green energy and jobs in that sector. With 9% unemployment there are plenty of people to put to work. Is the US ready for "going green"? There is still too much dependency on oil, that's why the market can put whatever price they want on gas And we have it cheap compared to most Euro markets. We need to stop buying foreign oil, drill domestically then phase into alternative clean fuels (going green) in the near future.

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  4. We are way more expensive than most Asian countries. And we have some green energy already. My wife has a hybrid and she loves it. There is the Nissan leaf that barely gets any publicity at all. What if there were some REALLY beneficial tax breaks for people who buy those types of vehicles? Or for People who install solar panels on their home?

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  5. http://www.youtube.com/watch?v=qKdScVerrBU

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  6. T-Smokey: I agree that we need to drill more at home, and in the meantime try and develop alternative energy. The problem goes back to free trade and the fact that they will still choose to buy from the foreign countries instead of paying American workers decent wages.

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  7. here's the thing. when oil is extracted from the gulf, it is then owned by the company that extracted it, ie BP. it is not american oil, or foreign oil, it is BP oil. so there is no way that "american" oil can lower the cost of crude

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