Date registered: Aug 2002
Vehicle: 2021 SL770
Location: Fountain Hills, AZ
Mentioned: 2 Post(s)
Quoted: 737 Post(s)
Cost of gasoline plunges. Who's fixing prices now?
What a difference a season makes
As the nation seared in the summer heat, gasoline prices were rising as fast as the temperature, and so too were suspicions about the underlying reasons. Grandstanding members of Congress were calling for blood â€” or at least a windfall profits tax on rapacious oil companies.
So, conspiracy theorists, what's afoot now that the price of a gallon of regular gasoline is down more than 50 cents to $2.50 a gallon and still falling?
Already, new alleged plots are replacing the discredited ones. Maybe the Saudis are up to their old tricks, helping their pal George W. Bush by driving the price of oil down in advance of an election. (In the latest USA TODAY/Gallup Poll, 42% of the public thinks Bush is manipulating prices.) Or maybe it's the doing of Detroit, out to kill the electric car again. Or maybe it's Big Oil priming the pump, so to speak, so it can raise prices later.
Maybe Congress should call in the CEOs of major airline and trucking companies and berate them for shameless profiteering off falling fuel prices.
Or maybe everyone should just seize the moment to remember that the likeliest explanation for such events is the most obvious one. In this case, price swings that are easily explained by world tensions and seasonal shifts in supply and demand.
Boring perhaps, and certainly no help to candidates eager for villains to blame. But true.
This isn't to say that price fixing doesn't happen from time to time. Nor is it to say energy companies haven't been able to jack up their margins. But neither the president of the United States nor the most pernicious schemes can affect prices nearly as much as global economic and geopolitical forces.
Over this summer, robust worldwide economic growth drove demand for oil and refined products to the limits of capacity. That meant any tremor â€” a war in the Middle East, the threat of a hurricane in the Gulf of Mexico, political instability in Nigeria â€” sent prices up.
Prices have come down because of the very same calculus.
The speculators who helped bid them up have noticed that demand is ebbing, that the summer driving season is over, that the weather in the Gulf has been calm, that oil is still flowing from the Middle East. Now they're dumping.
Lower gasoline prices help boost the economy, curb inflation and ease the burden on lower-income Americans. They are not, however, entirely a good thing.
They help stoke the USA's oil dependence and undercut investment in alternative
"If spending money you don't have is the height of stupidity, borrowing money to give it away is the height of insanity." -- anon