Thursday, November 20, 2008
Why the steep drop in such a short time?
Colleen just called me to tell me that she had just filled up our van at a rate of $1.58 per gallon! Can anybody explain to me why the price of oil has dropped so dramatically in such a short time? Did people really cut back that much on their driving? I doubt it.
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11 comments:
one financial page said that some regulators were looking into speculators manipulating the price of oil high to make a profit.
If you are really into conspiracy theories, you can say they did it to cause a recession so Obama could win...
But the good news is that the Iranian president has been spending all that profit and now they are going brokee...and he's up for election early next year...
Bob, the demand has dropped. Oil could reach $40 a barrel any day now. The suppliers are pumping as much as they can to raise revenue to meet their government's budget projections.
Not only has demand dropped, but the rest of the world has figured out "As so goes America so goes the world."
Holy crap... that is cheap... I paid $1.78 this morning and felt all warm and fuzzy inside!
Of course here in California we are still over $2.00 a gallon! The cheapest I have seen so far is $2.09.
I never thought I'd see gas prices start with a 2 again, much less a 1!
I've heard the exact opposite of boinky's theory - rather than prices going up to get Obama elected, they came down recently to get McCain elected. I had been expecting a spike after the election, but it's continued to fall another 40 cents.
I agree with others that demand really has dropped. Not by 50%, but they realized that those temporarily high prices were unsustainable. That short term spike may have actually helped you and I, in that a lot of people who didn't really need large vehicles got into smaller, more efficient vehicles. At $2 a gallon, it's not cost effective to take a hit on your old car and trade for a hybrid, but enough chicken littles did just that at $4 a gallon. Also people have chosen to simply drive less. This drop in demand has led to cheaper gas for those of us who really do need trucks and vans.
Also, congress somewhat silently let the offshore drilling ban lapse. That was good work by the Republican minority. Many argued that it would take 10 years to extract that oil, which is true, but those prices were pure speculation, and now that the ban is lifted, there is no more possibility of claiming a long term supply shortage.
In other words, the bubble has burst, and it's back where it ought to be, and they were simply gouging us for the past three years. It may creep up to $2 again, but it would take a major catastrophe to see it at $4 any time soon.
Beats me. I've never understood oil prices...but the theories abound...isn't more interesting that no one knows why definitively.
Here in Paraguay we pay 7$US a gallon! We ride the bus a lot.
I've never understood economics. I'm just glad to get gas at a low price. Although I will shun Citgo and its Chavez-gas even if it's a whole buck cheaper than anywhere else. Just. can't. do. it.
It does seem like the minute Sarah Palin started talking about drilling in Alaska the price went down...and what qp says.:)
Happy Thanksgiving, That's just another thing to be thankful for. :)
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