Anybody Else Suspicious About Huge Drop in Gas Prices? (gallon, Congress, statistics)

[RD5050]

Don't get me wrong ... I am extremely glad to see gas prices back to these levels. But I still wonder how they managed to drop so much right before Bush leaves office?

For several years, when we were paying $3.00 - $4.50 a gallon, we kept hearing that huge demand and limited supply was causing the extreme rise in prices. We also kept hearing how much more Europeans pay for their gas, so we wouldn't feel as bad about our high prices in the U.S.

And for several years, Exxon and other oil companies continued to report record breaking profits of $30 Billion and more, quarter after quarter, with the money coming right out of taxpayer's pockets. It may have been the biggest transition of wealth from the middle-class to big corporations in U.S. history.

Now that Bush is about to leave office, gas is suddendly selling for nearly 1/3 of it's recent July 2008 peak price, and back to levels from when he first took office.

News stations keep reporting that there is less demand for gas, and that is the reason for the huge price drops. Is anybody driving significantly less than they were 5 months ago? Personally I am driving about the same.

And where would these reported "demand" statistics come from? I would assume the big oil companies. Who else would know this type of info?

It makes me wonder if today's falling gas prices aren't part of some sort of pre-arranged deal with the gas companies, maybe from Cheney's secret energy task force meetings from Spring 2001? Maybe they decided back then that they would maximize gas prices for the duration of the Bush presidency, make all the profits they could, and then drop gas prices back to the 2001 levels right before Bush left office, so Congress would have no incentive to ever investigate the previous high gas prices once Bush leaves office?

Hmmm ....

[mackinac81]

I don't see a conspiracy. Gas went down the last time we had a recession in 2001. Also remember that China was sucking up a lot of that oil, but they're having econ. problems themselves.

But I have met a lot of people who are suspicious for one reason or another.

[sailordave]

Gas companies don't set the price. Oil is a traded commodity and it's price is set on the futures market. With the economy down, some in the futures market are betting that people will use less gas in order to save money with the economic downturn. Then there's the large number of people who traded-in or sold their low MPG vehicle in exchange for something more fuel efficient. The price of fuel, home heating oil, will go up with the cold spells.

[swagger]

Originally Posted by RD5050

We also kept hearing how much more Europeans pay for their gas, so we wouldn't feel as bad about our high prices in the U.S.

It's worth noting that the Euros actually pay about the same for the gas - it's the exorbitant taxes in most European countries that makes it cost as much as it does.

Originally Posted by RD5050

Is anybody driving significantly less than they were 5 months ago?

My girlfriend and I have gone from driving a combined 60 mile per day commute to/from work two years ago to a combined 0 mile per day commute today. We're also conscious of which car we drive when we need to go somewhere, and usually take the one that gets the best mileage - I'll even be seen in her foo-foo car just to save a few pennies! My Jeep, which was bought almost exclusively for off-roading has seen the trail twice in two years. My interest hasn't waned, but the ratio of income:gas-price has dropped...

So yes, people are driving significantly less than they used to. Your life experience does not represent that of everyone else.

[Asheville Native]

It's being manipulated somewhere, and for some reason. While everyone enjoys much cheaper gas, it's going to come back and bite us at some point.

[Rhenzanite]

I'm driving significantly more than I was even 6 months ago... My commute has tripled but my income has tripled as well. Regardless of where gas prices are, I'm still going to have to go to work 5-6 days a week so I'll still be driving.

[Frankie117]

The increased exploration and stockpiling requested from the Arabs back in Spring has finally caught up with demands. Not to mention the fact that Asian demand has dropped significantly with the economic troubles in the US. I wouldn't call it suspicious, I call it administrative and production lag. Quite common in the principles of global economics.

[geos]

Somebody described it as a tsunami. When the water goes out everyone goes out to collect the sea shells and fish but they don't understand what's coming next. Commodities markets are a combination of corruption, fear, greed, panic, hysteria, fundamentals. Right now fear is in the driver's seat. Sooner or later the fundamentals of supply and demand will return. It's pretty clear it will be very difficult if not impossible to exceed the current 85 million bbl/da production. When it becomes obvious supply is barely keeping up with demand and finally can't keep up with demand commodities will resume a bull market (I hope).

[jtur88]

No. A crude price around 60-70 is probably reaslistic, in terms of suppy, demand, and production cost.

[Bjorn_Ironside32]

There no conspiracy, just reality...enjoy the cheap gas now while it lasts. The high prices we saw the last few years is only the tip of the Iceberg.. There will come a next boom in Oil once the economy recovers (when? we dont know). Many commodities bulls are actually predicting a triple oil boom phase and we just finished the first one.

Heres a dilemma of the next demand cycle. While the supply/demand fundamentals have not change (China and India are not all of a sudden stop growing), companies have stopped exploring.. somehere in Canadas west they stopped refining altogether due to the extreme cost of labor (where welders make $120k yearly). It takes supply offline in the short-term, and due to the nature of drilling, shutting down existing fields may reduce the ability to pump oil from those fields in the future.

heres an example, if a field is pumping 500,000 bbl/day before being shut down, it may only reopen with the capacity to produce 460,000 bbl/day. Thus, taking oil offline in the short term reduces potential oil recovery in the long term.

What does this mean for future oil prices? They’re going to go up, and they may be going up faster than before. This isn’t a return to the norm, this is the swinging of a seesaw. We’re at a low point right now, but an 800-lb gorilla just got on the other side

$150 dollar per barrel oil would seem reasonable 10 years from now