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Hate to bring doom and gloom to the party...but the reason oil prices are dropping is because of increasing signs of a new recession in Europe and the USA - broadly speaking, markets are betting that future demand will be lower. Economic downturns are generally associated with deflation. So we can't win either way.
The good thing is that I can fill up the tank in both cars this weekend, and then not worry about having to drive a single mile for pretty much the entire month! On the bad side, I will be saving less than I would have, if the gas prices were higher.
But according to this graph, gas prices are over inflated when compared to oil prices. Historically, in the past six years, when oil prices were around $80, the price of gas was slightly below $3. Now, oil is around $80 and the price of gas is $3.52. Since oil prices peaked earlier this year, the price has fallen by nearly 30%, but gas prices have only fallen less than 10%.
Another way to look at it is that gas prices never spiked like the oil prices did.
So, your starting point selection is arbitary in the assumption that gas prices shot up when oil did and by the same amounts (untrue) so they should also be down 30%.
So gas prices came down a little...but orange juice now comes in 59-ounce containers, with the 64-ounce price. Oh wait--that's not like getting a tax credit, is it?
I don't have to buy OJ but I do need gas hence for me it's a tax cut.
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