Keep the Price of Oil Going Down, Down, Down

From Sea to Shining Sea ^ | 7/24/08 | Purple Mountains

[PurpleMountains]

Isn’t it interesting how just a small drop in gasoline consumption – coupled with polls that show almost 60% of the American public favor greatly expanded drilling (and President Bush’s largely symbolic canceling of the existing executive order limiting drilling) – can cause such a large drop in the world market price of oil? Obviously the market-makers for petroleum think that America may, at long last, be starting to get serious about drilling our way out of our dependence on foreign countries that hate us. The price has dropped today to $126 from a high of $146.

[ThisLittleLightofMine]

Now drill....do not let up until we do.

[HamiltonJay]

Haha, even at 126 its still got an 80-90 dollar greed tax on top of it.

Though it is interesting that it can go down $20 a bbl and the retail price of gas stays steady like a rock at 3.99 9/10 the same its been for months. And that 3.99 and 9/10 is the same price up and down I 95, regardless of what state you are in... been making that trip every year for life and NEVER EVER seen the price so uniform through 7 states as it is right now... anyone that thinks people aren’t pulling strings are dillusional.

[ChildOfThe60s]

See where the price goes when the traders realize the Democrats can AND will continue to block drilling for the foreseeable future.

This is all psychological (and temporary) unless followed up with something that indicates action of some kind is in the offing.

In fact, I think that the price rebound will be worse in a year or two if nothing is done to start opening up land relatively soon.

[econjack]

Milton Friedman was a strong believer in the concept of Realized Expectations. That is, if enough people think there's a recession, there will be a recession. I think the same concept also works in reverse. In this case, the fact that Bush announced his support for more drilling and (finally) some press suggesting that the average voter wants more drilling and (finally) that a few GOP leaders are talking about more drilling--all these things work in concert to alter speculator expectations.

For months I've been saying here that simply announcing opening up ANWR, OCS, and federal lands to more exploration would drive the price down...a position I hold because of Friedman's work. It seems he was right...

[CharlesWayneCT]

The highest we got locally was about 4.05 a gallon at some stations. The station I use was at 4.05.9 I think for a day or two. One I drive by was at 4.09.9, but I don;’t use them.

That station was at 3.95.9 today, a 15cent drop (which granted is less only like a 4% drop in the price from it’s high).

Still all the station prices are down here.

The key though is that the gas is still too expensive, and the oil price too high. We can’t let the Democrats pretend anything they did “dropped prices”, or pretend that because Oil is down to 125, things are better.

We need to get oil back down to below $60.

[Right Cal Gal]

I envy you. Here in Cali, the highest gas prices in the nation, I’d give my eye teeth for 4.05. Even with the drop, regular is still 4.39 (thanks to high Cal gas taxes!)

[misterrob]

Double the Fed rate and announce a cap on government spending and the dollar gets a lot stronger. Oil prices would drop at least 20% in no time. The panic in the speculator markets would drive it further.

[hosepipe]

UHH OH!... somebody in the shadow government is going to get fired.. for pushing the price a shade too high for the villagers to consume.. The villagers are lighting torches..

Soon the media will act like this all didnt even HAPPEN.. so the villagers will go back to sleep.. By the way how DID John McLaim get to be the republican candidate??... Since we all are a bit sentient these days...

[DonaldC]

I would imagine the ratchet effect pricing we are seeing is because it is easier to increase the price in expectation of higher costs in inventory replacement whereas the expensive inventory must be used up and replaced by cheaper before the price can be dropped. How long the later takes, I do not know.

[Theo]

Bump.

[HIDEK6]

I’d give my eye teeth for 4.05.

I place a higher value on my eye teeth.

[thackney]

Only if you don’t consider Alaska and Hawaii

http://www.fuelgaugereport.com/sbsavg.asp

Scroll down after clicking the links below for the highest:

http://www.fuelgaugereport.com/sbsavg.asp

http://www.hawaiigasprices.com/

[gjones77]

Milton Friedman has almost always been right, too bad more politicians don’t listen to him or Thomas Sowell

[rivercat]

Imagine this conspiracy scenario...
After years indoctrination, the average American has become friendly to the global warming and eco hype.
Super-rich Liberals get together and drive up oil prices through speculation and political posturing in an effort to harm the President, Republicans in general, and to help Obama get elected.
Oil prices spike.
When gas is $3.xx per gallon, some people buy hybrids and drive a bit less.
When gas hits $4.xx per gallon, SUV sales tank.
Threat of $5.xx per gallon causes the average American to wish for off-shore and ANWR drilling (and say so in polls).
So the folks behind all of this realize that they’ve gone a bit too far, so they soften oil prices back to level that will still prevent people from buying big cars, but might bring them back into the no-drill column in polling.

[Delacon]

bump

[mouske]

Gas here in SE Michigan is stuck right around $4.00/gal. I had an appointment in Toledo yesterday. All of the stations I passed in Toledo were selling at $3.66/gal.

[Rippin]

stays steady like a rock at 3.99 9/10

---

In central PA price at pump is down 10 cents. The price is not uniform between states if you count taxes. Outside of taxes the other reason for non-uniformity in the past has been blending rules. I believe some of those have been temporarily relaxed which could lead to more uniformity. There’s nothing weird here.

[HamiltonJay]

BS nothign weird here, the 7 states I drive every year, always have fluctuation in prices, because each state has varying taxes, pays different transportation costs, etc etc.

Not this year, every one of those 7 states was selling gas for 3.99 and 9/10ths the whole way up and down 95... I’ve been driving that drive every year for 20 years, and NEVER EVER have their been such uniform pricing through those 7 states.

The fix is in folks, you think otherwise you are kidding yourself.

[rurgan]

Who is fixing it? Name names.

Thank God for U.S. oil companies and speculators otherwise oil wouldn’t have gone down $20 in the last week.

[Rippin]

Please note the links to average prices by state from AAA. The prices are NOT uniform. Furthermore, increased uniformity could be a pure function of increased price sensitivity of the consumer which is now very well documented. Furthermore, to the extent gasoline retailers use gasoline as a loss-leader to get wallets in the door to buy other things they will be very sensitive to crossing major psychological thresholds like $4 per gallon. It is all very normal.

[SAJ]

As have I, although my view stems from 30-odd yrs of trading futures. The mkts do NOT trade today's news, bar rare cases such as Hussein's invasion of Kuwait in 1990, but rather trade on the expectations of future developments held by the mkt participants.

Interesting that the whole of the futures bubble seems to be popping all at the same time. Usually, there's some sector rotation in situations like this.

[Tallguy]

I’m no expert, but I would think that the upward pressure on pump prices is due to the ‘replacement cost’, which in-turn is most affected by the price of petroleum. The downward pressure at the pump is more governed by actual gasoline inventories. Gas inventories can vary widely due to the grade variation driven by boutique fuels.

[Right Cal Gal]

Well, that’s the last time I believe truTV - they had a “quiz” and they said who had the highest gas prices - with a choice between Cali, Hawaii and Alaska and the answer was Cali.

I’ve been DUPED!