Prices will fall, not plummet, at the pumps

Waterbury Republican-American ^ | January 20, 2007 | Madlen Reed (A.P.)

[LibertarianInExile]

I thought I'd repost the chart for ease of discussion re: some of your points.

Sorry but you might notice the spike began in 3/12 and prices rose for four periods before steadying out a bit...The price of gas fell in 75% of the time that it took to go up. Proving conclusively that prices do not rise faster then they fall."

I'm not arguing that the price of gas DOESN'T fall eventually, or that it doesn't fall quickly. But I'm definitely sure that this chart doesn't 'prove conclusively' what you say it does. Look, for example, at what I'm noticing here at the various rises and drops from 4/17 to around the end of June. While the earlier gas price rise seems to correspond to oil, its drops look to correspondingly drop later and less. Say that the gap between crude and gas on 4/17 is the benchmark for the rest of that period. The lines should drop as crude does, but they only minimally track, and gas only varies slightly as crude goes up and down widely. I can't look at these and say unequivocally that 'prices do not rise faster then they fall.' Only when the broad trend in oil is a substantial drop in price is gas price seeming to drop correspondingly, and yes, in some cases quickly.

Consider for example the week of 4/17 where there is a small short spike in Crude but no corresponding spike in gas. Please point out ANY corresponding spike in gas that is not found in crude.

But as I note above, the broad spike in crude has already happened, 'broadening the gap' between gas and oil price, and that not only is there little movement after the price rises, there is almost no movement after substantial drops in oil price. Actually, I'd like to see a chart that shows the current cost of crude oil as a percentage of the current price of gas, which would better settle this discussion. And before you say it, YES, I know that crude now doesn't and shouldn't track prices now precisely. I'm just making the argument for academic purposes here, not out of some grand commitment to bagging on oil companies or gas sales outlets. They are fun to bag on, yeah, but only in a Rat stupid class warfare way. I'm only saying that here, I do see how the data might be supporting the conventional wisdom that gas sales prices don't track crude as quickly on the drops as they do on the rise. But such a chart as I suggest would show what time lag is present quite nicely.

Are you saying that as the price of crude rises that gas stations make less of a profit margin?

Nope, I'm saying that from this chart, the reverse seems to be true. If you look at the gap between the two prices, when oil prices are high, gas prices rise higher, as measured by the width of the gap between the two. When oil prices are lower, the gas prices are dropping more widely. From a consumer perspective, it looks like when oil's cheap, prices are more competitive, but when oil's expensive, gas sale prices all get in line, and at a higher level.

[Harmless Teddy Bear]

I'm not arguing that the price of gas DOESN'T fall eventually, or that it doesn't fall quickly.

But that is what you said before.

consumer price rises faster than it falls.

As I proved it does indeed do so.

The lines should drop as crude does, but they only minimally track, and gas only varies slightly as crude goes up and down widely

LE are you sure that you are reading the legends on this chart closely? Of course gas varies slightly as crude goes up and down widely.

Crude is shown at dollars per barrel and gas is shown in dollars per gallon.

Going down one square is only a change of 0.12 cents for gas and a change of $2.80 for crude. It is impossible for gas to follow oil exactly but they do track. I don't know how you can say that they don't.

[Harmless Teddy Bear]

Rephrase.

I'm not arguing that the price of gas DOESN'T fall eventually, or that it doesn't fall quickly. But that is what you said before.

consumer price rises faster than it falls.

As I proved it does indeed fall faster then it rises.

[LibertarianInExile]

Look, I know what I posted. To admit that the price of gas does fall eventually, or that it does fall quickly SOMETIMES, is not to concede that consumer gas prices do not rise faster than they fall. Your argument is essentially the same as saying that, if I concede that the sun appears to rise in the morning and appears to set in the evening, I've conceded that the sun rotates around the earth. Just because I agree that in some cases the conventional wisdom doesn't appear applicable, doesn't mean I agree that it is entirely false. Generalization from this chart's broad lines does not somehow make invisible that the specific lines do NOT track, and that oil spikes down AND up are simply not entirely reflected in gas prices on this chart.

I addressed your chart and tried to show you that where oil prices have fallen in some periods, gas prices have not fallen correspondingly steeply or quickly. I've tried to be reasonable and discuss this with you from the standpoint of one who is entirely disinterested in the outcome but interested in the validity of the conventional wisdom. I pointed out that I'd prefer to have a different chart which I think would settle the matter entirely--and have been clear, I think, that disagreeing with you whether the matter is proved is not the same as disagreeing with you ultimately. If you choose to ignore my post, instead of responding to it, and claim you've proven something that is nowhere near proven by simple repetition or obfuscation of my earlier remarks, so be it. The topic isn't that important to me that I'll continue discussion.

[LibertarianInExile]

"Thank You but when the name calling began I cut off any more talk about it"

Well, perhaps both sides are a little at fault (I caught HTB questioning your agenda here), but I did notice you impugned HTB's motives pretty harshly, too. Can't we all avoid that, at least on issues where we ultimately agree? I doubt you disagree that, even if oil companies were jacking up prices and so were gas companies, it would be a bad thing for them to do so as a hedge against future high commodity prices? Is there any question here that capitalism should be allowed in the oil industry?

[Harmless Teddy Bear]

I addressed your chart and tried to show you that where oil prices have fallen in some periods, gas prices have not fallen correspondingly steeply or quickly.

Ok I admit that I am confused. Granted that average gas will of necessity lag slightly behind in the rise and fall of crude prices I can not see where that is so except maybe at the very last part of the chart where it drops off. Is that what you are referring to?

[italianquaker]

I agree, and Thanks for your input

[MarkL]

The price of gasoline in ANY STATE is far far more than 9 cents.. Government makes more money on taxes from "ENERGY" of ALL forms than the producers do.. FOR DOING LITERALLY NOTHING..

Please read my post again. You'll see that I wrote that the price of gasoline in Kansas is 5 to 9 cents a gallon MORE that in Missouri. That difference is due to a difference in the gasoline tax. It has nothing to do with transportation costs. Stations owned by the same company, less than 1 mile from each other on opposite sides of the state line have a price difference of up to 9 cents a gallon.

Mark

[hosepipe]

I know.... you made your point.... I made mine..