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I Predict Lower Gas Prices…Maybe

From GasBuddy.com here is a chart of gas prices in the US over the last 6 years:

6yearGas

Here is a chart of oil prices over the last 8 years:

5YrOilPrices

As of this writing oil is at $81.19/barrel, but this chart stops on 9/30/08, where oil was at $100.64/barrel.  I wanted to see the correlation between gas and oil prices.  It seems like oil is dropping rapidly, but gas is only sluggishly moving down.  The blue gas prices in the chart represent the US national average.  Here’s a summary chart I made.  It’s not very exact.  I rounded the numbers as closely as I could.

  Average Gas Price Average Oil Price
Oct 02 $1.40 $27.00
Oct 03 $1.45 $30.00
Oct 04 $2.00 $45.00
Oct 05 $3.00 $60.00
Oct 06 $2.53 $70.00
Oct 07 $2.75 $80.00
July 08 $4.10 $150.00
Oct 08 $3.10 $80.00

 

When oil was $80.00/barrel in October ’07, gas was about $2.75/gallon.  Right now it’s at $3.10, so I predict a drop.  On the other hand, the oil industry always seems to come up with excuses for keeping the price high.  A couple months ago they said that though demand was low, the refineries didn’t refine enough oil, so supply was also low, thus keeping the price of gas up.  CoughBullCoughShit.

OPEC is due to have an “emergency” meeting on November 18 to talk about cutting production, “to ensure that oil market fundamentals are kept in balance and market stability is maintained.”  I think by market stability they mean they want to keep the prices high.

I could be wrong about the market stability thing, but also in the article is this quote, ‘On Thursday, the head of Libya’s national oil company, Shukri Ghanem, called on oil producing nations Thursday to cut output to “protect their interest (and) stop the loss of income.”‘

The Shukster (author’s note:  my spellcheck wanted me to change Shukster to Huckster.  Ironic, huh?) was more blunt about the whole affair.

The nations that make up OPEC are greedy; that is no surprise.  That greed may work against them.  Even if they all agree to cut production, worldwide demand has decreased.  Further, OPEC members have, in the past, ignored limits and upped production to get a bigger piece of the pie.  Once one member crosses the line, they all tend to do so.  I think they’ve laughed at us long enough. 

If we pay $2.75/gallon or less as compared to $4.10/gallon, and there are two drivers in the average family, each of whom averages 15000 miles per year, and assuming the average car gets 20 miles per gallon (I just made that up), so each family uses 1500 hundred gallons of gas per year, then we’ll save tons of money.   1500 gallons x $4.10/gallon = $6150/year in gas expenditures.  1500 gallons x $2.75/gallon = $4125.00.  The lower price would yield a savings of $2025.00 per family, or $607,500,000 total for our country of 300,000,000 people.  Now that’s a nice stimulus package.

Note: After I wrote this I found a great article on Consumerist that is very much related to mine.  It’s great reading.

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October 13, 2008 - Posted by | Opinions

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