4/05/2005

The Expected Trend For Gas Prices

On Friday, oil prices set a record high, because they were not adjusted for inflation. As a matter of fact, average gasoline prices at the pump have broken records for three consecutive weeks. But the Federal Reserve Chairman, Alan Greenspan, said Tuesday, that expected increases in oil inventories should lead to lower prices. Supposedly, the higher prices in gas have lead the demand for oil to slow down modestly. There has also been an increase in production, which should lead to larger inventories and, in turn, (what we all wish for), lower prices. By the barrel, Tuesday oil prices fell 1.7 % to $56.04. One minute we hear that prices are expected to reach around three dollars a gallon, the next we hear they will be going down. Who are we supposed to believe? I for one think I will go with what the FED Chairman says. Maybe it's just a hope, but I've always considered myself an optimist. I found this statement very interesting also: "It takes about half as much energy to produce a dollar of GDP today as it did 50 years ago, making the economy less vulnerable to swings in prices."

7 comments:

salty said...

I hope Alan Greenspan is right to. We are paying too much for gasoline. Good blog Fred.

Harry said...

Lets hope that gas prices will go down and not up to $3.00 a gallon. So I also hope that Alan Greenspan is right.

Marie said...

I personally feel fortunate that gas prices aren't as high as $3. We have it better than most countries as far as gas prices are concerned. Hopefully gas prices will actually get lower; however, during the summer the gas prices have gone up, not down.

Eric said...

I think we would all like lower gas prices but as Marie said gas has a tendency to go up in the summer.

Keston said...

I also agree that I would love for gas prices to go down, but I'm not sure they will. I read an article today that said every state in the US has a gas price above $2.00. It's not looking real promising that the price is going to go down with a busy travel season coming up.

Dr. Tufte said...

-1 on Salty's comment for a spelling error.

It's all about refineries. There is plenty of oil out there, but not oil that our refineries are currently tuned for. Why not? Because we are short on refinery capacity. Oil companeis can't build them because they get vilified when they do.

And who is selling us all this high priced oil? Those horrible, awful ... Canadians.

STAT said...

Companies will raise it's prices when it's costs go up, right? The company tries to retain it's margin.

So when the cost of oil goes up, so does the cost of gasoline. That makes sense.

What doesn't make sese to me is that the oil companies seem to be making more money when their costs are higher.

It's like they're saying, "Finally an excuse to hike prices!"

If you look at the stock prices of the oil compaies, for the past year, they're sky high!

Where the hell is the competition that's supposed to be driving prices down? The big oil cartel has seen the writing on the wall with hybrid, electric, hydrogen cars, etc., and has decided to get while the gettin's good.