Gas Follows Oil, Genius!

I've heard this from a couple of people who should be smarter than to think this way, so SOMEbody's got to say it. They mention that it's evidence of funny business that gasoline is $3+ with oil at $80, since last time oil was at $80 gas was at $2.80-ish.

Hold on there.

Gasoline prices FOLLOW oil prices people! DUH!

The price of gas goes UP after the price of OIL goes UP. When the price of oil goes DOWN it will take a minute for the price of GAS to go DOWN.

When a refinery has to pay $100 for oil, when it was paying $75 a month before, the gas made from that $100 oil is going to sell to the gas stations for more than the gas made from $75 gas did a month ago. When the price goes back down, once the oil is made into gas, and the gas is shipped, stored, and bought, the price of the gas will be lower. In a couple of weeks, if oil continues falling, look for the price of gas to be right where it should be, based on the price of oil today.

Calm down. Market forces and the supply chain are working.

In a stable oil market, I noticed that $25 on a barrel of oil put about $1 on a gallon of gasoline. Shortly after oil hit $100 and $125, gas was going up through $4/gal. We really were headed for $5 and $6 gas nationwide BUT Saudi Arabia bailed us out, bucked OPEC and went to up production of crude oil. And Brazil struck black gold off their coast. And the hurricane season didn't pan out. So the oil contract futures price spike got some of the commodities traders VERY rich VERY quickly (hi, S.J.!) and the fools who thought it would keep going up have had their clocks cleaned on oil futures. Good. The speculation market isn't a kiddie pool and I hope all the amateurs have been sufficiently scared away for a good, long time.

Anyhow, the price of gas is falling, chasing the price of oil down the hill.

I, for one, am glad to have my fuel bill reduced 25% and thank God for it.