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Oil Prices Falling: Will Gas Prices Follow Suit?

Oil Prices Falling: Will Gas Prices Follow Suit?

Last week, oil prices were at a two-month low of less than $100 per barrel, but in many parts of the country prices at the gas pump remained painfully high.

You don’t have to be an ecomonic genius to conclude that if oil prices are falling, gas prices should follow suit, but that’s not always what happens in a system where oil companies seem to be able to set their own prices.

Highway Robbery

Ensuring that oil and gas prices are positively associated in the future is the chore of a new Department of Justice task force organized by Attorney General Eric Holder.

Late last month, Holder announced the formation of the Financial Fraud Enforcement Task Force Working Group to focus specifically on fraud in the energy markets.

According to the DOJ, the Oil and Gas Price Fraud Working Group will monitor oil and gas markets for potential violations of criminal or civil laws to safeguard against unlawful consumer harm.

The Working Group will also evaluate developments in commodities markets and examine investor practices, supply and demand factors and the role of speculators and index traders in oil futures markets.  

Too Little, Too late?

A new report by the Consumer Federation of America found U.S. households will spend an average of nearly $3,100 on gasoline in 2011, up from $2,000 in 2009.

The study, which surveyed 2,000 American households found that very large majorities (85 percent) are concerned about gas prices, think it important to reduce oil consumption (87 percent) and believe it important to increase fuel economy standards (75 percent).

“Pain at the pump, along with the country’s oil import dependence, has produced a growing consensus that the federal government should substantially increase fuel economy standards. And among independent technical experts, there is a growing consensus that committed car companies could meet these higher standards.”

Some are applauding President Obama’s recent decision to expand domestic offshore drilling as a solution to America’s dependence on foreign oil.

Despite Republican claims that current restrictions on offshore drilling were to blame for high fuel prices and the loss of American lucrative jobs, however, the new policies will not have an immediate effect on supply or prices, nor would they quickly open any new areas to drilling.

Related Reading:

Why We Should Be Thankful For $5 Gas

Latinos Hit Hard By High Gas Prices

Drivers Save Money With New Green GPS Technology

Stop Car Companies From Blocking Fuel-Efficient Cars!

 

Read more:

Image Credit: Flickr - futureatlas.com

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64 comments

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7:07PM PDT on Jul 23, 2011

thanks

12:36AM PDT on May 21, 2011

The attacks on commenters logic are unfounded.

10:17AM PDT on May 20, 2011

Of course they will.

I feel like I'm repeating myself on this site every time I comment on such but do any of you conspiracy nuts ever stop to realize that the store owners who buy the gas do so and have to regain their purchase price? They buy xks gallons of gas at a set price, maybe contract for a couple of such deliveries to ensure supplies at what they hope will be a lower price. The fact that gas prices drop as oil becomes cheaper does not address the fact that earlier supplies are bought at higher costs (by refiners AND retail outlets). That more expensive fuel has to be sold at higher price to offset purchase price.

Try to understand the effects of lower crude prices takes time to work its way down the supply chain. If you all would take some time to think before ranting about gas prices (while ignoring government input into that higher costs), you might understand it's relative simplicity. Hell, many of you should be happy for higher gas prices, isn't that a progressive social goal? Higher prices = changing driving habits, economic activity?

Finally, how many of these moronic price setting investigations have politicians started up over the years? How many of them have found anything they can take to court? Anyone? All this was for buffing up the President's image some for reelection, nothing more.

6:34PM PDT on May 19, 2011

how do i note this?

5:40PM PDT on May 19, 2011

It seems that when oil prices go up there is an instant rise at the pumps, but when they fall it takes months before we get a drop, and that drop NEVER goes as low as when oil was the price it was before, or even lower.

Remember, oil and gasoline companies are Corporations and as such, are merciless in getting more and more profits, without any consideration to the human suffering, or environmental degradation.

Watch the film Corporation. A Canadian production, it is a documentary that explains how the laws regarding corporations MAKE THEM disregard human suffering, environmental damage, ANYTHING that gets in the way of greater and greater profits.

5:04PM PDT on May 19, 2011

My town is too small to have public transportation so we are SOL when it comes to getting to and from work with these raising gas prices. It looks like some of the local people will be on unemployment soon because they simply can't afford to go to work and things are not getting better. These are pitiful times.

10:18PM PDT on May 18, 2011

That was a silly question to ask on the poll when we all know their going to raise the price and we have to pay anyway in order to have transportation for work, etc. Even when you take public transportation like the city bus, they raise the fare to meet the high cost of fuel. So we can't win for loosing.

12:03PM PDT on May 18, 2011

Prices will remain high as long as we are dipping into our reserves that are being sold to other countries. How would they charge another country higher than we would pay for our own oil? HMMMMM?

11:12AM PDT on May 18, 2011

noted,thanks

6:15AM PDT on May 18, 2011

I completely agree with Julie Dawson

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