Okay, someone needs to explain all this to me.

Not too long ago, gasoline was selling in the United States for around $4.10 a gallon, even higher in some areas. At that time, lots of people, including some of the sages on this forum, were saying that it was all because of:

1. Growing demand for oil in China and India; and
2. Fuel taxes.

Currently, gasoline is selling for about $2.20 in the U.S., less that in 2006, and after adjusting for inflation, less than we were paying in 1980. And yet, nothing has happened to China and India...they're still there. And fuel taxes have remained unchanged throughout the entire period in question (#2 was always a completely bogus argument).

So, does anyone want to hazard an explanation? You can say it's the recession, dummy, but I'll bet you that demand for gasoline hasn't changed all THAT much in the last few months. It's more likely that the recent high prices were nothing but a speculative bubble, and the bubble has burst with a vengeance.

http://www.eia.doe.gov/oil_gas/petroleum/data_publications/wrgp/mogas_home_page.html

 

Kimiko, your last paragraph comes close to the answer. The price of oil was inflated to the maximum that it could possibly be, given the compliance of U.S. and British controlled oil companies, who added their own drastically inflated profits during the 'crisis'. How long this may have continued had a Republican administration continued is unclear, but the 'profit-hoggers' both in OPEC and refining and distributing corporations were made clearly aware by the end of summer that McCain had no real chance and the hammer was going to come down fast.

The result can be laughingly called 'self-regulation'----taking and running with literally hundreds of billions of dollars in EXTRA profuts garnered over the past 8 years, everyone in control of oil is dropping prices to the levels they SHOULD have been all along in order to avoid drastic government regulation next year.

However, don't get used to these low prices. They MAY get a little lower, but a small part of the reason for the fall IS reduced consumption. As winter hits and people get more comfortable with driving at lower prices, consumption will go up and so will prices. Also, added to this IS the increased demand from Asia, particularly, which will cause regular increases in prices from now on----but THAT would just be normal.

 

Speculation buying in the commodities market, with the current economic slow down prices have dropped due to less demand in the western world. People have found other ways to commute, and are traveling less. Which has also caused a decline in Asian markets, less goods being sold overseas.

It all being manipulated by the commodity traders

 

From what I understand is that the gas prices we get are actually six weeks old. Gas companies have people who are bidding on gas right now for six weeks from now. If these Bidders think that something horrible is going to happen in the war or just in the Middle East in general, then they bid really high on gas.

So in theory, six weeks ago gas bidders thought there'd be no threat on gas this week.

I could be wrong though, so take this with a grain of salt, okay?

 

Could it be that with Obama in the White House, oil speculators now see an end to favorable policies towards the oil industry in the U.S., with the end of Iraq War as the icing on the cake, resulting in lower oil prices on a long-term basis?

 

I'm loving it!!! Here's an article from Yahoo today about it..

(Reuters) – Oil fell 5 percent to $56 a barrel on Wednesday as the U.S. government hacked its global demand growth forecast again due to the slumping global economy.
OPEC officials, concerned about the oil's steep drop from record highs over $147 a barrel per day (bpd) in July, said the cartel could possibly decide by the end of the month to cut production again to raise prices.

U.S. crude fell $2.94 to $56.39 a barrel at 14:13 p.m. EST, after touching $56.00 earlier. London Brent crude traded down $3.06 to $52.65 a barrel.

The U.S. Energy Information Administration chopped its 2009 output outlook by 740,000 bpd, with total demand expected to average 85.93 million bpd next year compared with estimates of 85.89 million bpd for this year.

Demand in the United States, the world's biggest consumer of oil, was expected to fall by more than 1 million bpd for the first time since 1980 this year, the EIA said.
Earlier, the International Energy Agency, which advises many of the biggest economies on energy policy, said a slowing world economy may force it to cut its oil demand forecast again when it releases its latest monthly report on Thursday.

The economic crisis had already led the IEA, to cut its assumption for 2008 world oil demand growth to the lowest rate in 15 years at just 440,000 barrels per day.
"We are likely to cut demand ... because the IMF changed its projections on the world economy very dramatically," Nobuo Tanaka, head of the IEA, told Reuters.
The IEA comment reinforced fears among traders and analysts that the ferocity of the recession sweeping through many of the world's biggest economies has not yet been fully factored into projections for oil demand.

U.S. stocks extended losses on Wednesday after U.S. Treasury Secretary Henry Paulson said his department would consider capital needs of non-bank financial institutions, renewing concerns about the scope of problems in the U.S. economy.
"Fear global recession is worsening day by day is driving this market down," said Rob Laughlin, senior oil analyst at MF Global. "Demand for oil is deteriorating week by week."

OPEC REDUCTION
OPEC President Chakib Khelil told Reuters on Wednesday that OPEC may cut oil supplies again, possibly by the end of this month if prices keep falling and the world economy weakens further.
"If the prices continue their decline, most probably OPEC will have to take a further decision on a cut in supply," Khelil, who is also Algeria's energy and mines minister, told Reuters in an interview in Algiers.
Kuwait's oil minister said oil markets are oversupplied and OPEC would consider cutting output again if inventories continued to rise.

"If there is a surplus in the market and unwanted stocks, I think OPEC has the right to look into this matter seriously," Kuwait's Oil Minister Mohammad al-Olaim told reporters, when asked if the producer group needed to cut output again.

Analysts polled by Reuters ahead of U.S. weekly inventory data forecast crude oil stocks rose by 1.2 million barrels last week, while distillate inventories were seen rising by 800,000 barrels.
Analysts also forecast a 300,000 barrel rise in gasoline stocks. The data will be released on Thursday, a day later than usual due to the U.S. Veterans' Day holiday on Tuesday.

 

I'm not even going down the big political road today.

 

There are so many parts to the answer here, this is only scratching the surface

During the peak cost it was reported that there were 4,000,000 fewer drivers on the road. Now how that number was reached, I can't tell you.

Hybrids have become more popular. I bought a Prius and decreased my consumption by 50%. This has worked so well in some states that they are considering not taxing at the pump but taxing for the number of miles driven each year.

Usage has decreased so significantly that prices here have gone down (I paid $1.83 per gallon for my last fill up).

Don't expect the end of the Iraq war to be the golden egg, it will, in fact, result in higher unemployment and underemployment.

If Democratic policies are to be believed, there will be a decrease in benefits to oil companies in the US and they will actually end up seeking less oil.

Last butt not least, enjoy the present prices, they won't last long.

 

simple an oilman was the president or still is and he padded his pockets for the last few years along with the rest of his good old boy's ...but when it was time for the election he wanted to get his pal mccain the pain in for 4 or 8 more years of the bullshit we've had the last 8 yrs with georgie girl so he told his pals the gig is up we got to drop the price and get my pal into he office IF we still can and then IF he does get in he'll go right back to where we were..didn't work old bushy wushy plain and simple and oilman runs the country and makes millions.and i'm in my area am only paying 1.89 a gallon. can give all the other thought on this it's the down and out truth ,bush fucked us all.

 

I actually hope they don't, since higher prices encourage the kind of policy and behavior changes I would like to see.

In the meantime, though, we might take that driving vacation we've been thinking about.

 

it might go back up to like 2 something a gallon ..but see with out an oilman running the country it might be a tad bit hard to have that happen again,and if obama's smart he won't do anything to impeach himself.

 

It hasn't gone to less than $2.37 here in Las Vegas.

 

circus circus been to vegas many many times and always come out a winner never have lost there for some reason, last year i walked out with 23,000

 

Don't bet on it. The pricing today is the old "pendulum" theory at work.

We went through a period of high futures pricing do to speculation which was enabled by supply and demand. When gasoline prices, at the dispensers, were skyrocketing, people kept their tanks full because it would cost more tomorrow, now that it's falling people are waiting to get the lowest cost. While this alone would never explain the incredible drop in price it can be seen as part of the reverse swing of the pendulum.

Not only motorists cut back or delayed buying, but so did bulk users (i.e.: trucking companys and airlines), also the depots and fuel storage tanks were beginning reach capacity prompting a reduction in finished product being bought at wholesale. This increased the speed of the pendulum swing, momentum is probably spent and the arc is at or near the further on the low side that it will be for now.

IMO, chances are very good that as soon as the supply and demand level out, the price willl begin to edge up again. The pendulum will begin that swing to higherprices again.

 

It's $1.99/gal here, it's rather nice.

 

It was Gasoline Gnomes stealing all the barrels.

Step 1. Steal Barrels of Oil

Step 2. ???

Step 3. Profit

It wasn't the evil, faceless, international, loose-cannon, drunk at the helm, insane with power corporations fault. I mean, the thought of a big time executive having to sell his Château because he's losing money is just a crime. So they had to increase the price of oil, so little people like us could help them keep their collections of infinitely priceless, thousand year old brandy's.

 

They got you thinking exactly how they want you to.



And I ain't talking about the conservatives.

 

That doesn't explain the precipitous drop in world oil prices, though.

Actually, my point was a relatively simple and non-partisan one -- that people's glib and facile explanations as to why things are happening as they're happening are often complete nonsense. They're just counting on our short memories.

It's like when the stock market falls for a day. After it falls, there's a rush to explain it on the financial talk shows. They have to say something, so they say it's because of Company A's lower-than-expected quarterly profits, or because the government issued a report saying that inflation had edged up. Or maybe they just say it was "profit-taking". The next day, when it rises, they have a whole new set of explanations for why THAT happened.

But they really haven't got a clue.

 

Lol, I was just kidding. I don't want to give my long answer as to why the prices are dropping.

It was supposed to be funny.