Oil Hits a 4 Year Low

Just out of curiosity…why? I thought those evil oil companies could control the price of oil and gasoline. Maybe we should bail these guys out too.

FILED UNDER: Economics and Business, ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. odograph says:

    It’s making my “commodities bubble” call look better. Though, I would have thought $70 the bottom.

    $1 gas would really make me reorder my thinking.

  2. Bithead says:

    We’re suppsoed to be seeing $1/gal sometime next year.

    To the degree that ours is an energy based economy… a lot of that based in oil, one wonders if low energy prices are not going to spur an economic recovery on their own.

  3. Dave Schuler says:

    All in good time, Steve. If prices stay low too long we might see just that.

  4. Franklin says:

    Well let’s continue building gas guzzlers then. I bet the price of oil will never go back up! And forget all those pinko alternative energy ideas, this proves we don’t need ’em.

  5. odograph says:

    I agree with you, Bit.

  6. odograph says:

    (Though for some economic pessimism, Speed Kills: The Economic Unwind)

  7. Clearly it is in anticipation that Bush and Cheney will no longer be able to protect their buddies and funnel huge sums into their coffers.

    I find it humorous that Obama will get credit for the recovery now as the groundwork for lower prices has been set by market forces completely beyond his control.

  8. just me says:

    Actually my big question is that while it has dropped significantly the last few weeks the price at the stations in my area haven’t dropped for about three weeks-they have been hovering around $1.70. I wonder why a rise in prices makes my gas go up immediately but a lowering in the prices is very slow to hit the station.

  9. odograph says:

    Obama could still be Carter 2.0, based on the trouble already baked into the economy (see “speed kills”).

  10. Steve Verdon says:

    Actually my big question is that while it has dropped significantly the last few weeks the price at the stations in my area haven’t dropped for about three weeks-they have been hovering around $1.70. I wonder why a rise in prices makes my gas go up immediately but a lowering in the prices is very slow to hit the station.

    Really? I hear this all the time, but have seen little hard evidence (other than anecdotes) to substantiate it.

  11. tom p says:

    below $1.40 here in the hinterland.

  12. odograph says:

    Actually my big question is that while it has dropped significantly the last few weeks the price at the stations in my area haven’t dropped for about three weeks-they have been hovering around $1.70. I wonder why a rise in prices makes my gas go up immediately but a lowering in the prices is very slow to hit the station.

    Really? I hear this all the time, but have seen little hard evidence (other than anecdotes) to substantiate it.

    From Slate:

    […] Why does it seem like gas prices go up faster than they come down?

    Because they do. Analyses of gasoline economics show that when the price of oil rises, it takes up to four weeks for gas station prices to catch up, with most of the increase taking place within the first two weeks. But when oil prices sink, it takes up to eight weeks for the savings to be passed along to consumers. The phenomenon is known as “asymmetric price adjustment” (PDF) or, more informally, “rockets and feathers.”

  13. M1EK says:

    Global recession bordering on depression == lower oil prices. Gosh, what a surprise. The same exact thing happened when the Indonesians/Malaysians’ economies collapsed in the early 1990s.

    None of the Peak Oil guys except the lunatic fringe believe the price increase will be a straight line pointing diagonally up. Most predict a real jaggedy rollercoaster of fun.

  14. just me says:

    Really? I hear this all the time, but have seen little hard evidence (other than anecdotes) to substantiate it.

    Well around here it has been the case. I don’t know what you want me to do to substantiate it.

    Odograph I couldn’t get the Slate article to load (I think your link is fine my computer is just being slow tonight). I am curious to read the rest of it though.

  15. Bithead says:

    Obama could still be Carter 2.0, based on the trouble already baked into the economy (see “speed kills”).

    Wherein lies part of my point, re oil prices.
    Obama would be better off sitting back and watching the blinking lights. But his instinct is to flex the muscles of government, whereby he’ll make it worse.

  16. Steve Verdon says:

    Well around here it has been the case. I don’t know what you want me to do to substantiate it.

    Well every data source I look at shows declining prices. So unless it is some sort of regional hang-up or something, I just don’t think the view that prices go up immediately, but don’t go back down (quickly) is a solid claim.