A Bargain by the Barrel…Pricey at the Pump

Do you remember the first time in the past seven years that gas hit $2/gallon?

I do. I was living in Durham so it must have been the summer of 2004.

Do you remember the reaction as we teetered at $1.99?

I remember mine! -but I will get in trouble for using those exact words on here-

 

No one could fathom paying (*gasp*) TWO dollars for gas.

Then we couldn’t fathom paying THREE dollars…..

Suddenly last summer…three seemed like a bargain and FOUR was the new threshold….

 

If I worked at OPEC….(1) I would be a lot richer and drive a nicer car and (2) I would be giggling in amusement at how malleable consumer spending is.

Gas is back up to $2/gallon…and there has been little uproar. In fact…I’ve yet to hear a single person mention it. I started to get antsy at $1.80 even though my Scion only needs to be filled up one…maybe two times per month (yes, I live close to work).

 

$2? Why? Why if the price per barrel of crude oil is < $50 (remember a year ago when it was >$140…remember?!) are we paying MORE at the pump.

Here’s an update from MSNBC:

Oil's Ups & Downs

 

 

 

 

 

 

 

 

Today oil prices fell as a result on the market’s tumble (check the DOW…make sure you’re sitting down first).

The article says that, “Most energy-market analysts found no fundamental reason for a rally this month that pushed oil prices from $40 per barrel to more than $50.” (isn’t THAT reassuring?)

Prices have gone up because more oil is being held back in inventory. Check your Econ 101 book….supply and demand…if they cut back on supply (hold in inventory)…the price will go up….so says the Econ 101 book….

In addition…OPEC is cutting production and domestic producers are putting a lid on oil projects.  Oil inventories also rose because of losses by big corporate sectors like banking.

“The U.S. government last week said crude storage facilities were brimming with more oil than they’ve had in 16 years. Combined with the strategic petroleum reserve, the nation now has 1.05 billion barrels of oil in storage — enough to fuel roughly 44 million cars for a year.” (please…PLEASE do not go out and get His and Her matching Hummers on this news!)

“‘You can’t swing a cat without hitting a barrel of crude oil in the United States,” analyst Stephen Schork said in his daily markets report Monday.'” (PETA was not available to comment on Mr. Schork’s cat swinging……) 

OPEC says it will slash production by 4.2 million barrels per day…but compliance by all the the cronies…ah hem..pardon me…what I meant to say was, “members” of OPEC may be dubious says analysts. Now look in your Econ 102 book…under “Prisoner’s Dilemma”…..

If the whole gang offers to cut production and boost prices then everyone gets the same result. But if the whole gang..minus one cuts production…and the minus one plugs along and offers lower prices…the minus one gets the business and the plan….tanks. (awful pun…completely intended)

The new national average is $2.048. That’s still $1.238 cheaper than this time last year. (still too expensive in my book!)

 

In other news…tonight at 11pm I will air my report on WHQR’s use of their government grant. This has been a very stressful story to produce due to the volume of paperwork involved in a grant…but primarily…due to the fact that the Board at HQR would not agree to an interview.

 

That report, again, airs tonight…and the invitation to the Board is still on the table. I will post all the background info later tonight…..

 

Happy Monday!

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1 Comment

  1. This blog’s great!! Thanks :).


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