Crude Oil versus Gasoline prices

An Anonymous reader asked in my last post on Gold and Silver, why does there appear to be such a lag in the drop in price of Crude Oil versus the cost of gasoline at the pump? I said I would check it out and report back if I found anything relevant. So this morning I have posted 2 charts. One is on Crude Oil prices over the past 2 years and the other tracks Gasoline prices over the same period. Here are the charts:


There does appear to be a longer lag time most recently as gasoline prices should be lower. I can't explain it so as my reader suggested, maybe the Oil companies are trying to gut us to improve their profits as he suggested. Another possibility is that because demand has dropped significantly with the slowdown in world GDP, the Gasoline available today was produced using higher priced Oil and that it will take more time to use this Oil up, hence the lag in Gasoline prices. You wouldn't lower the prices of something you paid higher for until you sold it and then might drop your price of that product. The same is most likely true for Gasoline as well. The real gouging may take place on the front end when Oil prices rise rapidly. They most likely feel justified to raise prices then as everyone knows Oil prices were going up, hence the rise in the cost of Gasoline. It's a psychological game played with Consumers the losers. You can bet on that.

Thanks Anonymous for the question.

Policy on Iraq is about Oil but not what you think

The Bush/Cheney policy that drove us into Iraq was not WMD or other stories about a terrorist haven there. It was about OIL. But it wasn't that we had hoped to capture a source of oil for ourselves, nor did we want to really help the Iraqi's share in the profits of their oil supply revenue. It was about keeping the Middle East in turmoil so that Oil prices would stay high.

As you look to the chart shown here you can see the effect of the years of this Administration on the price of Oil on the right of the chart. It has gone above the 1979 spike in the center of the chart. Add to this the fact that both Bush and Cheney are Oil men and add to the mix that 2006 brought the highest profits in history to big Oil companies and their executives. That is why the President is rattling his saber with Iran. That is why there is no diplomatic effort to get the Iranians and Syria involved in talks. Because as long as there is turmoil, war and sectarian violence, Oil prices will continue to climb, as will gasoline prices.

There are ample stockpiles in our strategic oil reserve, and this Administration is doing all it can to keep the conflict going because the big fear is that if there is a peaceful solution to this conflict, Oil will once again go below $30 per barrel and Middle East countries will feel the pinch, especially the friends of the Bush's; the House of Saud in Saudi Arabia.

You want to do something to help end this war? Try using less gasoline, start saving energy and start promoting higher gasoline taxes to cut demand. It is the American people that can truly make a difference here, not the politicians. Start now.