I noticed on my way in to work today that the price of gas was $2.45/gallon here in Kansas City, down from almost $3/gal. just a couple months ago. Does that mean the price of oil has gone down, too? No, actually, it's just about as high as it's ever been (around $80/barrel).
So what does this mean?
It means there isn't necessarily a direct correlation between the futures price and the price at the pump. Yes, there is an influence, but it's much more a supply-and-demand thing.
So, the next time you see MSM headlines wailing how we're being gouged by 'big oil', stop and think a minute about whether or not you've let the current gas price affect how much you drive. Right now, the supply is high relative to the demand, so prices have dropped over the past few weeks.
The price of gas is based on a business model just like any other product, and if customers continue purchasing that product at higher prices, why would the company lower the price? It would be like Coca-Cola voluntarily selling a 20-ounce bottle of soda for $.25 even though they know they can sell it for $1.00. It makes no sense.
There's my two cents.
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