I Just Paid 1.67 for Gas

It is hard to believe, but I paid $1.67 for gas a few days ago, and the same station is selling gas for $1.57 today. I haven’t paid this little for gasoline since 2002, when I remember gas rising to 1.70, at the time, I thought it an outrageously high price. Today, it seems like a much-needed bargain.

The reason gas is falling is that demand is falling, mainly because of the economy. I think this highlights the importance of conserving energy. If we reduce demand, prices go down. We can blame the speculators, OPEC, oil companies, etc, but what is causing this drop is a lack of demand. I hope we don’t let these “low” prices make us complacent. We still need to conserve and promote alternatives to keep these prices low. I don’t know about you, but I like having an extra 20 dollars a fill up in *my* pocket, and not in the pocket of an oil company of foreign country.

Some Good Economic News…Some Not So Good

Good News: Oil prices have dipped dramatically lately. I have followed energy prices at the futures level since 2002 when I became upset that gas was skyrocketing to the insanely high price of $1.70. These days, $1.70 seems cheap. While I don’t think we will see $1.70 gas again, I do think a price around $1.99 is possible in many areas by December. Some people have said prices are going down because “an election is near.” Nope. It is because our economy is weak and getting weaker, and demand is down in developed countries, like the U.S. Thus businesses are using a lot less fuel, and so are consumers. Part of the price drop is that Americans have finally wised up, and have started conserving energy.

This is an example of why it is important to conserve energy. Using less fuel lowers prices. That is basic capitalism. If you want to lower a price you do one of two things. You either increase supply or reduce demand. Right now, the oil market is well-supplied because there is a lot of supply and weakening demand. It is a shame that it took a near economic collapse to lower oil prices, but there is at least a little good news amidst the doom-and-gloom. I just hope we don’t forget about $4.00/gallon gas, and that we keep conserving, and keep developing alternatives, or we will be back at $4.00 very soon.