A Wall Street Journal headline today said "Crude Hits Seven-Month Low" which is good news, but infuriating. First of all, it strikes me as proof positive that most of the dollars per gallon in excess of $100 were pure speculative froth, that is, rich people gambling as they try to get richer by distorting the value of a vital ingredient of the world economy, one that is not far behind food and water in term of human survival (given the extent to which current economies are petroleum-based).
In the midst of hurricane season with oil rigs knocked off line and Nigerian rebels blowing up pipelines left and right, in other words, with supply in doubt, oil drops. Where are all those Wall Street talking heads who popped up to parrot the line that $140 a barrel oil "is simply a reflection of supply and demand"? My gut feeling is that they should be publicly stoned with Economics 101 textbooks (obviously it is not stoning when a wood-based material is used, and it probably wouldn't be deadly, just painful and humiliating).
Second reason this situation made me angry was that gas is still close to $4.00 a gallon in New York and it really should be a lot less. Let's say the price of a US gallon of gasoline topped out around here at $4.30 when crude was $142 a barrel (mid-July). That's a little more than 3 cents per dollar of crude. With oil at $100, gasoline should surely be about $3, not $3.85, which is what I paid yesterday. I realize that the finer points of this calculation vary by state, and some states have taxes that are per gallon and per dollar of retail value. But it seems to be that if oil is close to $100 a barrel then gas should be a lot close to $3.00 a gallon than it is. One thing's for sure, you can bet on another quarter of record profits for Exxon-Mobil-BP-Shell-Chevron-Etc.