Tuesday, June 24, 2008

36 Up, 3 Down

For any of you that think gas prices will ever come back down significantly OR not continue to increase for a long time, consider some powerful yet simple facts about the American demand and willingness to pay for gasoline:

Gasoline prices are 36% higher today than they were a year ago, but American consumption last week was only 2.7% lower than the corresponding week last year.

We can guess about the role of speculation, cartel price manipulation or the impact of Chinese and Indian economic growth, but the fact above is all you need to know to be certain that prices will not only fail to come back down, but also continue to rise steadily for the foreseeable future.

I found this fact in this article.


Unknown said...

Have gas prices EVER gone down appreciably at any point in history?

Jared said...

Well, I wasn't around for the "oil crisis" in the 70's but I understand that it resulted in prices similar to what we are experiencing today (adjusted for inflation). Of course, gas not only came down from that, but it came down a LOT. I remember being in high school and paying $0.90 a gallon at an Exxon at one point (that only lasted a few months but it was not some random daily special - it was an actual sustained gas price...)

I guess we wouldn't naturally expect gas prices to go down given the non-renewable nature of the resource, but the amazing thing is that prices really havent gone UP in the last thirty years either (prior to the last few years of course). This has established a price range that people have always known and I would think, on some level, probably (wrongly) expect to see again.