Recently, I was grousing about gas prices seeming to go down much more slowly than they went up with the price of oil. Well, boy, was I wrong. Take a look at this (unfortunately fuzzy) chart, compliments of GasBuddy:
What this shows is that, during the past year and a half, the spread between gas prices and oil prices has increased dramatically. Five years ago, the price of gas jumped largely side-by-side with the price of crude. But beginning in 2004, the spread became considerable, and in 2007-08, gas prices moderated to a large extent as crude prices shot sky-high.
What does it all mean? I’m a lawyer, not a petroleum economist or commodities trader, but it does seem to shoot a lot of holes in the arguments made by Democrats about the price of gas. Sure, speculators may have been shooting the price of crude oil up to $145 a barrel this year (they’re also driving it down now in response to the recession), but they didn’t really budge the price of gas that much, at least on a comparable percentage basis. And those gas companies like Exxon and BP? They could have made us pay a LOT more for gas if they had followed the pricing models of 2004/2005 (or even May 2007, by this chart). Why didn’t they? Probably a mix of political pressure and the fact that they were making so much money on other energy goods that they didn’t need to push the price at the pump.
So, if you’re whining (like I was) that oil prices have dropped by half but my gas prices have barely dropped 25%, shut it. We’re experiencing a return to normalcy in energy, and that’s good for all involved.