Spread this message with Digg, Del.icio.us, Reddit, or Stumbleupon, and subscribe to the RSS Feed to track articles

Gasoline Price Gouging?

Published 10/19/08 Craig Harrington - Print Article
E-mail - editor@economyincisis.org

The price of a barrel of oil is exactly half what it was in mid-July. On average, a consumer was paying at least $4.00 per gallon in the United States. Some places on the East and West coasts could expect significantly higher prices somewhere above $4.50. With the price of oil now 50 percent less, shouldn't consumers be spending roughly 50 percent less than they had been previously?

The short answer is simple: NO. The average price of one gallon of regular unleaded gasoline is hovering around $3.00 (note: this is the national average, your specific prices may differ). The price of oil may have fallen 50 percent, but the price at the pump is only a bit over 30 percent less.

The reason for the drop-off in prices is largely related to the drop-off in the American economy. America is by far the world's largest consumer of petroleum and petroleum-based products. As our economy grinds to a halt and the recession deepens, the demand for petroleum has fallen.

Yet Americans are paying more now than they were at this time last year when oil was almost $20 more per barrel. On average, Americans are paying their gasoline provider 20-30 cents more per gallon, while their gasoline provider is paying $20-$30 less per barrel.

With nationwide prices falling it is difficult to scream “price gouging” and command much of an audience. Americans seem relieved that prices are “so low,” completely ignoring the fact that they are still paying more for oil and oil-based products than at almost any point in the last century. Furthermore, the OPEC cartel is set to meet in the next week to address the “emergency” in the oil market. On October 17, 1973 the OPEC nations first used oil as a weapon against western consumers, setting of a decade of rising prices and dampening growth in the United States. Now, with oil still trading at historic levels – they are lower than they were last year, but higher than they were for most of the previous 80 years – OPEC may intend to do so again. According to one Iraqi official, "a return to $100 per barrel oil would be “fair and acceptable.”

This country needs to end its addiction to oil, and continue finding ways to cut back and conserve. It must also display outrage at the prospect of increasing one of the world's most profitable industries (oil exploration, refining, processing, etc.) increasing its prices when the consumers are already being gouged at the pump.

Source MarketWatch

Click here to contact your Representative in Congress.

Unless the above article is already copyrighted, this article is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License, EIC grants permission to use this article in whole or in part provided attribution is given, preferably in the form of a link back to EconomyInCrisis.org.