Crude Oil at $35 Per Barrel Today But Where Is Cheap Gas?

My little crude oil widget tells us that the price of a barrel of crude is selling for $35 at the time of this writing. This represents a mere fraction of the prices we witnessed in 2008, when the going rate was $144 per barrel. These low prices persist even as OPEC has cut production output by 4 billion barrels daily.

Here is what I do not understand, "Why are prices at the pump still $2 per gallon or more?" Everyone knows that when the prices for crude go up, we see an INSTANTANEOUS rise at the pump, so why is the opposite not true? Why are gas prices still $2 a gallon now when they were $1.50 a couple months ago at the same crude prices?

I believe that oil companies are keeping the prices high intentionally to keep their profits up. They got so used to huge profits these past few years that they must now be going into withdrawal. Like a drug addiction, greed is overwhelmingly powerful and my thinking is that Big Oil needs more profits.

What are you paying at the pump today? It is still $1.99 in central Ohio but should be lower.

Crude Oil prices fall after Fed announcement

The price of light, sweet crude for January delivery fell about 91 cents, or 2 percent, lower to $43.60 per barrel on the New York Mercantile Exchange. Immediately after the Fed announcement, prices dipped as low as $42.70 per barrel.

The Federal Reserve announced yesterday that it is cutting its interest rate for interbank lending from 1 per cent to between zero and 0.25 per cent. At this point, there is obviously no more cutting left and this was considered a very bold move by many. With the rate cut, the Fed also said that economic conditions "are likely to warrant exceptionally low (rate) levels for some time." Since there is no more room left to cut, the Fed will now have to act through "quantitative easing", which means they will add to the money supply in the form of loans to spur the credit markets, etc.

Meanwhile, OPEC has agreed to a production cut of 2 billion barrels per day, which analysts believe is the necessary reduction for the current lowered demand. While these analysts are probably correct, OPEC is more interested in halting the decline in value of a barrel of oil and cutting the supply usually is a good counter measure.

How low will the price of a barrel drop? Have we hit bottom? In the United States it looks like it will be some time before the economy can be turned around and I foresee demand falling even lower and prices at the pump getting smaller. Regular unleaded in central Ohio this week is around $1.53 per gallon. What is it in your neck of the woods?

Gasoline prices below $1.00 per gallon?

There are reports recently that prices at the pump in the United States could dip below $1.00 per gallon in 2009! Can you believe this? I personally never thought that I would see gasoline less than $2.00 a gallon in my lifetime, so to actually see it sell for a dollar would be quite a shock.

How do you think these low prices will affect the mentality of the US populace? Will people return to their gas guzzlers? Will demand go up and will we see people driving more and taking more trips, etc?

For me, the most harmful result of low prices at the pump would be a loss of momentum for alternative energy vehicles. Would our troubled auto makers continue to invest in hybrids and electric vehicles with these low prices? I certainly hope so but can easily see this not happening!

Low Gas Prices and the Oil Free Movement

So what are the prices at the pump in your neck of the woods this weekend? Where I live in central Ohio, they were in the $1.50's on Wednesday and then jumped to $1.75 on Thanksgiving. Inexplicably. Is there any other commodity on Earth that can retail for $4.00 in summer and then $1.50 in the fall? I can't think of any.

What I am already seeing and hearing are consumers who are forgetting the bad gas times and returning to their gas guzzling ways. It has only been two or three months and we are forgetting the pain we felt. How can our memories be so short?

I sincerely hope that we, as consumers, will continue to demand more fuel efficient vehicles, more electric vehicles, more (any) plug-in hybrid vehicles and more alternative energy vehicles. Oil prices are dictated/controlled by Big Oil and as long as we are so addicted, we are their slaves. My biggest fear is that we will completely forget (the past) and then watch helplessly as the auto makers return to their oil soaked ways. Giving us 25/35 (city/hwy) mpg vehicles day after day after day...