Can someone please explain the gas prices to me?

[Heather in Neverland]

I am sorry to be such a dolt but I really do not understand the whole thing behind gas prices. I mean, I understand the whole supply and demand concept. What I don't understand is how gas prices have dropped about $2.00 a gallon in a really short period of time. Of course I am happy about it but it makes me nervous...like it is the calm before the storm, ya know?

 

Any insight?

[Julie in Austin]

Yes, it is really quite simple:

 

If my family needs to go out of town on a long trip, gas costs 4$/gallon.

 

If it is a month where I have nowhere to go but the park we walk to, it is 2$/gallon. :tongue_smilie:

 

More seriously, I think gas prices were ramping up because, as China and India became wealthier, they were using lots more gas. But now, in anticipation of a fairly severe world-wide recession, it is expected that demand will not increase. Therefore lower prices.

[chanda7]

From what I understand, the market got flooded with "extra" gas when U.S. reserves were released during the gas shortage in the southeast. That drove prices down. Now that OPEC has cut production again, whenever everything levels out, gas prices will go back up.

[Deidre in GA]

most of the run up was due to speculation. the high prices made a significant number of people cut their use so demand dropped. coupled with the economic decline, the speculators are speculating that industry cut backs will continue for a while so the speculators aren't salivating at the moment.

 

in order to help the prices moderate, we need to continue conserving and moving to renewable fuel. low gasoline prices as a long term way of life is pretty much gone. it's nice that prices have dropped just don't get used to it.