The Passenger Seat » Today’s fuel price musings - looks like Bob Trojan’s not the only one walking

Today’s fuel price musings - looks like Bob Trojan’s not the only one walking

July 24th, 2008 at 09:25am Thomas V. Bona

Regular reader Bob Trojan has joked that he’ll walk so that he doesn’t have to fill his tank until gas prices bottom out. Well, according to government data, U.S. demand has dropped 2.4 percent from a year ago. The phrase “demand destruction” is being thrown about by analysts.

There are other factors to: the strengthening dollar and the relative undestructiveness of Hurricane Dolly. But despite a slight overnight bump in oil prices, some people are saying oil could drop to $110 or, dare I say, even below $100.

We’ll see. For now, gas prices keep dropping as well (Numbers courtesy of AAA’s fuelgaugereport.com):

Gasoline: Rockford dropped more than two cents to $3.93 a gallon, a 27-cent drop from last week’s record. We’re still tenth in the state in gas prices. Only Springfield ($3.90) is below us. A friend from Chicagoland noted marked lower gas prices out here. Heck, we’re even lower than the lower-taxed Wisconsin. The Illinois average dropped more than two cents to $4.12, almost 14 cents below last week’s record. The national average dropped more than a cent to $4.03, 9 cents below Thursday’s record. Illinois has the 13th-highest gas prices in the nation (including the District of Columbia).

Diesel: Rockford dropped more than two cents to $4.73, 13 cents below the record set in May. We went up to sixth-highest diesel prices in the state. The state average dropped more than a cent to $4.80, almost six cents down from last week’s record. The national average dropped more than a cent to $4.79, down almost six cents from last week’s record. Illinois is tied with the 20th-highest prices in the country (including the District of Columbia).

Entry Filed under: Fuel price musings

5 Comments Add your own

1. diesel additive | July 24th, 2008 at 10:03 am

I wonder if this is mainly due to people taking less or shorter distance vacations, carpooling, walking, or what exactly. That would be an interesting study to see what is really causing the drop.
2. Bob Trojan | July 24th, 2008 at 10:14 am

Hey, it’s working!
Gas Prices dropped to $3.89 on Riverside this a.m.
3. Thomas V. Bona | July 24th, 2008 at 10:18 am

Bob,

You start driving less.

U.S. demand drops 2.4 percent.

The question for me is, how much were you driving before??
4. ben | July 24th, 2008 at 10:27 am

The problem is over charging even though the price/barrel is dropping. In Chicago is $4.49/gal. and the further away you are from other the city people seem to take advantage of the situation and raise the price even more. Its just a really bad issue all together.
5. Thomas V. Bona | July 24th, 2008 at 11:04 am

Ben,

Thanks for reading and taking the time to comment.

Overcharging how? Gas prices are dropping everywhere, not going up:

The Chicago metro area is down 2.4 percent in the past week; Rockford is down 6.5 percent; The state as a whole is down 3.2 percent. The nation is down 2.1 percent.

Now, you could say, “But oil prices have dropped faster!” True, but gas prices never rose as fast as oil prices, so retailers were effectively undercharging … cutting their profits so as not to scare off motorists.

Don’t believe me? Even with the oil drop, crude prices are still 66.7 percent ahead of this time last year. Gas prices are 36.7 percent up. That’s clear indication that retailers have sacrificed profits as they’ve watched their product costs go up.

If you think retailers are profiteering, then you must have been really upset when gas was below $3 … or even $2. Then, gas stations were really making money on gas.

No, you weren’t? So why now? Is gas retail the only sector that shouldn’t be allowed to make a reasonable profit?

Again, I understand everyone’s frustration about gas prices. It sucks. But the cause is back up the chain a lot farther…