According to former Des Moines Register opinion-page editor, at least three experts are puzzled by the drop in gas prices at the pump. They say that gas prices have never decreased faster than crude oil prices, as they are now, and that summertime gas prices "were in no way justified by market fundamentals."
Gilbert Cranberg's article appeared in Friday's
Des Moines Register. He interviewed 3 people knowledgeable about oil markets about the drop in prices, and then asked an "expert" on the matter. The first knowledgeable one said, it was just the lower demand. The second knowledgeable one said he was "puzzled." The third confirmed what the second said:
He said that the price of gas customarily declines with the end of the driving season, "but not as sharply as it has in the last few weeks and certainly never went down faster than the price of crude, as it has."
Then he interviewed an expert, Peter K. Ashton, described as "a longtime consultant on petroleum issues who has testified on gasoline pricing" before a Senate Subcommittee. Here is Ashton's response:
"As an economist I cannot speculate on the politics that may be involved, but my recent research suggests that the recent drop cannot be explained by the drop in crude prices or the change in inventories alone. From an economic standpoint, therefore, it certainly raises questions in my mind as to whether the high prices we saw this summer were in any way justified by market fundamentals. I do not believe that they were. To the extent that prices are now declining more than market fundamentals might dictate suggests to me that a decision has been made to reduce prices back to levels that might be considered more in line with the forces of supply and demand -- whether that is a politically motivated decision is up to others to decide, not me! Nevertheless, it is clear to me that the prices we witnessed this summer could not be justified by the market."
Cranberg writes about the possibility that gas prices have been manipulated, concluding aptly:
The possibility that the fall election is being "bought" every time a voter pulls into a gas station makes this an issue of unparalleled importance. Because it is, the press ought to make it a high priority to uncover the facts wherever they lead.
I believe this is the first time I have seen the mainstream media call for this kind of scrutiny--actually fulfilling its mandate as the "fourth estate".
According to my quick Google search, the last Congressional hearings about oil prices were in November of last year, when Katrina supposedly made heating oil instantly expensive (and Chavez started financing New York's inner city heating bills!). Late last year and into January we heard of record oil company profits. Bill Frist said he wanted to look into this, but didn't.
Oil prices have a key influence on people's perceptions of their economic wellbeing.
So what do you think?