Dropping Gas Prices

[KimberlyD]

With the price of gas finally dropping down to $50 a barrel, how is this effecting the worlds economy. I have been looking around and seeing the dropping gas prices but that is all that is dropping. The price of food (which is effected by the price of gas) is going up and not down, this means people are forced to pay more out to feed their families. This in turn means they have less to save to purchase other items such as cars, houses, etc... which greatly feed into the economy. I understand that we had a drought that made food production hard and as a result the prices would increase due to that, but the price over exceeds the amount of markup it should be for this reason. Stores are keeping the prices high as if the gas prices are still high. What are your thoughts on this?

Oh and here is a link to an article I read about the dropping price of oil.

Crude Oil Dips Under $50 A Barrel, A Price Last Seen In 2009

 

[galmal]

I agree with you that even though the price of gas is dropping, I don't see much else improving. The media jumps on the price of gas at the pumps - whether it's going up or down - as if this is the only indicator of our economy. They pat themselves on the back when prices drop, but for those of us in the trenches, not much improves. My mortgage is still the same, my energy costs are still the same, food, utilities, clothing, etc are still the same. So I save $4-5 a week on gas, so what?? That certainly doesn't make a difference in my quality of living.

 

[KimberlyD]

If anything, as gas drops, everything else is going up. Cost of living is getting worse, but wages remain stagnant... so our economy is not getting any better because of dropping gas prices. When the cost of living goes down or wages improve... then there will be something to celebrate.

 

[Nur]

Are the prices not going up because of the holiday season? I don't know how it is in the US but since food prices always go up here during the December holiday, I figured it might have been a reason for there too.

Here in my country, the dropping prices of gas has resulted in the lowered fare for the jeepneys, which is one of the most commonly used means of transportation here. It went from Php 8.00 to Php 7.50 so a drop by 6.25%. I haven't checked the current market prices but it was up during the last week of December in preparation for the NYE rush. There are also talks about lowering the fares of buses and taxis because of the gas price.

 

[Redheart]

Dropping gas prices should see the price of virtually everything drop a little but it might take a little while before we see that. Manufacturers of whatever products you buy won't just reduce their prices while they stand to make a profit, unless they're forced to. Maybe they think the prices will shoot back up before long so they are wary of lowering the prices and have to raise them after a short while. Not good logistically is it?

 

[Peninha]

In my country the prices have already dropped, but the government took advantage of that and raised the taxes on fuel, so now we don't really notice the difference. The worse will come when oil price goes back up.

 

[DeltaForce103]

Falling Oil Spells Boon for Most of Asia’s Economies - WSJ

India imports nearly 80% of its crude oil. The drop in oil prices has provided a significant boost to the economy and done more in increasing positive sentiment in it. Dropping oil prices have helped the government slash subsidies without public backlash and it has helped bring inflation under control.

 

[globulon]

Despite the pain felt by many oil companies, especially in the US shale oil industry, this drop in prices is wonderful for consumers and the world economy! While prices at the gasp pumps are the cheapest they've been in years, there should be an accompanying boom for the manufacturing industries around the world. Hopefully this translates to more wealth for the average person!

 

[Gelsemium]

I love the fact that the gas price drops, but what I don't get is that if the price drops 50% why doesn't the price of gas drops a lot as well? Sometimes it drops just a few cents and that really makes little sense.

 

[xTinx]

Inflation is not something that immediately disintegrates just because one commodity is experiencing a rollback. The prices of goods hardly drop once they start to shoot up. Rollbacks are just temporary unless production picks up and there's no need to stay at such a high price and risk losing to competitors.

 

[Radix24]

With the gas price dropping, it would mean cost of transportation will be cheaper. This would entail an increase in the profit margin of industries that rely on vehicles to pump income into their coffers. This might not mean a decrease of goods prices though. People would want to keep their margins high. Besides, once a price increases, it is hard to roll back.

Next one,the decreased price might affect economies that rely oil exports though. Particularly in the Middle East regions. If the momentum of the oil prices is not stopped, they may have to find other sources to supplement their income.

 

[goncalogdct]

As you said, the decreasing oil prices should have an effect in virtually every industry out there, since almost all of them rely on oil-dependent transport in some point of their activity. Even if this doesn't directly affect the prices, at least right now, it should at least increase the profit margins for the industry, which is also very beneficial to the economy.

Now, on the absence on an effect on gas prices, as some of the people from Portugal have said, I do agree there have been almost none. Instead of blaming the government though, I think this is because of the companies that sell gas. Its not on their best interest to lower gas prices that much, since they will be lowering their profit margins, which is why they kind of agree on a minimum price between them, and just don't go lower than that. I believe that's the problem here.

 

[krazyman]

I love the fact that the gas price drops, but what I don't get is that if the price drops 50% why doesn't the price of gas drops a lot as well? Sometimes it drops just a few cents and that really makes little sense.

This was explained to me once, so I will try here. The gas we buy at our local corner store we pay the price for that gas that is already in the tanks at the station at the price the vendor paid per gallon plus a few cents extra for profit. Truth be told the people who own the Sunoco or BP stations don't make a lot of money like their parent companies (Sunoco and BP) - they make more money on the sale of concessions (beer, pop, pizza, etc.)

When the price of gas falls it's because when the new shipment comes in you'll pay the lower price because that gas was at a lower price when refined. Eventually it evens out when the price of oil starts to go up - there will be short (very short) leveling period and you'll price begin to rise (sometimes as high as 5 to 10 cents per day)!

It's usually cyclical - gas prices tend to drop in the winter and rise in the summer (at least in the U.S.) that is NOT always the trend, but if you look at it historically, that is USUALLY how it works - sometimes you will see spikes in the winter months but usually this time of year you'll see gas prices come back down a bit.

What you have hopefully noticed over time is that gas prices have NEVER returned to their all time lows - the low gets progressively higher each year to prepare consumers. Can anyone remember gas at $.99 a gallon or cheaper? I can - those days (at least in New York) are long gone!

 

[cyberpinoy]

When the price of gas increases it costs more for everyone to do any kind of business. especially any place who has products delivered. So naturally when the gas prices go up so does everything else. However you never see places like grocery stores lower prices when gas goes down. They like that extra profit for the time being. and because gas goes up and down so frequently they have no need to raise and lower prices according. Greed is the root of all evil, and that is why you dont see your prices reflected when gas drops. It doesnt seem fair either does it, they sure as heck dont want to pay the extra cost when the gas goes up and those prices raise just as fast as the gas, but look now, gas goes down and what are they doing, Filling their pockets with all the profits. That is what happens when you let massive huige corporations like Walmart take over your mom and pop shops. You sacrificed Good Quality products and service with a smile for lower priced china made crap with a side of corporate ignorance.

 

[Peninha]

That is the deal here, everything turns around money, it's just business and people's needs are not considered, what it matters is that the ones with power are making money...