Supply & Demand?

By Moe Fakih

I remember listening to talk radio in June while filling up my Honda Accord Coupe with 89 Octane at $4.68 per gallon. The oil companies were claiming that refineries have been unable to keep up with demand and that finding new sources and extracting those sources was a costly endeavor - thus $4.78 per gallon in a gas station located in Orange County, California.

People were swearing as they entered fueling stations and they were swearing more upon leaving. It may be interesting to research the statistics on road rage violence during the period where gas was over $4 per gallon.

Today, the United States is on the verge of a major economic meltdown as layoffs are gaining momentum and as the auto industry is eagerly awaiting a loan from the government so they may keep their plants open and keep more American jobs online. If the automakers go under, this will send a shock wave through the economy.

So have the oil companies finally decided to "be nice" and lower prices to help out Joe and Jane American? How can an industry complaining months ago that petrol chemical price hikes were justified since the cost of doing business was high?

It is obvious that market manipulation has been taking place and continues to take place. Today gas is around $1.85 per gallon at the same pump I used in June - that's a difference of $2.83. Has a meteorite full of crude oil landed in some remote desert? How are the oil companies determining this price point? Perhaps the answer wrests with the circle of powerful business interests and bankers that run the show.

I'm not complaining about the price reduction, I'm just asking for a logical explanation based on market dynamics that explains these price fluctuations? Does Anyone know?