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Editorial: $1.75 a gallon

Wednesday, November 19, 2008

When the U.S. economy began to sour last year, consumers across the nation began to cut back on one major expense they could control: gasoline.

The results have been dramatic. Pump prices topped out at over $4 a gallon in July, based on nationwide averages, and then dropped like a boulder falling off a cliff. This week, the average per-gallon price of gasoline in Missouri was $1.75, a bargain economists had predicted we would never see again.

Many motorists say the lower gas prices are a silver lining in the financial mess that has virtually brought the U.S. economy to its knees. Consumer purchasing is way down, unemployment is up and going higher and federal bailouts and economic incentives of over a trillion dollars this year don't seem to be making a dramatic difference.

Lower gas prices in the U.S. are the result of much more than a hiccup in the U.S. economy. Oil prices have crashed worldwide because demand is dropping around the globe. Oil-producing nations anticipated growing demand for petroleum products in the two most populous countries, China and India, would more than make up the slowdown in U.S. consumption. But the financial meltdown has dampened forecasts, and prices per barrel of oil continue to drop.

Until Stevie's Burgers recently took over the space on Broadway in Cape Girardeau formerly occupied by a service station, motorists regarded the signs advertising fuel for under $2 a gallon as a relic of the past that we wouldn't ever see again. Now those signs could be put up at any area service station and be right on target.

What happens next to fuel prices remains to be seen, but American consumers are continuing to use less gasoline -- fearing, perhaps, another swing back to $4 a gallon could occur just as quickly as this year's precipitous drop.

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Oil and the resultant price of gasoline is driven by speculation. Oil hit its peak as we came into hurricane season here in the US as speculation in possible losses at refineries drove up the price of crude. As we have eased out of the hurricane season and fears of increased unemployment continue speculation decreases with the thoughts of significant decrease in demand.

To this point there has not been a subsequent decrease in demand to match the drop in the price of oil we have seen. The federal government is trying to stave of high unemployment with an infusion of monies and an encouragement of the continued lending policies that brought us this economic mess.

I much appreciate that I nearly filled up my car with $15 yesterday but this roller coaster ride is not finished.

-- Posted by shortwhitebaldguy on Wed, Nov 19, 2008, at 2:05 PM

One of the oil company's recently reported record profits for the last quarters of business. If I were a oil co, raping the consumer like they have, I wouldn't be bragging about my profits. Instead they should be ashamed, & staying low key.

When I grew up we were told that desiel fuel cost less because it didn't take as much to make it since they did not have to refine it as much as gasoline. Desiel fuel hasn't changed in its make up, so why is it about one dollar higher in price per gallon? Duh so whats the deal? I think we all know.

-- Posted by Kickstarter on Sat, Nov 22, 2008, at 7:11 PM

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