Gas Prices Ready To Drop?

All of the indicators are there: lower oil prices, higher supply, and lower demand. Some analysts believe that gas prices may head for $3.50 per gallon as a national average this summer. Those same experts are trying to reassure Americans that $3.50 a gallon is a good price.

Oil prices have dropped by 15% recently, but most Americans have only seen a drop of a few pennies per gallon at the pump. The staggering $4 price tag has kept more people at home or car pooling. So the demand has dropped. As demand drops, supply increases. So why hasn’t there been a larger drop in gas prices, yet?

There are a few other issues in play. Many refineries are clustered along the flooded Mississippi River. Flooding prevents shipping, so the gas is just sitting around waiting for better weather. Additionally, some independent gas station owners are afraid to lower their prices only to have to raise them in a day or two, as has been the trend this year.

The real solution to keeping gas prices lower is for more Americans to find ways to use less fuel. Oil companies are posting record profits every quarter, but blame high gas costs on local station owners and high oil prices. Some even claim to only make 6 cents per gallon. Government entities add an average of 60 cents per gallon in taxes. Are people to believe it costs a company over $3.25 a gallon to make gas? Isn’t the free market grand?

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