Why are gas prices still going down?

[Xist]

I remember looking into this with Google before. I just looked again, as well as trying to see if the topic had been covered here.

Today I met a guy who said that his family owns gas stations throughout Arizona. I asked him why gas prices were down and he said it was because oil had been released from the US Strategic Reserves, but that prices would soon reverse, and climb higher than before.

Can you guys provide links on the subject? I like to at least be able to feign that I know what I am saying!

[niky]

US Department of Energy - Strategic Petroleum Reserve

Don't know much about it, but as far as I can tell, it's simply an oil "bank" that the DOE can use to stabilize fuel supply and prices in times of emergency. Emergencies like Hurricanes, supply destabilization due to war or embargoes, etcetera.

Flooding the market with millions of barrels of "cheap" oil (ergo: bought when it was cheap then stocked) can lower prices. But not for very long.

[Cobb]

It was my understanding the recent drop in fuel prices was from the lack of demand from the NE since the hurricane hit there. I think the NE uses 75% of the US demand for fossel fuels for heating if I remember correctly.

[NeilBlanchard]

I think the AAA average gas price for Massachusetts has gone up recently, by about 4 cents.

[mort]

The DOE doesn't show any SPR drawdowns since August when the DOE said it would lend one million barrels of sweet crude oil from the SPR to Marathon. I think local price variations must be due to transportation issues. Here in Calif.:

January 07, 2013 - On an upward trend for a second week, Regular is up again. Edging higher over last weeks price by several cents.

The average price in California for regular gasoline increased 5.1-cents from the previous week. The average statewide price for regular was $3.605. Mid-grade and premium prices increased as well.

The national average for self-serve regular is at $3.601, up 30.3 cents from the previous week.This is 0.4 cent lower than the price of regular in California.

-mort

[Xist]

I just had to ask, didn't I? Prices here are fifteen cents higher already.

[trooper Tdiesel]

i call it the reverse rubber ball theory....

it keeps bouncing higher and higher and the low spots just keep getting higher.

[NeilBlanchard]

Yes, the price of gas around here has plateaued if not gone up a bit.

I like that - 'the reverse rubber ball theory...' it fits what it feels like, at least.

[Xist]

Since high school, I often say "stupid gravity" or "Gravity is a harsh mistress." Anyone care to come up with an Inverse Theory of Petroleum Cost Gravity?

Or at least a better name?

[UltArc]

Jynx.