To the Readers' Forum:
We are finally seeing a drop in gas prices but don't feel that "Big Oil" is giving you a break. They are still taking us to the cleaners. I have monitored local, Jamestown area, gas prices and crude oil prices since October 2009.
When it peaked at $4.069 on April 29 2011 I calculated an equation that related the local gas price to the going price of crude. As it went back down, it follow the history quite well. It should because the price of gas should be a ratio to the price of oil. A slight exception is a small change due to sale tax. As of today the local gas price is $3.969. Using my formula the price should be only $3.49.6 for crude at $95.90/barrel.
The last time crude was at this level was on Nov. 4, 2011. On that date crude was at $94.34 actual. Local price of gas was $3.619 a few weeks later it dropped to $3.499 and according to my calculation it should have been $3.491. Remember that the price had dropped from a high of $4.069 in April so the calculations do work.
By my observation, prices go up very fast but they come down very slow. This is where the high profits come in. Prices are dictated by the refineries. Station owners are the ones being squeezed.
The conclusion that I draw from this is that these high price can't be justified by the price of crude or the time lag to produce that crude.
Why are they doing this to the public? Because they can. It explains the high profits. Gas prices will and should continue to drop. Big Oil should remember the fable of Jack and the Bean Stalk. They will kill the Golden Goose (us). It is a major reason why our recovery is nowhere in sight.
There are ways to handle this problem but with an administration with a failed energy policy it will stay this way for the near future. The politicians say that measures take 5 to 10 years to see the effect. Well, if we had done something 10 years ago, change would have started.