Gas Prices Falling ... Too Much, or Not Enough?
”I do drive occasionally, but not enough. I don't own a car because we don't really need it here.” That was New York-based CNN correspondent Stephanie Elam opening her gas price segment on the January 20 “In the Money.”
Her remarks should have clued viewers in to the disconnect between much media reporting and gas pricing reality.
Jen Rogers, another CNN correspondent covering the energy story, expressed her displeasure at what she implied were disproportionately high gas prices for consumers. Rogers said, “You know what gets me, though, it does not take them very long to raise prices at the pump when it is almost $80 [per barrel], but now it is $50. And I’m looking at the gas station, and looking at the gas station. It just comes down a little bit.”
“In the Money” host Ali Velshi asserted that “prices [have] come down about $14 or $13 in the last month of oil, [the] price of gas, 10 cents.” However, Velshi’s numbers were less than accurate. Since one month ago the price of crude oil has dropped $9.89. The U.S. Energy Information Administration reported that crude oil was priced at $62.19 on Dec. 19, 2006. The most recently reported price, January 17, was $52.30.
Neither was Velshi’s statement about the price of gas at the pump correct. Velshi’s claim that gas prices had fallen 10 cents was 6.5 cents less than the actual decrease of 16.5 cents. The AAA daily Fuel Gauge Report shows the current national average of regular unleaded gasoline to be $2.171. One month ago the price at the pump was $2.336.
But it was the difference between crude oil’s and gas’ decline that bothered Rogers: “That really makes me mad. I want to see it come down the same amount,” Rogers said.
If one assumes she was speaking proportionally, and not in dollar terms, her request might be a common one. However, Rogers never proved that crude oil and gasoline were not following similar trends. The highest per-barrel cost of crude oil in 2006 was $77.05 and occurred on August 7. There was a 32.1-percent decrease to the current price. The highest price at the pump, according to the AAA daily fuel gauge report, was $3.004. There was a 27.7-percent decrease in that price to the current national average of $2.171.
That translates into a discrepancy of only 4.4 percent between the decrease in the price of crude oil and the decrease in the cost at the pump.
The correspondents were worried that prices weren’t falling fast enough, but Velshi had another thought. He wistfully reminisced about high gas prices: “There were some people saying that the bad news about this is that back when it was $3 a gallon for gas, people really thought about saving conserving, getting smaller cars. Back at $2…”
No one found time to mention the most hopeful statistics about gas prices. Gas at the pump has fallen 88.3 cents since an August 2006 high. Per-barrel crude prices have fallen $24.75 since August 2006.