Don Good from the Good Oil Company in Winamac has said this week that you can forget what you may have read about the laws of supply and demand when it comes to gasoline prices. The supply of oil and gasoline is higher today than it was three years ago when a gallon of gasoline sold for $1.90.
There is a culprit – Wall Street speculators. A decade ago they controlled 30% of the oil futures market. Today they control 80%.
Good was asked what the drop off will be as we go toward $4.00 a gallon.
“It’s kind of a moving target,” said Good. “We’ve become kind of desensitized. The first time it crossed that $3.00 mark it dropped off dramatically. I think we’re still in that band where when we cross $4.00 we’ll see a five to ten percent fall off.”
Good says as prices escalate the American driving public will sooner or later go for vehicles that get better gas mileage.
“We’ve got a lot of things coming in now because of high prices. You’ll see a lot smaller fuel efficient cars on the road and that’s creating a permanent loss of volumes, but unfortunately it’s not showing up in the price on the street.”
There’s no question, we’re going down in consumption.
“It may not sound like a big thing, like three to five percent a year, but if you take three years at five percent we’ve dropped 15 percent. At five years, you’re looking at 25 percent and that is just a lot of oil considering we were the largest consumer in the world by far.”