In normal economic circumstances, retail gasoline prices rise, often dramatically with the rise of crude oil prices. Often, gasoline prices rise on rumors of pending crude oil price hikes, and gasoline prices tend to stay elevated long after crude oil prices have dropped to prior levels. Gasoline retailers and refiners tend to milk profits for the most extended length of time possible, and tend to be totally disdainful of consumer outrage or discomfort. We have especially seen this pattern during the entire period of the George W. Bush administration, during which time the petroleum industry has raked in the most obscene corporate profits in their long history.
However, at the present time, this paradigm has changed. Crude oil prices on the spot market have reached the highest absolute prices in history (prices adjusted for inflation are still somewhat below record levels). Yet, even as crude oil prices are inching upwards day by day, and the news broadcasters and media outlets continue to promote public awareness of crude oil price increases, at the local level, gasoline has dropped as much as ten cents per gallon in the past month. What is happening?
There may be several factors. One factor that may play a significant role is the Federal presidential election season. The petroleum industry would no doubt intensely desire their wholly owned subsidiary, the Bush administration, elected this November. Gasoline prices draw public attention, and rising gasoline prices (not necessarily crude oil prices), tend to drive up inflation, unemployment and other "bad news" items that could decrease election chances for the Bush/Cheney team. Thus, the petroleum industry may decide at present to absorb some of the short term losses of enhanced profits and attempt to put the nation in a best possible financial mood prior to the election in November. Lowering gasoline and fuel prices helps Bush no doubt, and it is a prudent business mood for the cash/flush petroleum giants.
However, there is likely more at play here. Recent reports by the Association for the Study of Peak Oil, by petroleum investment specialist Matt Simmons, and others tell us that we may be at the peak or plateau of all-time global oil production. Some are suggesting that recent data shows the Saudis are at their all time peak of production, with no direction to go but down for all time. The same may be true of North Sea oil production, and we know American crude oil production peaked many years ago and is only a fraction now of its peak decades ago. Even natural gas is getting increasingly more difficult and expensive to recover, though no one is suggesting a peak of natural gas production.
The point of this information about the global oil production peak is that public awareness of the seriousness of its ramifications could cause international panic, including huge drops in the international and national financial markets, which utterly depend on cheap oil to fuel continued economic growth to ensure investor well-being in the current paradigm. National governments of most technology based nations of the world are very averse to sharing bad news, much less catastrophically bad news. The current American administration would be particularly uninterested in revealing the distressing truth that the end of the Oil Age might occur at the midway point (Hubbert Peak) of oil production, and not at the global cessation of oil production. If we are at the peak right now, as several experts have suggested, it would be among the worst economic news in the history of modern civilization worldwide. Instead of notifying the public and facing extremely difficult choices, the powers that be may very well attempt to disguise the new reality temporarily by lowering gasoline prices.
This could enable preparations for a coming turmoil, for contingency planning, or for whatever machinations the corporate elite/ power elite have to ease their transition into the rapidly changing world.
One thing is for sure — gasoline prices do not go down while crude oil prices go up, except in highly extraordinary circumstances! This reality should be a signal to the masses that something extremely unusual and highly significant must be pending at the highest levels of national and world governance. This pattern is absolutely unsustainable, and common sense should tell us to treat it that way.