Why have gas prices gone down? is it because there is less demand!?

Question

when its a lot of demand the rpices are really high-

less demand seems like it is going down as far as prices-

which is a good thing-

i think a lot of us take advantage of going out all the time- sometimes its nice to stay at home-

too bad the prices haven't gone down to 2 or 3 dollars-

Answer 1

Demand destruction is definitely a component.  Americans are driving something like 5-10% less this year than last, which if I'm hearing correctly is the biggest drop ever.

The effect is magnified by the speculation.  People were talking $200 a barrel for oil by the end of the year not too long ago.  The record price ($147-ish) was based on the idea that that would happen and now that it seems less likely, speculative money is leaving oil.

The demand destruction is real, but it triggered a much larger movement because of the speculation that had been going on.

P.S. To Idle Curiosity:  Gas prices in the US are measured in gallons, not litres.  $1.70/litre == 6.40/gallon. You're still being crucified. :)

Answer 2

Demand did not drop.  The quantity demanded dropped because prices rose.  World wide, demand has increased.  Maybe supply increased.  That could be it.  I really don't know for sure.  

Answer 3

You guys are paying $2 to $3 for gas ? Wow ! and I thought they were crucifying us , when we had to pay $1.70 in OZ.

Answer 4

Yes ,the demand dropped about 5-10% but here is what really happened.Remember the cigarette industry a few years ago when they took the price of a pack to the mid $5.00 range? well that was the point when people started to quit smoking.BUT the cigarette manufacturers slowly dropped the price until the people started smoking again,the new price that became acceptable to smoke was the $4.45 @ pack mark.When the increase started they were $1.75. Do the math,the same exact technique has been used to run these gas prices up so that instead of the good old $2.50 a gallon gas ,they have made us think that $3.50 @ gallon looks real good.