Friday, January 12, 2007

Slippery Oil

As the NYSE closes for the week, crude oil prices continue to drop. Take a look at this chart I made at, covering three years of American average gas prices.

Note that while we experienced steep rises about ninth months ago, four months ago witnessed steep declines. And prices continue to fall (though the holidays made a slight bump). While there has been an overall real increase in price over the past few years, considering the rise of China and the growing economy elsewhere, the increase is rather mild.

It certainly dispells the "evil corporation" myth we heard not more than a year ago when prices were on the rise. Are Shell, Exxon Mobil and BP suddenly altruists because the prices have fallen? No, of course not. But it does back what the CEOs said when Congress hauled them in to testify: most of the profits go back into the company to expand capacity.

This is yet another reminder why people shouldn't make permanent laws in reaction to sudden market changes because those changes are almost always temporary.

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