An Open Letter to Citizens about Gas Prices
As someone who lives in Canada and is thus affected by the economy, I've been paying very close attention to how the stock markets in Canada and the U.S. have been doing. Right now they're demonstrating high volatility, but one thing isn't being volatile at all: the price of oil.
Over the last month the price of oil has steadily declined, dropping to $69.85/barrel on Thursday, coming back up on Friday to $71.85. This means good things for consumers, because as the cost of oil drops, so too does the price of gas at the pump.
Ever since the prices returned to something reasonable after Katrina in 2005, the cost of gas at the pump has remained closely related to the cost of a barrel of crude oil. When oil was $120/barrel, gas was roughly $1.20/Litre. When oil was $108/barrel, gas was roughly $1.08/Litre. Now that oil is $70/barrel, it's a great relief to everyone that gas at the pump is down to $0.70/Litre.
It really speaks to the business ethics of the gas companies that they're willing to lower the cost at the pump for us as the cost per barrel drops. They increased it at the same time as the cost went up, and we trusted them to lower it the same way, and they really pulled through for us.
I, for one, am relieved that they lived up to our expectations. Now that gas is affordable again I'm able to fill my tank without dreading how high the cost will be, and without worrying about whether the cost of getting to my job will outpace my paycheck.
Now we can look forward to the gas companies competing for our gas dollars again. When the price was still high, they locked in their prices to each other so we wouldn't have to drive around looking for which station had the lower price. Now that the price at the pump has dropped again, I'm sure they're going to have different prices that get lower over the course of the day, just like it used to be when prices were this low.
Some analysts believe the cost per barrel could drop as low as $50/barrel soon. That's great news for us! It's been ten years since we saw prices at the pump as low as 50 cents/Litre. I remember when I wouldn't even gas up if it was more than 50 cents. The good old days are here again!
Now that the prices are low again, I think it's fair to say we were wrong about the gas companies. We were afraid they were using shady business practices to keep the cost at the pump artificially high, but they've really put that confidence back in me. It's clear to me now that there can't possibly be any question of their morality and business ethics. They aren't being greedy, they're just responding to the market in order to deliver us their product at reasonable prices.
So everyone rejoice! Gas prices are low, and we can all afford to both fill our tanks and pay our bills. Remember though, there's no telling when the price may go up again. If the cost of a barrel of oil goes back up over $100, you can be sure the current low prices will go back up to keep pace with it.
I'm glad they were honest enough to drop prices at same time as cost. Otherwise they may have been tempted to just keep the cost at the pump elevated until the cost of oil picked back up, and we would never have seen this drop in gas prices. They could probably have said something like "it takes 90 days for the cost at the pump to catch up to the cost of oil," and expected us to forget about that when prices started going back up. But they didn't, and that speaks to their integrity.
Aren't you glad the gas companies are fair?