Twin Peaks--The title of a popular television drama series, Twin Peaks, which first aired during the spring of 1990, may be a good description of an emerging trend in retail gasoline prices seen since 2000. Prior to 2000, retail prices would typically follow a pattern of slowly rising prices, starting in late winter or early spring. With peak summer gasoline demand occurring between the Memorial Day and Labor Day holidays, retail gasoline prices would correspondingly peak at some point during this period. However, since 2000, this price pattern has given way to one that shows two distinct retail peaks during most years.
Aaron wrote:I think you left out the number of guns necessary to force everyone to comply with your plan.....
Gasoline Demand Accelerates
As Katrina Price Surge Wanes
By THADDEUS HERRICK
Staff Reporter of THE WALL STREET JOURNAL
November 5, 2005
Americans are stepping on the gas again.
Though gasoline demand fell about 2% from a year earlier following hurricanes Katrina and Rita, use is ticking up again. This week, data compiled by the Energy Information Administration showed gasoline demand rising over the year-ago period for the second straight week to nine million barrels a day, bringing U.S. demand to its highest level since late August.
The rise in demand has come as the average U.S. gasoline price has fallen, to $2.48 a gallon last week from a high of $3.07 for the week ended Sept. 5. But it remains about 45 cents a gallon higher than this time a year ago, meaning many consumers are returning to their gas-thirsty ways despite higher prices. That could keep upward pressure on gasoline and oil prices in the coming weeks and months, at a time when some market observers are wondering whether lower demand could take some of the pressure off energy prices.
Unless Americans change their driving habits, the quickest way to significantly bring down gasoline prices is to make more gasoline. But tight world-wide oil supplies and a lack of refinery capacity, particularly in the U.S., make that unlikely.
Onlookers from economists to oil-industry executives to environmentalists have been watching to see whether September's price surge would temper America's thirst for gasoline, which helped bring the country to the edge of an energy crisis.
The initial decline in demand was a pronounced drop for gasoline, the lifeblood of the American transportation system. In Box Elder, Mont., Gary Skinner and his wife, Lorraine, parked their Toyota Four Runner in favor of their more fuel-efficient Suburu, and Mr. Skinner quit his job because his commute cost too much. "It wasn't worth it," he says.
Higher prices have also affected the auto industry. Sales of its largest, most fuel-inefficient sport-utility vehicles dropped in recent months.
But despite the change in the behavior of some, U.S. motorists have so far used just about as much gasoline as they did in 2004. Economists say that illustrates gasoline's "inelasticity," another way of saying that gasoline prices have little impact on how much people buy.
According to Global Insight, a 1% change in the price of gasoline results in just a 0.03% change in demand. The same 1% change in the price of women's clothing, by contrast, results in a far more significant 0.8% change in demand. "You can't get people off the roads," says Ms. Novak.
Such inelasticity is rooted in America's heavy reliance on the automobile for everything from work to leisure. In most cases, Americans have few good alternatives. Adelberta Benito, a Houston resident, says she would need to ride three different buses to get her child to school, which would more than double the time she spends making the trip by automobile.
MrBill wrote:By the way, do you assume dollar for dollar increase or percentage? Just curious because $15 to $30 is 100%, but only $15. The move from $75 to say $100 will only be 33%, but $25 per barrel.
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