Why Americans should be psyched about Europe’s woes

If you’re anything like me, you’ve been watching the sovereign and bank bailouts in Europe and asking, “Okay, but what’s in it for me?”

Well, here is your answer: cheaper gas.

Over the weekend, Trilby Lundberg put out her latest report on how much Americans are paying at the pump. As the Associated Press reports:

The average price of regular gasoline in the United States has dropped 9.25 cents over a two-week period to $2.83.

The price of gas has been dropping because the price of oil has been dropping, reflecting concerns that European woes will slow global growth.

Now, the price of a gallon of gas is still much higher than it was a year ago, when the U.S. was deep in the throes of its own economic problems. According to the AAA, this time last year regular gas cost $2.42 a gallon on average. Now it’s at $2.79.

Nonetheless, because of what’s going on in Europe, we haven’t seen the normal gas price run-up in advance of the summer driving season. According to the AAA survey, gas is six cents cheaper now than it was a month ago. That’s very unusual for late May.

So there’s your silver lining, meager though it may be.

danallen2

I know the standard for journalism has dropped everywhere, but why must you try to join in the degradation?
Barbara Kiviat

By reporting on how worries about slack global demand drive down the price of oil, and, in turn, gasoline at the pump?
deconstructiva

I don’t understand your point. Why is this part of lower standard journalism?
deconstructiva

Barbara, you type faster than I do (I was trying to find a certain link to post but it’s not working). That aside, what are you finding / hearing about THAT current oil spill’s impact on gas prices here, this summer or longer? If offshore drilling will be held back until safety / envir. issues are addressed, does this make us explore more on-shore sites? Or, alas, import more? Or accelerate non-oil options (biofuels, etc.)? What are your thoughts, Barbara? Thanks.
waltwriston

“The price of gas has been dropping because the price of oil has been dropping, reflecting concerns that European woes will slow global growth.”

Every time I hear/read statements like this I tend to get dubious. Oil drops IMO because institutional investors get scared and run into treasury bonds, ‘hard’ commodities or both. Every time a stock market index slips 100 or so points oil always falls; even if the USD rises.

Should be a lemma by now?
warrwim

There is a clear inverse relationship between the dollar and commodities as oil, precious metals, grain etc. are commonly priced in dollars in world markets. Consequently, when the dollar declines in value, holders of commodities demand a higher price for their products in order to stay whole in purchasing power.

Ms. Kiviat’s point that concerns over world growth prospects leading to lower oil prices is also valid. In addition, there are surplus supplies of crude stored in the U.S. at the moment which has led to lower crude prices in the US (W.T.I. or Nymex traded crude) than in Europe (Brent Crude).