Updated: Have you noticed the gas prices lately?

Update (November 18, 6:30pm CST): My wife returned home an hour ago and reported that the price for unleaded regular has broken the $3 level—$2.999 at two separate stations.  I can’t remember how long it has been since prices were that low.

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I made a few comments at a couple of internet sites this week that my local gas prices are approaching the $3 line.  Coming down towards that line, that is.  Earlier this week, unleaded regular at my neighborhood gas station was $3.049/gallon.  Yesterday it dropped to $3.029/gallon.  Some of my neighbors wonder if the price will drop through the $3 line before Thanksgiving.  (Everyone expects the price to rise on or just before Thanksgiving although I remember that has not always happened in the past.)

At the same time, I read on Drudge and other sites that the price of Brent crude rose above $100/barrel during trading. How can our local pump price drop while the world crude price rises?  

US and Canadian domestic crude production. 

There is a glut of US and Canadian crude that has offset the price of international crude. That glut is stored in a place call Cushing, OK.

Greg Knapp, a local radio host, interviewed an oil industry analysis, Loren Steffy of the Houston Chronicle.  That interview is available via MP3 here.

Steffy noted that US refineries are working to utilize this domestic supply. At the moment, they’re set up to use imported oil via tankers.  When pipelines can be redirected to accept oil from the Cushing Tank Farm, there will be an immediate impact on the availability of oil.  We will be less vulnerable to variances of overseas oil supply—like the recent  and ongoing civil wars in Libya and Nigeria.

Steffy does not expect the current low gas prices to last.  They, like all commodities, are subject to the law of supply and demand.  At the moment we have more supply that we have demand and that is driving the gasoline prices down.

The trend, however, is towards equalization.  If we have a glut, we will sell that glut either here in the US or overseas.  There is demand for our product as seen in the revitalization of the Dakota oil fields and the central western states of Colorado and Wyoming.

The bottom line is to enjoy these low prices while they last.  The US industry could manage these prices to all our benefit if—we can get rid of the opposition of the bureaucrats in Washington and their liberal political supporters.

I urge you to listen to the MP3 interview linked above.  It will be an education.                   

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