> On the original topic, I don't get how changing the weighting of
> gasoline in the GS commodity index would affect the crude oil price,
> which is $15 off its highs. It might affect the relation between gas
> and crude prices, but no more. Maybe I'm missing something.
>
> Doug
While I don't subscribe to the idea of gas price manipulation to help the Repugs in the upcoming elections I don't have an answer to the local believers in this idea on two frequently asked questions.
1) Why is the drop in crude oil prices ~20% but the drop in gasoline prices ~35%?
I haven't checked that these amounts are accurate nationally but gasoline costs where I reside are indeed only 2/3 of what they were in July. I went from paying $3.05 to $1.96 although the price this last week has rebounded a small amount to $2.06.
2) Why would the price of fuel drop immediately when historically it lags behind the drop in crude by several months?
I have never seen a chart with a timeline showing the prices of crude and gasoline to know how much gasoline typically lags behind drops or increases in crude and how that history compares to the last several months. My seat of the pants estimate is that when crude goes up it is almost immediately reflected at the pump (within 48 hours?) but when crude drops pump prices take about 6 to 8 weeks to match the drop. The time of year seems to have some effect on how quickly they align as well. I have absolutely no idea how accurate this is and have never bothered to search for data to support or refute this estimate. I also don't ever recall mentioning this estimate to anyone prior to this so it isn't exactly weighing heavily on my mind. I just don't have a reasonably intelligent reply that is supported by any data when these two questions are presented as "evidence".
John Thornton