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Oil Drops Below $57, Gas Prices Rise

Daily Fuel Economy Tip| January 8, 2007

Despite the nearly 10% drop in the price of oil during the past week, the national average price of a gallon of gasoline has actually gone up $.03. That seems pretty fair, right?

The price of oil briefly fell below $55 during Friday's trading session before rallying to close at $56.31. Despite closing higher, the price of oil fell over 8% for the week - the single largest weekly drop in oil prices since early in 2005.

Unfortunately, the decline of the price of oil didn't carry over to the national average price of gasoline, which actually has increased three cents during the past three weeks.

Just for the sake of comparison, I checked to see what the national average gas price was the last time oil dropped to $55 per barrel, which was nearly a year and a half ago during June 2005. During mid-June 2005, gas prices were down around $2.05 - more than $.25 lower than current gas prices.

Unfortunately, this comparison is more apples to oranges thanks to the fact summer gas prices tend to be higher as it is thanks to extra additives designed to help reduce smog. It's likely that if these additives were able to be taken out of the equation that the average price of gas would have been well below $2 per gallon.

I guess this just gives even more credence to the fact that gas prices shoot up like a rocket but fall like a balloon.


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