August 2008

Craig Mongeau - August 2008

Apparently the old saying, “the bigger they come, the harder they fall,” doesn’t apply to fuel prices.

As of this writing, the price of a barrel of oil is approximately $131 — high, but down significantly from a record price of $147 in mid-July. At that time, the national average for a gallon of regular gasoline was about $4.15. For the past few months, oil prices, as we are all painfully aware, have meteorically risen, sometimes over the course of just a few hours of trading. The next day, we see gas prices have risen overnight at the pump. But as we’ve seen so many times in the past, gas prices just don’t go down as quickly when oil decreases in price.

If we use the price $4.15 when oil was $147, we can roughly determine that for every dollar that oil goes up, gasoline rises 2.8 cents (4.15/147). So, when oil is $131, gas should be $3.70 per gallon [4.15 – (2.8 * 16)]. Doesn’t work that way, though, does it? Not when you’re seeing gas at $3.99 a gallon when oil is $131 a barrel. I recently heard some government energy expert when asked about this phenomenon answer, “well, a lot goes into the price of a gallon of gasoline. About 70 percent of the price is refining, then there are taxes, delivery and speculation on demand and supply.”

But weren’t those same price factors in place when oil was $147? I’ll admit, my example may, to some extent, be an oversimplification, but prices are not decreasing as quickly as they rose — and that’s a fact. And what else is fact is that nobody in government does anything about this unfairness — and that’s a shame.

But, despite gas and oil prices, roads need to be repaired and plowed, and so we’re busily preparing for this year’s New York State Highway & Public Works Expo and yes, Snowplow Roadeo. The show will be held at the Verizon Center of Progress Building on the State Fairgrounds Oct. 15. Look in upcoming issues of Superintendent’s Profile for show details. P