Price of oil goes down yet cost of food, commodities and other services stay put. What’s up?
Monday, December 29th, 2008 at
7:50 am
Don S asked:
When the price of oil hit almost $ 150.00 dollars per barrel, the price of gasoline went sky high taking along with it the prices of everything else using oil and gas. Now that the price of oil is down to $47.00 per barrel and the price of gasoline where I live is down to $1.60/gallon, I don’t see much of anything follow suit. The prices of food, services, transportation and other commodities which previously blamed the price of oil for the rise in cost have not come down proportionally. Something smells.
When the price of oil hit almost $ 150.00 dollars per barrel, the price of gasoline went sky high taking along with it the prices of everything else using oil and gas. Now that the price of oil is down to $47.00 per barrel and the price of gasoline where I live is down to $1.60/gallon, I don’t see much of anything follow suit. The prices of food, services, transportation and other commodities which previously blamed the price of oil for the rise in cost have not come down proportionally. Something smells.
Tagged with: Food Services • Oil Gas • Price Of Gasoline
Filed under: Commodity Trading
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Absolutely.
The term is “sticky prices”; and a quick definition is a slow response to changes in supply and demand for a commodity or inputs to a commodity.
Here’s a pretty good link:
*** Although this is a possible cause — you are right, something does smell!
I’ve been thinking about this too, it’s funny you’ve asked it. I’m a little confused on the matter myself. It’s scary how volatile major economic markets have been and they’re seemingly spontaneous spurts up and down have been chaotic. I think the Middle East oil companies have the US by the balls so to speak and control prices as they think they ought to be. I haven’t done much reading or reasearch on the matter yet but I’m going to be interested to see what’s happening here.
I think the biggest flaw of what’s going on is the American dependence on Middle Eastern oil. That is so fundamentally screwed up that we’re basically relying our entire nation’s productivity to foreign people who own oil companies. We need to utilize a better source of energy. This country is a mess…
The prices are at what your willing to pay for it. Stop buying and prices will suddenly be more attractive.