Appraisers' Free Forum

No, not housing...

http://news.yahoo.com/s/ap/20080715/ap_ ... oil_prices

...prices have swung violently in recent days as they flirted with record highs. But it does underscore investor uncertainty about the sustainability of sky-high prices and their effect on the broader economy.

Of course, gasoline will not necessarily follow suit.

Correct. While oil prices have sky rocketed, gasoline prices have not kept pace on a dollar for dollar basis. A reduction in oil prices will likely not mean gasoline prices fall as much. Only if oil gets below $90 a bbl with we see gasoline prices fall.

The best thing for us would be to make the Chinese float their currency and stop subsidizing gasoline.

I heard something interesting on radio a couple of days ago. They said that even at the now-lower-price, oil was still 70 percent higher than at this time last year. Now, when they talk in percentages, sometimes it is hard to know what they actually mean... and, also, my memory may be a bit foggy, But, 70 percent of $145 is about $101... they could not mean that oil was less than $45 a barrel at this time last year... that's been at least a couple of years ago. So, I'm guessing they mean percentage difference. From $145 to $100 is about a 30 percent (negative) difference... but, in my memory, $100 seems to be higher than a barrel of oil was at this time last year. From $85 to $145 is about a 70 percent difference, so I think that must be what they meant. That also jogs with my memory about the approximate price this time last year (someone who really wants to know could look it up).

Now, again, my memory may be faulty, but it seems like gasoline was about $2.30 this time last year. Here in Joplin, it is about $3.85 now. Do the math... from $2.30 to $3.85 is a little less than 70 percent difference.

If my memory is accutate, it would seem that almost all of the difference in price of gasoline from last year to this year can be explained by the difference in the price of oil. But, if my memory is wrong, well, then anything goes....

See http://www.wtrg.com/daily/crudeoilprice.html

Crude was a little over $70/barrel last july

That probably means that the radio source for the "70 percent" was either wrong or else meant something other than what I took it to mean. Percentage difference from $70 to $145 is 107 percent.

It would be an interesting exercise to compute the comparison of oil to gas prices on a percentage difference basis, though. Does anyone have a similar link for last year's gasoline price average?

Saw these on Google, maybe help you a bit?

http://www.eia.doe.gov/oil_gas/petroleu ... _page.html

http://www.autobloggreen.com/2007/09/02 ... p-in-2006/

If I'm reading the gas graph correctly, it looks like regular was about $2.95 in July last year and is $4.10 now. The percentage difference between those figures is about 39 percent. From the oil graph, it was $70 in July of '07 and $129 this year... a percentage difference of about 84 percent. That would seem to support Terrel's contention that the price of oil would have to fall a whole lot more before it would be in line with an oil cost reduction in the price of gasoline.

Here's something else on the relationship between oil and gas prices.

http://articles.moneycentral.msn.com/Sa ... spx?page=1

Oil and gasoline prices often move in the same direction, but they aren't linked directly. In fact, while oil prices have more than doubled in the past year, gasoline is up only about 19% during the same time.

Love it when they use those exact terms: more than doubled. According to the graph, this data is not correct. However, the difference between $2.95 and $4.10 is $1.15. That figure is about 28 percent of the current price... closer to his 19 percent, but the 39 percent difference bewteen last years price and this years price is still a more accurate way to express it. Can anyone figure out how they got 19 percent?

Could it be that the bubble is about ready to burst... or, do we simply need to prepare for the new reality:

http://articles.moneycentral.msn.com/Sa ... spx?page=1

Omigosh!!! If this article is right, I actually called one.

http://news.yahoo.com/s/ap/20080725/ap_ ... oil_prices

Of course, I wasn't sure enough to short it. The missing piece of the puzzel is apparently that C-store owners want to bring in more traffic.