Momlogic's financial expert Danielle Hoston: I know something we can ALL be thankful for this holiday season... LOWER GAS PRICES! As I drove away from the pump with a huge smile on my face, I started to think about how long this glorious price adjustment was going to last. Here's what I found out...
SUPPLY AND DEMAND
The incredible price spike in gas prices has led to a gradual decrease in our fuel consumption and, over time, a significantly lower demand for gas. At the same time, supply increased as fuel inventories continued to build. This simultaneous decrease in the demand and increase in supply is probably the most significant reason for the decline in price.
SUMMER'S OVER AND SO IS HURRICANE SEASON
Last year, gasoline producers and refineries were hit hard during hurricane season. Investors anticipated a similar shortage and anticipated that another damaging hurricane season would skyrocket the value of fuel and the value of their investment. Well... those disastrous hurricanes never hit (woo hoo!) and our highest fuel-consumption season - summer - is over.
Obviously, the recession has played a hefty role in the decrease of fuel consumption in the United States. More recently, worldwide consumption has significantly declined and speculative investors in crude oil and gasoline products took notice and started selling off their holdings rapidly.
The recent campaigns of both parties recognized the country's frustration with gas prices and the need to resolve the growing energy crisis. The election of Barack Obama has indicated that the country is leaning towards alternative fuel and its products as opposed to more oil drilling and crude oil products.
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