Monday, September 15, 2008

Price of oil up, price of gas down

Oil is currently trading at around $96/barrel, the lowest price since February. At the same time the price of gasoline has risen 4 cents or more in many parts of the U.S.

It could be that these two facts are largely unrelated, and that the fall the price of crude is due to heightened fears of a world-wide economic downturn while the increase in gas prices is due to refinery disruptions due to Hurricane Ike.

But it's perfectly possible for a hurricane to be the cause of both. Refinery disruptions decrease the demand for crude and decrease the supply of gasoline.

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