Saturday, November 1, 2008

petrol prices not crashing for most of the world

Since June, the average price of pump gas in the US has fallen by about 40% from it's high a bit above $4 to the current national average of $2.42, but many nations haven't been so lucky.

As a result of the rapid and massive swings in the values of currencies, many countries are still looking at pump prices near their June highs. In Australia, for example, the crashing price of a barrel of oil has been nearly matched by the 30% crash in the value of their currency relative to the dollar, the price of pump gas has only fallen about 6% from it's June peak (from $6.0AUD to $5.6AUD/gallon today).

Since every major world currency has followed a similar track for the last few months (except for the Yen, which has risen vs the dollar), nobody has seen fuel price declines anywhere close to what we've seen.

The good news is that consistently high prices for a good long time means more people will be convinced that high prices are permanent, which will lead to higher acceptance of fuel efficiency investments and other energy conservation efforts - which should help keep the price of oil on the decline worldwide, allowing us to ridicule petrol conservation efforts and embrace our giant trucks for a few more years.

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