As for where those prices should be, the calculator at Econobrowser, that closing price of $111.82 a barrel for Brent should yield a price at the pump of $3.63, within a penny of where it should have been two weeks ago. That means gas is overpriced and should drop again. That it hasn't isn't good news, so no Professor Farnsworth tonight.Folks, it's time for Professor Farnsworth.
And it's not a suppository!
Gas prices had been holding steady or dropping slowly, in accordance with their usual pattern of going up like a rocket, down like a parachute, falling maybe to $3.85, until Tuesday of this week, when I noticed that prices had started to drop, falling to $3.64 cash near work. By the time I got to the corner gas station, the price was $3.59. Oh, wow, a 30 cent drop in a week! Since the fuel idiot light had gone on in my car, I filled up, and was happy to do so. After all, $3.59 was below the price expected from the value of Brent Crude, so I didn't expect it to go down much more. I was wrong.
On Wednesday, the corner station was selling regular for $3.49, which is the price my wife filled her car up at. By Thursday, it was down to $3.45. Today was the first day that the local price held steady, although stations all around the area, even in downtown Birmingham, were selling it that low. On the radio, I heard prices of as low as $3.29 at 14 Mile and Mound in Macomb County. That means that I saw a drop of 45 cents in less than a week. No wonder I was shouting "Whee!" as the rollercoaster dropped.
So, when was the last time prices were that low? According the the graph below, not since the end of June, which was also the last time there was such a prolonged slide in the cost of gas. Check out the green line for Grand Rapids as well as the orange line for Detroit!
It turns out that I thought that would happen. As I wrote at the time:
[M]y wife said she'd like gas around $3.00/gallon. I told her she might get her wish sometime this fall. She responded that she hoped so and that low gas prices would be good for Obama's re-election. All things being equal, she'd be right. I have my doubts that all things really are equal (these are not business as usual times), but I can hope.Compared to where prices were as recently as two weeks ago, $3.29 is close enough to around $3.00/gallon for government work, and it is good for Obama's election, so I'll break out the gloating macro I first used at the start of July, the last time prices were this low.