How the market influences gas costs
A current downturn in gas prices has come as a welcome relief to the majority of drivers in North America. The timing, nevertheless, of the rate drop has many individuals thinking conspiracy theory. A recent poll of Americans showed that a shocking 42 percent of respondents believe that George W. Bush and the ruling Republican administration in Washington decreased gas prices in time for the November 2006 mid-term elections. While this may or may not be the case, the different stock exchange around the globe do have an actual time effect on the rate of oil, and therefore gasoline.
The most significant perpetrator in the lowering of gas prices may really be Nature. In prep work for the upcoming typhoon season, lots of financiers on Wall Street and worldwide invested heavily in gas and oil futures, guessing that another direct hit by a Katrina-like storm straight on gas and oil pipelines in the Gulf of Mexico would send prices through the roof like they did last year. But a recent correction by typhoon forecasters who downgraded the 2006 typhoon period caused the price of oil to plummet and all those financiers who bought futures to sob.
However it had not been just the hurricanes that did it. The announcement accompanied completion of the summertime season for motorists, which likewise dragged down the rate of oil. The price of oil over this time fell off the table, going from an August 7th high of $77 a barrel to $58 a barrel in October. It does not take wish for this drop in prices to be felt at the pump.
This seismic shift in oil and gas prices over such a brief amount of time left numerous investors in deep financial difficulty. A minimum of one shared fund that was invested greatly in oil and gas futures went belly up due to this remarkable drop in prices. At the very same time, there were other funds that did fairly well regardless of the portfolio-ruining drop in oil costs. As they say in sports, sometimes it’s much better to be fortunate than good.
While it may be ignorant to think that global politics never ever plays a part worldwide’s commodity markets, it is unlikely that the sole factor for the enormous and rapid drop in oil rates was because of upcoming elections. The number of variables that use the world’s stocks, bonds and commodities is too huge in number to be affected completely on one nation’s elections.