An interesting tid-bit of information from a letter by economist Don Boudreaux to the New York Post in response to this article in which an analyst claims that American drivers are “getting hosed” because gas prices haven’t dropped as fast as oil prices:
You favorably quote an analyst’s assertion that “motorists are getting hosed” because prices at the pump have not fallen enough recently to reflect the latest fall in oil prices (“Oil Drop Brings No Relief to the Pump,” August 3).
Despite your seemingly supportive accompanying graph, this assertion is questionable.
First, according to the figures in your own graph, oil prices today are 55 percent higher than in late September of 2007 (the starting date in your graph), while gasoline prices today are 57.7 percent higher. As evidence of hosing goes, these figures are very weak indeed.
Second, if we take a longer time horizon, evidence of hosing disappears completely. In 2004, for example, a gallon of gasoline retailed for about $2.00 while a barrel of oil sold for about $33. Today, oil’s price is higher by 275 percent while gasoline’s price is higher by only 100 percent.
Donald J. Boudreaux
Funny how public perception, as created by the media, often doesn’t line up at all with reality.