Gas Prices Linked to Temperature

By | Dec 9, 2008

Once again the cold air snaps at our windows; I can’t see the sunlight for all the frost. I wait until now to fill up my furnace’s oil tank because I know that despite all of the hype, despite the mythical speculative buyers, and despite my own sense, fuel costs go down as the temperature drops.

One would think the opposite would be true: since we now need fuel to heat our homes against the killing cold, wouldn’t that indicate an increase in demand that would raise costs, or at least maintain the status quo? Apparantly our air conditioners are hungrier in the summer – it is more energy efficient to create heat, after all, than it is to cool down the environment.

So what is the point? Why are we enjoying the lowest prices in years at the pumps? The reasons we have been given so far are:

  1. The increase in unemployment means fewer people are using their cars (employment figures are down, but does it really make that much of a difference in fuel?)
  2. The decline in the economy means that fewer investors can afford to be speculative buyers, meaning no one is waiting to stock up on the current crop of oil production (where is the surplus from before?)
  3. Air conditioners are going off line in the cooler weather (how much energy do heaters use?)

I’m curious to see how this works out. In the mean time I am enjoying having my gas budget slashed at this critical time of the year.  Looks like there are going to be presents under the tree after all.

1 Comment so far
  1. Josh Maxwell December 9, 2008 7:01 am

    Nice site. There

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