In the short term, driving may be cut and there could also be a decrease in travel or road trips, which will have an impact on the hospitality business, such as hotels and restaurants.
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New York, NY (PRWEB) October 25, 2012
In a recent Profit Confidential article, George Leong, financial expert and contributor to Profit Confidential, notes that going back to July 2008, when the price of gasoline was at its historical average high of $4.11 per gallon, World Texas Intermediate (WTI) oil prices peaked at $145.00 a barrel. (Source: “ESAI in the News,” Energy Security Analysis, Inc. from Reuters, last accessed October 25, 2012.) Just two weeks ago, WTI oil prices sat at $89.33 a barrel, while gas prices reached $4.08 per gallon on the West Coast. (Source: “Oil Prices Today,” Forex, last accessed October 25, 2012.) According to Leong, this shows that there is absolutely little connection between oil prices and gasoline.
According to the Profit Confidential expert, while oil prices have fallen to the $90.00-per-barrel level (source: Forex), the price of gasoline continues to be stubbornly high due to the greed of the big oil companies.
Leong notes that the government accounts for 11% of the cost of gasoline with seven percent for distribution and marketing, 18% for refining, and 64% for the cost of the crude. (Source: “What do I pay for in a gallon of gas?,” U.S. Energy Information Administration, last accessed October 25, 2012.) “In other words, the oil companies are lining their coffers at the expense of the consumer,” says Leong.
In the article “Why Big Oil Is to Blame for High Gas Prices,” Leong points out that with gasoline prices holding at the pumps, the jump in fuel costs will likely impact the disposable income of consumers at a time when spending is under pressure.
“There is some ‘price elasticity’ for gasoline prices in the short-term, as movements in prices tend to be ‘inelastic’ since consumers minimally alter usage,” the Profit Confidential expert explains. “In the short term, driving may be cut and there could also be a decrease in travel or road trips, which will have an impact on the hospitality business, such as hotels and restaurants.”
Leong states that the price of gasoline makes little sense at the current level. He concludes that the problem is that America is dependent on foreign oil to satisfy the country’s immense demand for gasoline and the greedy oil-cartel Organization of Petroleum Producing Countries (OPEC) controls much of the world’s oil.
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market...before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.