Ummm, anyone remember what the price of gas was in the 1970's when
oil was pushing $60/barrel? It was less than a dollar a gallon....

Actually, it was 1982 when gas prices spiked. (You may recall that the
Carter administration tried to manage supply by allocating fuel and
odd/even sales days etc, with the inevitable result that gas stations
ran out of fuel and the lines went around the block. It was the Reagan
administration that let prices rise and shortages disappear.)

In 2004 dollars, the high was $2.50 a gallon. We are very unlikely to
reach that level. All the Bush administration has to do is announce
that it will a) no longer add to the petroleum reserve and b) will
release fuel from the reserve in order to ensure adequate supplies for
the summer driving season. Then the uncertainty premium will disappear
and prices will drop. I doubt that any actual release would be
necessary, but a million barrels a day ought to take care of it and
could be sustained until after the election

I don't think the price ever reached $60 a barrel (or $50, for that
matter) unless you are using 2004 dollars for this calculation but not
for the other.

all the best -- Dan Ford
email: (put Cubdriver in subject line)

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