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Oil has dropped $13, so gasoline should drop 30 cents, Americans hope

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Here's a little consumer advocate-based gasoline price monitoring one can undertake, and you can forward the results to your local Congressman/woman.

Oil accounts for about 60-65% of the price of U.S. gasoline. For every $1 that oil rises, the price of U.S. regular unleaded rises about 2.4 cents a gallon.

Oil has fallen about $13 in roughly a month, from $73 to about $60 per barrel Thursday. That means the price of U.S. regular unleaded gasoline, which hit a high of $2.67 a month ago, should drop about 31 cents, give or take a few cents for regional variation.

Allow 2-3 weeks for the 'new oil' to work its way into the system, and monitor whether gasoline drops 30 cents per gallon in your area. If it doesn't, something fishy is probably going on: gasoline demand has basically been flat, on a year-over-year basis, and with the July 4th holiday behind us, we're past the historical peak period for gasoline prices. Further, stockpiles of gasoline are at their highest level in more than a decade, according to U.S. Energy Information Administration data. In other words, there's no reason for gasoline prices not to drop about 30 cents – and more, if the price of oil continues to decline -- barring a hurricane that closes refineries, or some other unforeseen problem, etc.

I'll provide an update in about 2-3 weeks. In the meantime, feel free to add your comments on the gas price trend in your area.

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Last updated: November 07, 2009: 11:58 AM

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