Gas Prices Drop, Energy Prices Rise

I paid $2.10 per gallon for gas today, a 30% drop from what I paid two months ago when it was $2.99 per gallon. The media has finally realized that gas prices are dropping, though in my area at least they’re falling far below pre-Katrina levels. I’m not complaining, but this seems pretty bizarre.

Especially considering that oil company profit margins were up 62% in the third quarter. Oil company incomes for 2005 are up 30 to 50 percent over 2004. Apparently I’m not the only one scratching my head. The Senate is also investigating high oil company profits following the recent spike in gas prices.

Of course Congress doesn’t have to look far for the blame—the energy bill passed in August gave $4 billion in tax breaks to the oil industry, equivalent to 40% of Exxon-Mobil’s net earnings last quarter, which were already up 75% over the same period last year.

So was the Katrina price-spike for real? I’d like to believe quick responses in the wake of disaster brought the prices back down, but I’m not so sure.

In another potential energy shenanigan, Xcel Energy is offering a Fixed Monthly Gas Payment plan. The idea is that you can avoid a sharp rise in natural gas prices by locking in your payment at a fixed monthly rate for one year, based on your energy usage in the past. If prices rise, you pay the same fixed monthly rate. But if prices fall, you pay the same fixed monthly rate. You also get penalized if you bail out of the program or use more energy than you normally use.

Sounds like an interesting plan, until you do the math. The fixed rate they offer me is almost twice the average monthly amount I spend on natural gas. It assumes an incredible price hike, which may or may not happen.

Apparently the pitch is that you don’t have to worry about rising energy costs. Of course you have to pay for that peace of mind.

One thought on “Gas Prices Drop, Energy Prices Rise”

  1. Regarding the fixed monthly payments… it’s almost like you’re buying price hike insurance from the same company who could hike prices.

    That’d be like buying car insurance from a guy who says he may or may not broadside you at 50 MPH on the highway next week.

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