Gas prices in the United States have dropped a whopping twenty two cents over the course of the past couple of weeks. This marks the second decline in a row since gas prices peaked in the middle of August, during the summer travel period. As gas prices dropped, giving consumers a break, Exxon Mobil, Texaco, and Shell expressed concern that the falling prices negatively would affect their already substantial profits. The U.S. national average for a gallon of gasoline at a self serve pump fell to $2.65 according to a survey of 7,000 gasoline outlets across the United States. Gas prices actually did peak on August 11th at $3.02 per gallon. Presently, the lowest gasoline price was to be found in Des Moines, Iowa, with per gallon prices at $2.32. The highest were to be found in Honolulu at $3.17 per gallon. In addition to falling prices at the pump, the cost of crude oil also is falling. The cost of a barrel of crude oil fell to $66 on Monday. This occurred when Iran announced that it would consider halting uranium enrichment and OPEC ministers said that they would not reduce oil production in the immediate future. Market analysts quickly concluded that supplies would outpace demand for the immediate future.
Gas prices are subject to inflation, and thus if we wish to see more insights on the gas price dance, we need to look into inflation in greater detail.
There are several inflation measuring methods:
The Consumer Price Index, CPI, which is calculated with respect to the basic period, is the most well known inflation measuring method.
In several countries, the federal service of government statistics publishes the amount of money printed each year, as well as the official index of consumer prices, which characterizes the inflation level. Apart from this, these monetary indexes are used as correction coefficients, for example during the calculation of the amount of monetary compensations, loss etc. If the calculation method is changed, then at the same changes of prices in the consumer’s market results may significantly differ from official ones. At the same time, these unofficial results can not be considered in practice, for example, it can not be quoted in the court of law.
The structure of a basket of goods as per fullness and also as per variability is the most dispute at the moment. At that time with the passing of time it should be changed. But any change in the structure of a basket of goods makes previous data as non-comparable with current data. The index of inflation distorts the data. On the other side, if a basket change was not allowed, after some time it would not conform to the real consumer’s structure. It will give comparable results, but it will not conform to the real expenses and will not reflect their real dynamics.
Apart from the Consumer Price Index, there are other methods which calculate inflation. As a rule the following are some of the main methods used:
* Producer Price Index, PPI — reflects the value of production without considering the additional price of distribution and sales taxes. The value of the PPI advances the data of the CPI in time.
* Cost-of-living Index, COLI — considers the balance of the increase of income and the growth of expenses.
* Assets price index: shares, real estate, prices of debt capital etc. Generally prices on assets grow faster than the prices of consumer goods and the value of money. That’s why owners of assets due to inflation will become rich only.
* GDP Deflator — calculated as a change in prices for groups of similar goods;
* Parity of purchasing capability of the national currency and the change of the currency course;
* Passe index— shows the ratio of current consumer expenses to the expenses for getting the same assortment set in the prices of the base period.
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