Some months ago, two reporters for MarketWatch reported on the way in which oil and gasoline was traded on the open market. Upon investigation, four energy analysts reported back in June of this year to the House Energy and Commerce Committee that the price of retail gasoline could fall by half, to around $2 a gallon, within 30 days of the passage of a law that would limit speculation in energy-futures markets.

Fadel Gheit of Oppenheimer & Co. testified that -

“Record oil prices are inflated by speculation and not justified by market fundamentals. Based on supply and demand fundamentals, crude-oil prices should not be above $60 per barrel.”

Something that oil industry insiders don’t want you to know, something that allows them to make billions in profit at the expense of the consumer and the world economy. Because of record oil prices at the pumps this past summer that drove the cost of gasoline in the United States to over $4.50 a gallon in some areas, and over $4 a gallon on the national average, demand for energy and oil has severely dropped off. The economy has changed drastically since this past summer as well, leading to less travel and less spending.

And what do I see at the pumps this week? I just paid $1.84 for a gallon of gas in Tustin, California. And the national average is back under $2 a gallon. What has changed? Gas prices for the past few months have slowly been on the decline, but in the past two weeks have seen night-to-day decreases over over 20-30 cents at stations locally and across the country. Finally, we are seeing some relief at the pumps.

But what is really beginning to scare oil producers such as the Organization of the Petroleum Exporting Countries (OPEC) is the lack of a significant increase in demand with prices reaching five year lows. OPEC is wanting to cut oil production by 1.5 million barrels of oil per day to try and bring the cost of oil back up. But the latest weekly U.S. Department of Energy report on energy stockpiles showed a significant drop in fuel demand across the Untied States. Even emerging nations such as China and India are seeing cooling effects with regards to energy demand.

The oil companies have been caught red handed. They have been caught inflating the price of oil through speculative trading. The weakening economy was the catalyst that forced the major oil companies to finally drop the cost of oil at the pumps to realistic levels.

Photo Credit: The Gas Station and Facebook

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