Cheap Gas Prices for Memorial Day 2010

Some good news on the gas guzzler front.  This Memorial Day, drivers can expect cheap gas prices.  This is may not be a long term thing, but it's good news for holiday travel:

"Gas prices have tumbled almost every day this month, dropping Friday to a national average of $2.749 a gallon, according to auto club AAA, Wright Express and Oil Price Information Service.

A gallon of regular unleaded is 12 cents cheaper than it was a month ago, 8 cents cheaper than just a week ago. The timing couldn't be better for holiday travelers."

The reason?  Oil prices have gone down all this month.  This is particularly surprising, given that the BP oil spill began on April 22 unabated and is pouring hundreds of thousands of gallons of oil into the Gulf of Mexico. 

In 2008, "Drill, Baby, Drill" became a rallying cry due to the preceding rise in gas prices.  The thought was that offshore oil drilling would help drive down the cost of gas by increasing oil production.  One would think that the spill that's considered the worst in American history would have the opposite effect.  That isn't the case: oil prices are going down, not up.

The real effect on oil prices isn't supply, but the current state of the economy.  As the article points out:

"Crude prices dropped again on Friday, as stock markets retreated from Thursday's big gains on new worries about Europe. Rating agency Fitch downgraded Spain's debt. The euro fell and the dollar gained strength. Oil is traded in U.S. currency, and a stronger dollar makes it more expensive to buy with foreign currency."

BP's oil spill is nary a factor.  Perhaps thinking about price issues isn't that important next to this environmental disaster, but wallet issues are important.  Not that everything's 100% rosy, gas-price-wise.  USA Today says the spill could have a negative effect on gas prices.  That said, the spill itself isn't a huge factor:

"The blunt math of the situation tells us that the Gulf leak, while devastating for local wildlife and tourism, is not enough to affect the flow of crude. Only two actual platforms are down, which in the grand scheme of U.S. oil consumption is almost nothing."

This is actually the argument against offshore oil drilling on the whole: it doesn't increase our reserves all that much.  It certainly doesn't allow us to be fully independent from foreign oil.  What this spill is doing is driving home the environmental danger of offshore oil production, as well as its economic impact.  The loss in tourism and other revenue counters whatever benefits there might be in drilling off the coast.  Fixing other things, like the unemployment rate, could have more of an effect on gas prices than offshore drilling, as the more people are at work.  So "Jobs, Baby, Jobs" might be as valid a rallying cry as "Drill, Baby, Drill."