"Ask AP" is "a weekly Q&A column where Associated Press journalists respond to readers' questions about the news."
Not surprisingly, given the deteriorating quality of their reporting, the journalists questioned sometimes give less than perfect responses.
One such example came last Friday from Adam Schreck, AP's Energy Writer, at the end of a week when oil prices had already plummeted over 10% from their peak.
Reader Joseph Patterson from St. Louis asked Schreck this question:
I understand, to some degree, the raising of gasoline prices when the price of a barrel of oil increases. What I can't understand is why we never see a significant drop in prices at the pump when the price of oil drops. Oh, there may be a penny less here or there, but nothing like the increases you see when oil prices go up. Why is that?
Schreck had the opportunity to correct Patterson's false premise that "we never see a significant drop in prices at the pump." But instead, he told Patterson that:
The cost of oil does indeed affect what we pay at the pump, but the process of getting it from the well to your gas tank takes time. Prices take a while to catch up.
..... As much as gasoline prices have climbed, the refiners and retailers would like to have raised them even more to cover their costs - but falling U.S. demand has made that impossible. And so, with an eye on their bottom line, they're not likely to lower their prices all that quickly - even with oil prices declining sharply.
Sorry to burst your price bubble, Mr. Schreck, but prices did respond to the decline in the barrel price, and quickly. On Tuesday, I wrote that:
Cincy (Greater Cincinnati) gas prices are down about 4% from a week ago, and (not pictured) more like 5% from 8-9 days ago:
All 15 low-end listings at the site (CincyGasPrices.com) are $3.78 or lower.
Visiting that site again at 10 p.m., I've found that prices have plummeted even further in the past 60 or so hours (the chart is dynamic and may not have the same readings when viewed):
All 15 low-end listings at CincyGasPrices.com are currently at $3.69 or lower.
In fact, if you look at the site's overall price chart beginning on Sunday, July 13, you'll see that the price drop correlates pretty nicely, after about a 24-48 hour delay, with the drop in the barrel price of crude, which closed at $145.08 on Friday, July 11:
Considering the fixed costs of retail operations and fuel delivery, the 6% or so price drop is a pretty darned quick reaction to a 13-14% drop in crude prices.
Imagine that.
What Shreck and questioner Patterson don't understand is that as much as retailers and refiners would like to keep their prices sticky in a falling-crude environment, competition greatly limits their ability to do so.
Patterson's ignorance is unfortunately understandable, because journalists like Schreck have been misreporting from ignorance such as that just demonstrated in his "Ask AP" answer for all too many years.
Cross-posted at BizzyBlog.com.
—Tom Blumer is president of a training and development company in Mason, Ohio, and is a contributing editor to NewsBusters
Editor at Large
Comments Policy
and no mention of
July 25, 2008 - 00:18 ET by NortoPOTUS's involvement in the drop. Still around $4 here in Maine, but then look at who reps us, 2 dems and 2 rino's. 9%'ers all.
Technically ....
July 25, 2008 - 00:22 ET by Tom Blumer.... he could get away with that in his answer, because the question wasn't "why," but how quickly.
Having said that, AP and the rest of the media have been citing everything but sunspots in their day-to-day reports explaining why crude prices have dropped so fast.
Next on tap: "It's a pre-election conspiracy!"
I guess...
July 25, 2008 - 01:12 ET by Dr_Libertythat you will have to drive to Ohio to get your gas then.
<insert witty signature here>
More of the same old, same old from AP!
July 25, 2008 - 00:22 ET by goldenthroatThe Assasinated Press continues to demonstrate it's left wing bent and lives by the philosophy of "our minds are made up - don't confuse us with the facts!"
They're so stinkin' afraid that the president would get some credit for the price decline that they're also taking the approach of "let's ignore it, maybe it will go away!"
Makes me wonder when was the last time they reported something called the truth?
"How can you be in two places at once when you're not anywhere at all?" - Firesign Theatre
GT
July 25, 2008 - 06:55 ET by DoktorFranken"Makes me wonder when was the last time they reported something called the truth?"
Approximately . . . . never.
"But, Gee, Dad - I still don't understand how you can be the Peoples
Prosecutor and my defense lawyer at the same time..." "Easy, son. That
way I can see that you are persecuted to the fullest extent of the
law." "That's my Dad!"
Don't Crush That Dwarf, Hand Me The Pliers - Firesign Theatre
Note to "Matt"
July 25, 2008 - 02:39 ET by Tom BlumerI deleted your comment because of the profanity it contained.
You can make your argument without it. Please do.
They were educated in
July 25, 2008 - 08:50 ET by pbanks7They were educated in Government Schools that want to keep us ignorant and dependent on The Goverment. Liberals believe goverment programs fix problems, capitalism is evil, profit is a dirty word, and people can be perfected.
MSM - shaping all the perceptions you need to believe, then confirming it with a poll.
"Liberals believe goverment programs fix problems"
July 25, 2008 - 12:51 ET by Par for the CourseLike this proposed program?
Just another 2.5 billion dollar government program trying to solve the problem of high gas prices, at least for some. Nothing new to see here, move along.
300 percent of the Federal poverty line for a family of 4 (in 2007) was $61,950.00.
Oil Economics Reporting
July 25, 2008 - 11:25 ET by j. frank wilsonThere is a very interesting article in the August 2008 issue of Conde Nast Portfolio by Howell Raines titled "Crude Reporting; If journalists aren't asking the right questions about prices at the pump, then who is?"
For example - major international oil companies are fully vertically integrated production and distribution firms. Exxon Mobil produces crude, refines it, and operates retail distribution systems. Majors have been spending on exploration and development between one-half and one-quarter what they have been spending on dividends and stock buybacks.
What have the majors been spending on capital expenditures?
And what influence does LIFO pricing have on pump prices?
One more point Mr. Raines does not make, but is very important to keep in mind. Some talking heads - such as Sheer Insannity - continue to harp on the size of oil companies profits vs. state and Federal taxes. As my Daddy says, "Profit is an accounting opinion."
You appear to be saying that oil cos ....
July 25, 2008 - 19:13 ET by Tom Blumer.... who, like all other publicly held companies, are under intense pressure to continue to increase profits, and whose share prices drop like rocks if they don't meet the Street's expectations, are nevertheless understating their reported income and true earnings per share.
Uh-huh. Only NYT exile Howell Raines could come up with that howler.
As to LIFO, I agree that it should go away; it wastes a lot of bean-counting resources, and doesn't reflect the flow of goods. So phase it out over 10 years while at the same time dropping the overall corp tax rate by about 3 points to keep it tax receipt-neutral. Agreed?
Tom Blumer:
July 25, 2008 - 19:46 ET by j. frank wilsonNo, I'm not suggesting oil companies are understating reported income (I'm not sure how anyone could do that, by the way) or true earnings per share. What are "true earnings?" Under GAAP management can make an extraordinary number of decisions to guide earnings, up or down. Depreciation - huge for an oil company - executive compensation, stock buybacks, all "shelter" income. My point is there is a huge difference between income and profit.
I think it a poor use of the shareholders' funds to buy back shares and not spend at least as much money on new resources. Far too many executives worry about share price (often because their compensation is tied to it - a very poor idea) instead of managing their firms for long term growth.
The LIFO reference was to retail pricing - not inventory valuation. I have no trouble with LIFO, FIFO, or any other approved methology. A former business professor of mine at the University of Miami testified before Congress prior to WW II to get the government to recognize that more than one system works.
I'm trying to figure out
July 25, 2008 - 17:22 ET by SchnikeysI'm trying to figure out how in the hell President Bush and congressional Republicans got this bill passed in the Senate and House. Whatever they did, they need to keep it up for the remainder of these drilling-oriented bills!
Hear that, Dems? That's your credibility on this issue going 'round the bowl and down the hole.
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"It could be the answer to our age-old, philosophical question, 'Why are we here?' PLASTIC!"
Schnikeys -- I Don't Think They've Passed any bill ....
July 25, 2008 - 19:21 ET by Tom Blumer.... unless I missed something today.
Got a link?
Also, an update for all: Cincy gas prices have dropped another 3.4 cents since the post went up last night. The average as of this moment is $3.755.
Meh. I heard President Bush
July 26, 2008 - 21:38 ET by SchnikeysMeh. I heard President Bush signed something that had something to do with offshore drilling, which in turn affected the recent drop in oil price. Maybe it wasn't a bill.
*Edit: This was meant to be a reply to Mr. Blumer's reply to my post.
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"It could be the answer to our age-old, philosophical question, 'Why are we here?' PLASTIC!"