Monday, November 24, 2008

Captain Obvious Award

As far back as this summer, when gas prices were at record highs, CNN.com has been doing these front page stories about how awful high gas prices are. Before the economic crisis really hit in mid-September with the fall of Lehman, every day there'd be a story about record high gas prices and some story about someone who couldn't go as far away for Fourth of July vacation. These stories were relentless, hitting what seemed like every day. At the time, this was supposed to be the proxy story for how awful the economy was.

In the months since Lehman fell, and the Dow crashed along with it, they've been able to put stories on the front page about each successive drop, along with pictures of brokers with their hands on their faces that looked like that had been taken in 1994. At the same time, however, gas prices dropped sharply as well. Oil is currently under $50/barrel and average gas prices are currently under $2.00.

Well, the good news is, they've since found a story on gas prices worth accompanying the stories of the falling market on the front page. With a headline in large font that says "End of Gas Price Crash is 'Either Here or Near,'" they have a story that quotes Trilby Lundberg, the editor of a survey of gas prices nationwide.
Lundberg attributed the price reductions to a drop in crude oil prices and demand, and also because of low refining margins.

"Crude oil remains [the] main driver," for the decline, she said, noting that crude oil futures settled on Friday below $50.

Demand is always low in November, she said, but the weakening economy is reducing it further.

However, Lundberg said that if crude oil prices do not fall further, "then the end of this [gasoline] price crash is either here or near."
You got that? No one actually knows that the end of low gas prices is "either here or near." Trilby is just stating the obvious that gas prices depend in large part on the price of crude. Neither Trilby nor CNN know what's going to happen to the price of crude which, of course, closed at a three year low on Friday, after closing at the previous three year low on Thursday. Furthermore, the declining price of oil is largely due to the weakening economy. In fact the only thing likely to increase prices by any significant amount in the immediate term is a cut in output by OPEC.

This is what passes for reporting these days.