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Whose holding IRAC Accountable?

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Today the cost of oil dropped to $101.34. The last time oil was this low, was February 29th, 2008. On that same day, IRAC increase the cost of gas by a penny. In that same news release, IRAC made reference to the increasing cost of oil and the record setting prices.

Global crude prices continue to trade at record levels, primarily the result of speculative activity as opposed to fundamental supply and demand factors. Crude prices sustained at this level will result in continued high refined product pricing. A build in inventory and decline in demand for gasoline enables a slight reduction for this product while a reduction in supply necessitates an increase in diesel prices at this time.

That being said, Oil is traded on a futures basis meaning your never buying oil today. Your buying a contract to receive oil in a month or two from now, which is a logical reason for IRAC to delay decreasing the cost of gas.

However, IRAC doesn't play that game. Least, they don't want the cost of oil goes down. For instance, February 21, 2008 they mention an increase in oil of $12 since the last price adjustment, which was February 1st.

In announcing the price adjustments, the Commission noted that the per barrel price of crude has increased almost $12.00 since the Commissionâ€™s last adjustment on February 1st.

On February 1st, 2008 the price of oil was $88.96, and by the time that announcement rolled around oil reached highs of $101 but ended up closing at $98.81 a day later. This shows that when gas goes up, IRAC uses current market data as the market price and not the proper futures price like the oil companies do.

IRAC continues to show this during a June 26th adjustment where they base the oil price on current political tensions which will affect the price of oil for, again, the future price.

July 14, 2008 comes and IRAC increases the price of gas to 139.1 cpl to 141.2 cpl. IRAC again says:

Record crude oil prices, and their impact on refined product prices over the past two weeks, now necessitate increases in local petroleum product prices. This build in global crude pricing is attributable to a number of factors..

July 18th comes and oil drops $16 after reaching highs on July 11th. Three days later, on July 18th IRAC decreases gas prices by 5.5 cents.

So, why aren't we seeing the drop in gas prices that we have seen when the cost of oil jumped? Who is keeping IRAC accountable to Islanders? People are saying the oil companies got the consumers where they want them, but where is IRAC on this and why hasn't IRAC done anything?


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