Don't Rush Me
Gas prices -- is there a method to the mess?
Supply and Demand Economics?
July 14, 2010 - Before we get to the column, if you click onto this website, http://www.moviemole.com/jillsshow-1/interviews/don/index.html
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Once upon a time I was content to merely moan and groan about the ever-increasing cost of gasoline.
"Oh woe is me!"
"Dang those evil profiteers!"
It is easy to write about the rising costs of anything. It is even easier to point a finger and blame said rising cost on a particular person or industry. So, it must be a sign of my maturity that now I feel compelled to complain about gas prices falling.
"Rush, shut the blank up! You're gonna ruin it for the rest of us," you're probably thinking to yourself, this very instant. "Falling gas prices are a good thing. Be grateful."
Well, I am grateful it cost less to fill up the 19-gallon tank on my 1999 GMC Sonoma (affectionately referred to by my sons as The Rattletrap) than it did, say in April of this year.
But, I have to ask, "Why?"
While I will never be counted among the best and brightest America has to offer, I do have somewhat of a serviceable memory. For example, short-term related, I recollect that I was paying more for gas before British Petroleum's oil rig busted a mile below ocean's surface than I am now.
I also, seem to remember prices have, for the most part, fallen several times since the accident in the Gulf of Mexico.
So, the critical thinker in me asks, "Why?" I ask because my long-term memory remembers that in the past 10 years gas prices went up if anybody even spit on a gas line. Prices were jacked up if the "powers that be" even suspected a hurricane might come near to an oil rig, floating in the Gulf.
I remember these excuses seemed to be a bunch of bunk.
I remember being angry that oil companies were making record profits, while the rest of us were shelling out record amounts of cash to fill our vehicles with petrol. I would have, at least, been pacified had "they" blamed some sun-glassed wearing, turban-sporting, robe-donned sheik for cutting back on the supply side of crude oil.
But, no. The reasons given for price increases were "hypothetical" at best. Hypotheticals smack against supply and demand economics I learned as a kid -- which I still kinda remember.
So, pre-oil spill (April 22) we were paying $2.85 a gallon of gas. Today, Monday, July 12 -- after 88.8 million gallons of oil has been leaked into the ocean, I paid $2.59 a gallon (cash discount) in Ortonville.
I don't just ask myself questions, and when I do, I try to answer myself. (I do this inside my head, without my lips moving, so folks won't think me koo-koo for Cocoa Puffs.)
Using my limited-knowledge of supply and demand economics and the commodities market, why is gas cheaper now, than before the spill?
1. It could be other petroleum companies and countries, not wanting the American public to suffer, have increased production, thereby meaning supply is really up, driving the cost down.
2. Americans are going "green" driving/consuming less, thereby meaning that even though millions of gallons a day are spewing into the ocean, the supply is actually still higher than before, driving the cost down.
3. The public relations for all oil companies and the United States government has been so terribly botched that investors don't want to anger Americans into "really" going green, driving the cost down.
Of course, if I go with my third guess, that would mean Wall Street actually runs the government. And, I know that isn't true because they never get breaks from the law makers of this nation.
And, while I am on the questioning bandwagon, how come the price of a gallon of gas differs from one station to the next -- significantly -- and from town to town? Goodrich is sometimes cheaper than Oxford. Lake Orion is always cheaper than Oxford. Clarkston is always higher than Oxford, Goodrich and Lake Orion; and Ortonville is always cheaper than all of them?
Why is that?
And why do people buy gas right off the expressways, where it is always 10 to 20 cents a gallon more expensive?
What theories do you have, I'd like to hear. E-mail me your thoughts, firstname.lastname@example.org
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Also, I have a bonus for you all! If you look up to the right, in a little box, you'll notice a 3rd column on bikes and frogs. Check it out -- a twofer!
Don is Assistant Publisher for Sherman Publications, Inc. He has worked for the company since 1985. He has won numerous awards for column, editorial and feature writing as well as for photography. He has two, sons Shamus and Sean and resides in the area. To read archived copies of his columns, click on his name, just under his picture up top . . . He can be e-mailed at: email@example.com