Would gas prices have to go up another buck?
May 25th, 2007 | by mbhunter |A friend pointed me toward this Washington Post article on a gas price tipping point analysis after I chatted with him about the Wisconsin gas station that shut its pumps down yesterday in protest. (If you’re not registered and get bugged, go here.)
The reason why, perhaps, gas prices are still going up is not because the oil companies are evil or because 7-11 is evil or that Congress isn’t doing enough, but because we drivers just aren’t feeling the pain badly enough to drive less! The price at which the average driver would modify his/her driving habits or buy a fuel-sipper to replace a gas-guzzler is $4.38 per gallon, and over five bucks a gallon in the Western US.
Not that anyone’s necessarily gouging us, but why shouldn’t prices go up more? We’re willing to pay more than a dollar per gallon more than we do now before we consume less! When we start consuming less fuel because it hurts too much to buy as much as we use now, then prices might soften a little.
Also, both oil and gasoline are sold worldwide to the highest bidder. Wholesale prices are set by the market, not by oil companies. Prices are high because worldwide demand for oil and gas is pushing prices up.
Oh — my friend also found out firsthand a markup at a particular gas station. Six cents a gallon. Miniscule compared to the other contributions to the price of gas. If the customer pays with credit card, the fees will probably eat up any markup the gas station charges.
Anyway, the point is this: If you’re unwilling to drive less, why should you pay less for gas?
And why shouldn’t you pay more for gas?
4 Responses to “Would gas prices have to go up another buck?”
By ~Dawn on May 25, 2007 | Reply
I remember a story about Alfred Hitchcock and the Movie Psycho- He gave the rating board the movie and they told him to cut the shower scene as it was too graphic. He waited a bit and then gave them the movie again, they approved of it, and he had not cut anything from it.
Desensitized.
The same is happening with the Gas, we raise hell a year ago when it went up to $3 in some places, but now that it is above $3 every where, no one is slowing down in there driving.
Desensitized.
By Lazy Man and Money on May 26, 2007 | Reply
It can be hard to slow down your driving. Should I skip work some day? Should I not go to the grocery store this week? Should I eschew all social activities? I don’t know anyone that just goes out for drives anymore.
The obvious solution is to buy cars that are more gas efficient. Unfortunately, that’s not an economical solution for many people who already have cars and would lose more by a newer one.
The reason that gas is going higher in price is the result of reduced refinery capacity. This is a temporary condition and prices will head back down again, before going up some more.
By John M on May 27, 2007 | Reply
I believe that driving habits go hand in hand with consumption habits. If the price of gas would go up to $4.00 a gallon, not only would that take a toll on the cost of driving a car, but it would also put a toll on other expenses as well. When more people are struggling to make ends meet, they reduce the amount of miles they drive, not necessarily with the intention of driving less, but because they don’t have the money to spend.
The suburban sprawl has made it acceptable for communities to be accessible only to drivers. This has caused a reduction in funding in mass transpiration systems, and has made it almost impossible to not own a car in today’s society (the exception being a few select major US cities). While I agree with you that an individual should not really complain about prices until they have made an attempt to reduce consumption, I also believe that the government needs to play a role in reducing consumption.
By fivecentnickel.com on May 28, 2007 | Reply
Lazy Man and John M are right. Unfortunately, cheap gas driven a wave of mega-surbabanization that makes it extremely difficult for people to reduce their driving. Thus, the only way forward right now seems to be buying more efficient cars. But this doesn’t solve the real problem, it just pushes back the day of reckoning.