Gas Prices Still High? It’s Probably Your Fault
September 3, 2008 by Miranda Marquit
Filed under Consumer warning, Economy, Family finances, Personal Finance, Saving Money
One thing I’ve noticed (and you probably have as well) is that gas prices aren’t falling very quickly. They sure shot up quickly enough (it seems), but now that oil prices are below $110 a barrel, gas prices seem to be holding on — grudgingly — for as long as possible.
BloggingStocks reports an interesting theory behind the behavior of gas prices:
During times of rising oil prices, consumers are very price conscious and shop for deals. Sure, since gas stations take delivery often, they’d be eager to pass on the price increases to consumers immediately. But as most consumers comaprison shop, gasoline retailers are limited by the amount they can hike up prices.
When oil prices go down, however, consumers are less alert to prices and compare much less as long as they see even a small price reduction. This allows gasoline retailers to lower prices at a slower pace as they recover some of the profit margins lost on the way up.
This is an interesting thought. And I’ve considered it a bit. After all, I’ve noticed myself thinking in the last week or so how nice it is that gas prices are below $4 a gallon (but barely). I realized that I’m not making mental notes of where the cheap gas is, either, as I run my errands.
It is true: We will be charged what the market can bear, and right now it appears that the market will bear something in the neighborhood of $3.75 to $4.15 a gallon.
Do you think gas prices will follow oil prices lower?
Totally agree. I knew when prices go up and demand never went down that these prices are here to stay. I do think when the price goes above 4 dollars then consumers really watch their miles.
Its simple economics. You want cheaper gas then drive less. I have made choices to not spend money on other places to pay more for gas because i do not want to sacrifice driving less.
But i do think the prices will continue to rise because of our dependence on foreign oil. We are at the mercy of Arab nations who do not like us.
PS really like the blog
Thanks for your thoughts, Brian. We’ve tried not to drive as much, and been much more conscious about our trips.
I like your grasp of the understanding you need to have of priorities, too. If you want to drive more, than you have to spend less money elsewhere.
Interestingly, gas prices near me have dropped considerably, and I live about 2 miles from 4 truck stops, so I think that’s big. We have tended to be below the national average the whole time, though, so it might not be a good point of comparison.
kk
Lucky you!
Maybe I’m tainted because we live in a place where it’s hard to ship the fuel to. No matter how you try to get out of our mountain valley, you have to go through a canyon…