Want Consumerist in your inbox? We will not sell or rent your email
Gas prices spiked in Ike’s wake this weekend, in some places to over $5. [AP]
This is stupid.
Oil prices have gone DOWN to $96 bucks, yet gas costs more than it did when it was $147 a barrel.
Nothing more than gouging from US gas stations. The gas in the pumps have been in there for days, and the price goes up $1 overnight?
If the market says that the impact was weak, it should be reflected in the price at the pump.
This must be payback for all of the gas that people aren’t using anymore.
@loogee: It’s not just commodity prices:
Refineries in the gulf were damaged by Ike.
Someone explain to me how this is not price gouging.
How can gas, in ONE day, spike more than a dollar for a PERCEIVED risk? Oil actually went down to below $95 and gas skyrocketed on the possibility that the refineries MIGHT be damaged?
I understand supply and demand as well as the next person, but the supply was not really diminished. All the stories that “Gas is going up more than $5 a gallon…yeah, not to $5 but $5 more..dont’cha know?” is what CAUSED the short supply. In addition, the short supply only lasted until the fuel trucks showed up (with fuel refined a week ago)…what’s that, maybe a couple hours?
@Sasselhoff: In FL, the Attorney General claims that there are shortages because some gas stations have refused to buy the higher priced gasoline.
D’oh…Loogee caught me typing.
Hypnotik: Sorry, 10 platforms out of 717 get damaged and gas prices spike that much?
Nope, I’m calling shenanigans!
Gas here went up, with several places out. I live in Dayton, OH, we got hit with lots of wind, no rain.
I would have loved to not bought the gas just to protest… but I had to get into work today.
Ah, a fellow Daytonian. Well I used to live there…
I heard the wind was crazy. Up by the lake, it was bad, but not that bad.
Getting back on topic, you’ve just explained why gas prices continue to stay around $4/gal even though oil is down to $96/bbl — you’ve got to get to work and you’ll pay whatever it costs to get there.
It’s people putting an artifical run on gasoline. All day Friday and Saturday the lines into the fuel stations were around the block (Atlanta, GA) because people were rushing to ‘top-off’ their tanks incase fuel suddenly became a rare commodity.
I just hope I can get fuel so I can go to work this week. >_>
@RisenPhoenix: Yeah, for some reason people decided to panic after the hurricane hit instead of just making sure they would have gas as soon as it was known where the hurricane was headed.
How many times does this have to happen before people stop freaking out?
While gas has not increased much around me, there are some stations that are clearly price gouging. In a 3 mile stretch of road I travel every day, there is a $0.30 difference in gas. That station raised their price $0.35 on Friday before Ike ever made landfall!! Too bad the government will never step in to make this right.
(Sorry for the long post, but I get frustrated at some of the comments on posts like these, and I figure some people are interested in learning more about the economics of the situation. Probably not the same people who make the frustrating posts, but hopefully someone finds it useful.)
Let me explain two reasons why sudden price increases for speculative reasons is rational supply and demand, not “gouging,” and two ways in which it’s a good thing.
1. If people have an expectation that gas prices will rise $1 within a few weeks, the rational thing to do is go fill up NOW, and even fill up a spare gas can, because it’s a no-brainer investment… an expected return of 25% in two weeks. It’s an uncertain return, but still better than almost any other investment you could make.
Of course, as soon as people start doing this, immediate demand spikes up. As we know, this leads to a price increase… now, not later.
That’s because each station has two choices: raise prices now, or sell at the low price and run out of gas, and watch your competitors sell their gas for a higher price after you run out. Which leads me to:
2. If you had large quantities of gas in your possession and expected that within a couple weeks it would sell for 20% more than what it sells for now, why would you sell now? If we were talking about stocks here, everyone would agree you’d have to be an idiot, but apparently when it comes to gas it’s different? Of course not.
The lowest any price can be (of any good) is the expected future price minus storage costs. If it were any lower, people could make a good profit by buying now, paying the storage costs, and selling later.
1. By the way, this property of immediately reflecting future expectations in the price may seem arbitrary to some of you, but it actually ensures greater efficiency by discouraging immediate consumption. If gas is going to be scarce in a few weeks, we should start cutting back NOW, not a few weeks from now.
The increased price sends exactly that signal without requiring everyone to figure it out themselves. It means selfish people who don’t want to do their part on conservation are the ones that pay the price, not you responsible ones… and if disaster does come, that induced conservation means there’s more gas left for the people who really need it.
2. Heck, if the price increase is local to one region, that will actually encourage people to ship more gas there that they would have sold somewhere else, further increasing the supply! It sends the economic signal for everyone to conserve and help out, not just the people in the affected region. (Unless people in that region have a price control, in which case nobody will send gas there [why would they?], and there will be a shortage instead.)
It’s not (entirely) the Station’s Fault.. it’s the distributor’s fault. The $5 stations are independent stations (at least in my area), so they don’t have contracts in place with any 1 distributor (Like a Texaco or an Exxon does), so they have to pay open market prices when demand is artificially high.
The individual station’s profits per gallon are unchanged.
Price history of regular unleaded just north of Dallas (I-30, exit 89, a Chevron and a Pilot on opposite sides of the freeway), as seen by me on my commute.
9/11 THU 5pm = $3.39
9/12 FRI 7am = $3.49
9/12 FRI 4pm = $3.89
9/15 MON 7am = $4.19 (the Chevron was still $3.89)
50 cents/gal in less than 24 hours, and 80 c/gal in 4 days.
oil prices have gone down because demand for oil in the gulf refineries has gone down in anticipation of the hurricane. The refineries are not making gas so the price of gas is going up. This is pretty basic economics people.
I really wish people would stop freaking out whenever there’s a hurricane. The long lines and everything are and were ridiculous. People, calm down. You will get gas. It will be OK.
I got $20 on my way to work this morning for $3.95, which I thought was too high, but I had already passed the nearest place because it was $3.99. I think my state declared a state of emergency, which meant gas stations couldn’t raise prices more than 10 percent in the span of 24 hours. Not sure how much good that did, though.
I can live with paying high gas prices because we’re running out of fuel globally. That’s the price we have to pay, unfortunately. But it irritates me when people decide hurricane = I need gas, even if they’re in Nebraska, for cripes sakes.
I personally think we should tell all the tree-huggers to go pound sand and get those Refineries off the coast. Why is it that 1/5th of our national production capacity is this vulnerable to weather?
Of course if they moved them up in my neck of the woods they’d probably close for two weeks because of an inch of snow. Or a Thunderstorm that passed through.
@MrEvil: They’re on the coast because oil tankers have difficulty sailing to, say, Nebraska.
My folks back in Indiana told me that the price of regular unleaded got jacked up to about $5/gallon. There were no shortages, the gas stations just saw a chance to play on people’s fears to turn a quick buck.
Now I hear the governor is threatening to fine those gas stations for price gouging. You’d think they’d learn their lesson the first time because the *exact* same thing happened on 9/11. Right after the terrorist attack, a lot of gas stations raised their prices to about $5/gallon (and this was back in ’01 when gas was cheaper). The governor was so mad about the gouging that he ordered all gas stations involved to give full refunds to all customers who had a receipt.
I had to drive from Philly to Lancaster on Thursday and Friday. On Thursday, I drove my car. The price of gas in Philly was $3.59, but $3.45 in Lancaster. I filled up in Lancaster.
On Friday, I drove my husband’s car to Lancaster so I could fill it up for $3.45.
On Saturday, I saw that our local gas station that was $3.59 on Thursday (don’t know what it was on Friday, didn’t check), was now $3.95. Glad I filled up both cars the prior two days. Hopefully it will last till the local gas prices come back down.
the over 5bucks a gallon is price gouging. here in houston, if you can get gas, it is only about 3.50 a gallon
Here in Indiana, gas was 3.38 at the local Thortons on 9/11. Next day, 3.45. When I got off work, gas was 3.88. I shit myself. I luckily didn’t need it. Then, next day its 4.15! Insanity at its finest. What really sucks is I drive a 92.. my 98 Sunfire needs a new engine
Free market economics and the law of supply and demand.
It was nothing more than a perfect storm … falling gas prices leading distributors to keep smaller inventories, couple with not one but two hurricanes disrupting both refinery output and supply lines to parts of the country. Here we had it even worse, local media quoted a convenience store chain owner saying that there was NO gas, everyone in the region is out and no more would be coming for a week. There was a huge run on gas that day, and we now have some of the highest prices in the nation – over $5 a gallon, and that has only come down to about $4.49 today.
Here is a detailed, but simple explanation of what happened: [tinyurl.com]
Return to top of page
Proudly powered by WordPress · Theme: Modern News by StudioPress.