The spike in prices is being blamed on a decrease in gas production and a weak dollar — not on an increase in demand.

"Until consumers are confident in their jobs and future income, they're going to be very hesitant in spending,"[a senior economist with Moody's Economy.com] told the AP. "And higher gas prices are just another excuse to keep money in the pocket."

Retail gas prices nearing summer highs [AP]
(Photo:ibelli)

SpotMotorcycles took a look at the myth of bike commuting utopia. Their verdict: It's worthwhile only for some people, and most of those people already own motorcycles.

I made my own estimate with their calculator, and it showed that I would actually lose $106 per year by commuting on a motorcycle, and that doesn't even take into account money spent on gear, licensing, or safety courses. Save money on commuting by purchasing a more fuel-efficient car? Maybe. But few Americans who live in areas without good public transit are able to completely get rid of their cars. If you want to feel the wind in your helmet, consider investing in a bicycle for short trips instead.

Save Money Commuting by Motorcycle? Not So Fast! [Spot Motorcycles]

(Photo: stirwise)

Looks like we won't have to suffer through any more People magazine articles suggesting you eat brussels sprouts and stick up a poster of Big Ben if you can't afford to fly to London.

Check out our posts under the "travel cheap" tag for bargain hunting tips.

(Photo: TedsBlog)

"U.S. public transit 2008 ridership highest in 52 years" [Reuters]
(Photo: Kriston Lewis)

I just don't get it. Does Consumerist know of a good media source that has a *current* (i.e., in the last week or two) breakdown of why the heck gasoline prices are rising 10 cents a week and more in the last month?

Let's take a stab at some possible reasons.

There are a lot of partial explanations. It's partly due to some refineries cutting production, both to increase profit by reducing supply and to make repairs, at least in California. It's partly due to the crude oil market being in contango, the term for when "the current month’s (Feb.) future price is trading lower than the futures price for the following month"—which means there's a lot of oil being bought and stored in tankers for future sale. (The problem: we don't know how this contango directly translates to higher prices at the pump. Does it create a shortage? Can anyone educate us in laymen's terms?) Oh, it might also partly be due to the temporary spike in crude prices back at the end of 2008, because often pump prices lag crude prices.

Or, gas station owners might be seizing the moment to take advantage of the low price of crude to make the profit they couldn't make last summer:

That's exactly why some stations raised prices quickly after oil futures jumped late last year: not because the more expensive oil had made its way through the production process, but because they saw an opportunity to make some money after struggling with paltry profits for months. So the usual lag between oil and gas prices may not have occurred this time at some stations — they wanted to raise prices, and they didn't feel like waiting.

Quinn Cassidy, an independent gasoline retailer in Slidell, La., said his profit margin on a gallon of gasoline has improved significantly since the summer, when he and others sometimes made pennies per gallon. Now, because of crude's descent, he says he can make 25 cents to 30 cents a gallon — and he makes no apologies for trying to keep the price as high as possible while remaining competitive.

We were hoping to find a simpler, straightforward explanation, but that's the best we could come up with after looking around at various recent articles on the topic. Does anyone have a better explanation?

"Why Do Gas Prices Rise As Oil Prices Fall?" [CBS4]
"Gas prices continue upward spiral" [AccessNorthGa]
(Photo: Mingo.nl)

Despite the lower prices, demand for gasoline continues to drop, according to MasterCard. They said that credit card swipes at gas stations were down 3.9% compared to last year. We can only imagine, with horror, what this slowdown is doing to "meat snack" sales.

Gas prices near $2.30 [CNN]
(Photo: The Joy Of The Mundane )

The Three Markets: Contract, Spot and Futures

Both oil and gas are traded on three markets: the contract market, the spot market, and the futures market. Each is influenced by different factors and impacts the price of gas at different stages of production. Unlike the futures market, the contract and spot markets are not the kind of markets found on Wall Street; they are informal networks of businesspeople.

The Contract Market
Though it seems like oil companies spend most of their time ruining your day by raising the price of gas, their primary business is exploration. Once an oil company finds a field and coaxes it into producing crude, it takes that unrefined oil and sells to refiners. The vast majority of oil is sold by contracts. A veritable orgy of contracts signed between oil companies and dealers, oil companies and refiners, refiners and independent dealers predetermine the fate of most oil and gas.

Refiners plan their purchasing and refining activity to ensure that these contracts are fulfilled. In exchanged for this privileged standing, refiners charge contract customers a premium.

The Spot Market
Need some extra oil? Got a spare barrel you need to sell today? The spot market is for you. The spot market fills the gap left by the contracts market. When a refiner needs extra oil to meet its contracts, they find people with surplus oil on the spot market. Unlike the contract and futures markets, which trade pieces of paper, the spot market involves the trade of actual barrels.

The best deals are often found on the spot market. Since neither the buyer or seller is locked into a prearranged deal, the laws of supply, demand, and free market are mostly in effect.

The Futures Market
Crude oil is the bees knees of the American Mercantile Exchange. A futures contract might stand for 1,000 barrels of West Texas Intermediate to be delivered at Cushing, Oklahoma. The futures market represents that collective state of the oil market at any particular moment. When you hear reporters talk about the price of oil reaching $100 per barrel, they're talking about the futures market. Because fluctuations on the futures market are driven by information, its prices guide the contract and spot markets.

The people buying and selling futures rarely, if ever, collect on their contracts; a seven year period saw 5 billion barrels traded, of which only 31,000 were ever delivered.

Refineries

Refineries are the temples where crude oil gets Bar Mitzvah'd into gas. Shifts in the refining world over the past two decades have helped ratchet up the price of gas. In the early 80's, there were over 350 refineries, mostly owned by the oil companies. The oil companies didn't see refining as a place to generate profit, but as an integral part of a larger operation.

By 2002, there were only 153 refineries, and most of them were no longer controlled by the oil companies. Refineries are now held privately and independently, and as with any independent businesses, profit is key. It is in the refiner's interests to supply only as much gas as is absolutely needed to stay on the profitable side of the supply and demand curve.

Gas emerging from a refinery is sold at what is known as the 'rack price.' The rack price is the cost of gas to dealers, and it is generally influenced by the spot and futures market. The rack price is also where branded gas begins to exert a price premium.

Branded gas from Exxon-Mobile, BP-Amoco, etc, isn't different from the unbranded gas found at Joe Schmoe's Gas Shack. Still, there are several costs associated with branding gas. The brand name carries a premium, since people might associate it with quality, and not grossly overcompensated executives. Branded gas is also sold under contract, giving buyers long-term stability that can't be duplicated by unbranded gas. Oil companies also add value to branded gas by providing ancillary benefits that command a price premium, like branded advertising and branded credit cards.

Refiner pricing strategies are almost as complex as the mating rituals of the red-sided garter snake. Though refiners want to maximize their profit, they don't necessarily want to gain additional market share. Refining capacity can't simply be ramped up on demand. Acquiring and refining crude oil takes considerable time, leading refiners to take a slow and steady approach to business. First and foremost, refiners care about fulfilling their contractual obligations. Leftover gas can be sold for profit on the rack.

If a refiner's rack price is consistently too high, dealers will take their business elsewhere when their contracts expire. If the rack price is too low, buyers might swamp the refiner, leaving it unable to meet its contractual obligations.

To ensure pricing continuity, refiners used to call each other and share pricing information. Activist judges on the Supreme Court called this "collusion." The refiners, unfazed by the justices, came up with a crafty alternative: publicly posting their rack prices. Somehow, the Ninth Circuit Court found this to be illegal, too. Nobody knows how refiners discuss their pricing arrangements nowadays, but we wouldn't be surprised if it involved a members-only group on Facebook.

Gas Stations

Ah, gas stations. Nourishers of our cars, wellspring of our rage. Gas stations are not all alike. Some are owned outright by the oil companies, while others are leased by dealers who sell only one brand of gas.

There are supposedly nine benefits to being a branded lessee-dealer:

(1) a wider variety of grades of gasoline than unbranded, which leads to higher gross profit margins,
(2) access to oil company credit card at no fee,
(3) oil company third party fee discount for VISA and MasterCard,
(4) "subsidies" in the form of soft loans and investments,
(5) marketing assistance,
(6) rebates based on incremental volume,
(7) training and support on how to run a profitable gasoline station,
(8) technical support and station startup design, and
(9) security of supply.

There are also open dealers, who sign contracts with a particular brand, but can shift their allegiance whenever the contract expires. Open dealers interface with refiners through middlemen known as jobbers. A jobber will often supply several dealers, and depending on the size of the operation, will sign contracts, or buy unbranded gas either from the rack or the spot market.

Finally, there are the true independents. These folks shop around for the best unbranded gas price, sometimes aided by a jobber. They almost never sign long term contracts and almost always get their gas from the rack or the spot market.

At the turn of the 20th century, the U.S. had just under 175,000 gas stations. Of those, about 55,000 are run by independent operators. Of the remainder, half are run by open dealers, and the other half is split between company-owned and lessee-dealer stations.

Fixing The Price Of Gas

Oil companies set the price of gas at company-owned stations. What they say, goes. With lessee-dealers, the relationship is more complex.

Lessee-dealers are charged a 'Dealer Tank Wagon' (DTW) price by the oil companies. The DTW price is set either by the oil company's central or regional office, and is driven by both the spot and futures markets. Most importantly, oil companies determine the DTW price by looking at the prices of other stations in the market. This is why two stations with the same brand a block away from each other can have different prices.

Lessee-dealers can't negotiate a DTW price since they sign contracts with just one oil company that require them to purchase a minimum amount of gas. Oil companies allow dealers to sell gas at a slightly inflated margin to ensure a profit stream so the dealers can put food on their family's table. That margin can range from 3-10 cents per gallon.

Why don't dealers just raise the prices more, like 20 cents a gallon, so they can give their families even more food? Some do. If they're caught, you can bet anything the next DTW price will be higher, bringing their profit margins back to normal - only now, their gas is more expensive than their neighboring stations and they have a competitive disadvantage.

DTW pricing is the product of an exceedingly complex and secretive pricing scheme known as zone pricing. A zone can be as small as a single gas station, or as large as a city. The testimony of a Mobil representative in 1997 revealed that Mobil had 46 zones in Connecticut. Most dealers have no idea what zone they are in, even though the DTW price given to their neighboring stations can determine their standing in a local market.

Oil companies, like politicians reapportioning voting districts, rely heavily on technology to slice apart local markets. The DTW price in each zone will be different, taking account several factors including nearby competition, demographics, and the historical demand of the zone. Oil companies also seek to determine the price elasticity of each zone, or how much the zone will pay for gas before looking for alternative suppliers. For some zones, that breaking point is a penny, for others, it two or three cents, and some will stay with their station out of a sense of loyalty. These factors can cause the price of gas in neighboring zones to fluctuate by as much as a dime.

Oil companies adjust zone price by considering what their competitors are doing. The price of rival gas stations will be surveyed two or three times a week, or the data will be relayed to the oil companies by refiners.

Taxes

State and federal taxes account for about 18% of the price of gas. The cost is a constant and is factored into the baseline price of gas.

Eliminating those taxes would reduce the price of gas by a few cents, but would do nothing to otherwise address the underlying factors involved in pricing gas.

Ok... so why IS gas so expensive?

A butterfly flaps its wings in the Saudi desert, causing the State Department to release a warning of increased terrorist activity. The futures market flips out, sending the price of crude skyward.

The higher price on the futures market makes it more expensive for refiners to acquire crude to refine into gas. When the refiner's work is done, the emerging gas will be priced accordingly higher. This raises the rack price and the prices on the spot markets. Oil companies and jobbers with long-term contracts might be insulated from the higher price, depending on their contracts.

Refining oil into gas isn't instantaneous, and there can be a lag before the higher price of the oil is reflected in higher gas prices paid by jobbers and oil companies. That, of course, didn't stop them from raising prices the moment the futures market jumped. So now that the oil that was purchased for refining at a higher cost is ready to hit the market as gas, the oil companies will raise prices again.

This double-dipped price is passed onto dealers as the DTW price, which is then inflated yet again so the dealers can turn a profit.

You paid more for gas thanks to a butterfly.

"It's just a !@$% butterfly!," you say. Sure, but it scared the hell out of the markets. Since the oil companies all move in lockstep, that butterfly can cause the price of gas to rise for several days as one oil company sees another raising prices and adjusts accordingly.

Eventually the markets will calm and the price will begin to fall. This allows the introduction of a friend much more insidious than the butterfly: price gouging.

Despite popular misconceptions, price gouging almost never occurs as prices rise. Instead, price gouging occurs when dealers keep prices artificially high in order to gain a little extra profit or recoup costs, even though the DTW price has declined.

Sticking with our butterfly friend, let's say she caused the DTW price of gas to spike for four days. It may be ten days before dealers lower their prices. That's price gouging.

Most people never notice true price gouging. They will complain that the price went too high, but that's the fault of the oil companies, not the dealers. Prices that stay high for too long go unnoticed. Just because the price of gas stays high does not mean that a dealer is price gouging. The price may actually be higher. That's why it's almost impossible to prove, let alone prosecute, price gouging.

Conclusion
Most of the above draws on the excellent work of the Senate Permanent Subcommittee on Investigations, which produced a 324 page report that makes for a fascinating read. Direct links to the report sections are below:
Executive Summary
Introduction
The Production and Marketing of Gasoline
The Effects Of Market Structure And Concentration On Gasoline Prices
How Gasoline Prices Are Set

Unless you're a Saudi Arabian butterfly, you can't hope to control the oil market, but you can control your consumption. Reduce your gas costs by carpooling, biking, walking, using gas price finder sites to decrease the information asymmetry, and/or switching to a car with a better MPG.

RELATED:
What Goes Into The Price Of Gas?
Get 30 More Miles Per Tank: Turn Off Engine If Idling More Than 10 Seconds
Potentially Insane Ways To Increase Your Fuel Efficiency

(Photo: Getty)

Editor's Note: This post was originally published May 2007. I decided to republish it now because it's one of my favorite posts Carey ever did, and it's incredibly relevant in the current economic situation.

Here's a Washington Post article about consumers who aren't able to fill their gas tanks for the usual (former?) "pay at the pump" limit of $75.

One expert explains:

The average station makes a profit of $60 at the pump per day, says Jeff Lenard, a spokesman for the National Association of Convenience Stores. "It's not uncommon to lose money selling gas. So the idea of losing $20 or $50 [in charge backs] is too much."
...
Stations "are faced with two bad options — allow the pump to go beyond $75 and risk not getting paid . . . or take a customer from frustrated [with gas prices] to outright anger," Lenard said.

At the Pump And Past The Limit [Washington Post]

Oil Prices Tumble Again; Stock Markets Surge [NYT] (Photo: hanapbuhay)

• What's The True Cost Of A Trade-In? Use Edmonds' calculator to price-out the cost of a trade-in. The results may be surprising: trading a 2005 Ford Expedition for a 2008 Toyota Highlander hybrid won't produce savings for almost 15 years.
• Is A Small Car Practical? You bought a SUV for a reason, right? RIGHT?! Yeah, think about that for a moment before looking at a new Smart.
• Are You Thinking With Your Brain Or Your Gut? Gas prices are rising, but the overall cost of ownership is stable. Your insurance bill is probably the same, and your mechanic isn't raising prices. Now might seem like the right time to get a new car, but “if you’re selling an S.U.V. or trading it in, you’re selling an asset at the low ebb in its value and trying to buy an asset that’s been bid up in value,” says Mr. Nerad of Kelley Blue Book. “In stock market terms, this wouldn’t be a propitious time to make that kind of trade.”

Is it worth trading in your gas guzzler? [Edmunds]
Ditch the Gas Guzzler? Well, Maybe Not Yet [The New York Times]
(Photo: Getty)

According to CBS2's article,

"We saw a substantial drop in the price of crude oil, which it appears gas station owners were in a hurry to pass on to consumers," said Phil Flynn, Vice President an Senior Market Analyst at Alaron Trading.

"So often we hear gas prices rise like a rocket and drop like a feather, this time, they're starting to drop like a rock and that's a good thing," Flynn said.

That's partly because demand is down about 4 percent from where it usually is. Many people have put the brakes on driving this summer because it costs too much.

"We could see $3.70 in the city and if we get really lucky, maybe $3.50 by Labor Day," Flynn said.

Yes, there is a fine line between educated speculation and full on media whoring, but does Phil look like the kind of guy who would simply say what we all want to hear, just to get his name in the news? Ok, don't answer that.

Expert: Gas Prices Dropping Like A Rock [CBS2]

From the NYT:

Mr. Bernanke was especially pessimistic about any easing of energy prices, dismissing suggestions that they were being driven by speculation in futures markets. Instead, he said high energy costs reflected the markets’ recognition that demand was outstripping supplies.

“Over the past several years, the world economy has expanded at its fastest pace in decades, leading to substantial increases in the demand for oil,” Mr. Bernanke said. “On the supply side, despite sharp increases in prices, the production of oil has risen only slightly in the past few years.”

Before Mr. Bernanke’s remarks, the Labor Department reported that wholesale prices rose 1.8 percent in June, making for the fastest 12-month inflation rate in more than a quarter century.

Economy Will Stay Sluggish, Bernanke Tells Congress [NYT]
(AP Photo/Susan Walsh)

Activists Keep the Faith, if Not Their Money [Washington Post] (Thanks to ejangles!)

New Jersey has 3,142 gas stations, according to the Star Ledger. Inspectors checked 1,023 of them, and issued citations to 350 owners. New Jersey's Attorney General encouraged consumers to report any violations they come across. A larger version of the map can be viewed here.
(Thanks to Ryan!)

Gillis calculated that at $4 a gallon, over 10,000 miles, an improvement from 12 mpg to 13 mpg would save $256. For the owner of a 33 mpg car to save that much, mileage would have to go up to 40 mpg, he said.

Here's how it works.

A couple drives a 25 mpg sedan. They trade it for a 50 mpg hybrid, a 25 mpg improvement.

A family with mom, dad and three kids has a 10 mpg SUV to haul everyone around. They trade it for a 20 mpg station wagon, a 10 mpg improvement.

Sounds like the couple did better, at least in miles per gallon.

But lets look at gallons per miles.

At 25 mpg the couple burned 400 gallons over a year and their new 50 mpg hybrid cuts that to 200 gallons. They save 200 gallons.

At 10 mpg the family's SUV burns 1,000 gallons of gas a year. At 20 mpg the station wagon burns 500 gallons — they save 500 gallons, much better than the couple.

Obviously you stand to save the most with the most efficient car. In the above example, though, you're spending so much on gas for that big vehicle that cutting your consumption in half can save you $2,000 a year. It's worth keeping this in mind if you've been assuming it's cheaper to stick with your old 10 mpg vehicle, or if you're car shopping on a limited budget and tempted to disregard modest fuel efficiency ratings.

"Seeking better gas mileage? Think backwards" [CNN]
"The MPG Illusion" (subscribers only) [Science]
(Photo: Getty)

“What was once a frequent occurrence such as the morning trip to Starbucks or taking the family to a ballgame just isn’t as financially feasible when $4-per-gallon gas must also share a place in the budget,” said Jack R. Nerad, executive editorial director and executive market analyst for Kelley Blue Book and kbb.com. “The fact that nearly three-quarters of new-vehicle shoppers see this as a permanent situation demonstrates the enormous effect that skyrocketing fuel costs can have on not just the auto industry, but the entire American economy.”

Not everyone is sad, however. The Toyota Prius is dancing on the grave of the latte (and the Hummer?). KBB says "sixty-two percent of shoppers say that gas prices have either changed their mind or made them think strongly about vehicles they normally wouldn’t have considered."

GAS PRICES CAUSE NEW-CAR SHOPPERS TO CUT SPENDING, BELIEVE SITUATION IS PERMANENT [KBB]

(Photo: Paxton Holley )

The article says,

His complaints target the so-called interchange fee — a percentage of the sale price paid to credit card companies on every transaction. The percentage is fixed — usually at just under 2 percent — but the dollar amount of the fee rises with the price of the goods or services.

As gas tops $4 a gallon, that pushes fees toward 10 cents a gallon. Now stations, which typically mark up gasoline by 11 to 12 cents a gallon, are seeing profits shrink or even reverse.

In a good month, Randolph's small operation would yield a $60 profit on gasoline sales. But that's been buried as soaring prices forced the station to pay about $500 a month in interchange fees.

"At these prices, people aren't making any money," said Jeff Lenard, spokesman for the Alexandria, Va.-based National Association of Convenience Stores. "It's brutal."

Many gas stations across the country have dealt with this issue by offering discounts on cash transactions which is not a perfect solution explains the spokesman for the National Association of convenience stores, "The problem with cash discounts is, if people don't have the cash or don't want to spend the cash, you've inconvenienced them."

Another avenue being explored by some gas station owners is finding less expensive credit card companies. Tom's Convenience stores in Pennsylvania has started using a new credit card company called Revolution which charges smaller interchange fees. Customers who use the card get an automatic 10 cent discount.

The National Retail Federation says that the recent surge in gas prices has focused attention on to what they believe is an underlying problem with credit card fees. They say that even though the price of gas has gone up, the cost of processing credit and debit cards stays the same. "We have always contended that it doesn't cost Visa and MasterCard any more to process a $1,000 transaction than it does a $100 transaction," said J. Craig Shearman, vice president of government affairs at the retail federation.

Currently, there is pending legislation in Congress which would allow merchants to bargain collectively with the credit card companies. Other legislation focuses on requiring credit card companies to explain how they calculate their fees. Unfortunately, approving and enacting such changes will probably take some time. So until there is any change in the structure of interchange fees, it seems that customers and owners will continue to experience pain at the pump.

Some gas stations banning credit cards [AP]
(Photo: Getty)

73% - Crude oil
11% - Federal and state taxes
10% - Refining costs and profits
6% - Distribution and marketing

He's also got a cool graph showing how this ratio has changed from 2001-2008.

What Goes Into the Price of Gas? [FiveCentNickel]

(Photo: amyadoyzie)

8. State and local carpooling programs
New Jersey's Carpooling Makes Sense Program will give $100 to new carpools committing to 24 days over 2 months. San Mateo, California is offering $60 for standard carpools and $80 for hybrid or clean-air certified carpools per member. Check to see if your area is offering any incentives.

7. Callaway Golf Clubs
With purchase of certain drivers, Callaway is offering $50-$100 in American Express Fill It Up Cards. Check their website for details.

6. Choice Hotels
Hotels such as Comfort Inn, Clarion and Sleep Inn will give you a $50 gas card with 3 separate stays until August 14th if you register for their points program. Details are available at their website.

5. Hotels.com
Hotels.com is offering a $50 gas card with a 3-night booking before July 6th. Use code GAS50. More details at their website.

4. State Tourism Boards
Many places across the country such as Traverse City, Michigan and Aspen, Colorado as well as certain areas in Florida are offering $25 to $50 for guests that book stays at their hospitality businesses. Check your travel board or destination location for more offers.

3. Hasbro
Hasbro is offering a $10 gas card with the purchase of 3 participating board games until July 31. See their website for details.

2. Toyota
Toyota is offering a $50 gas card if you buy tires from a participating dealer until June 30th. Check their website for the list of retailers.

1. Hertz
If you rent a Hertz car through Travelocity it comes with a free tank of gas before June 30th. Check out Travelocity's offer for details.

9 Summer Offers That Will Give You Gas [Wisebread]
(Photo: Getty)

Graphic from CNN:

Marci Solomon considered a Prius but decided the Metro was the best economical choice for her. The article says,

For the most part, Solomon plans on using the car for commuting from her home in Rochester, Washington, to her job. The vehicle she has now, a Honda Element, was getting 28 mpg, and she was filling up twice a week, costing her nearly $100. Stations were charging $3.97 a gallon in her area Tuesday, she said. The Metro is an investment in the future, Solomon said, even if she did pay more than five times the Blue Book value of the car.

"It was all about saving money," she said. "I don't think gas is ever going to go down, and these are going to be the types of solutions we have to turn to. I wanted to beat the rush."

The rush may have begun. The 1996 2-door 3-cylinder Metro Solomon now owns opened on eBay May 7 with a bid of $200. A week later, Solomon won the car auction with a bid of $7,300. In 1995, a new Metro hatchback sold for about $9,000, according to Auto Mall USA.

In May alone, 43 Metros of various years and models were sold on eBay, ranging in price from $221.50 to Solomon's bid of $7,300. The cars have been hot items, drawing upwards of 49 bids on certain vehicles, with many of the auctions coming down to last-second bidding wars. On Tuesday morning, 34 Metros were still up for grabs.

It's good to see this little guy making a comeback. Obviously, a Prius is going to offer more in the way of safety, speed, style and features but saving $14,000 on a car that gets nearly as good gas mileage makes good economic sense. So the next time you see a Metro roll up, don't disrespect, they're rockin' 46 miles a gallon!

Gas prices drive Geos from clunkers to chic [CNN]

Recently Miden's police chief, T.C. Bloxom, had noticed some irregularities in the department's gasoline spending which began to arouse his suspicion. A subsequent investigation concluded that Officer Craig Bucknor was using a gas card assigned to a school resource officer and then using another officer's personal identification number. According to Chief Bloxom, Bucknor used the department gas card 9 times which totaled $400 in the month of April. Additionally, Bucknor used the card twice in March for what is described as "a small amount." The thirty-year-old Bucknor had been with the department since September, 2005. It's a sad state of affairs when even our law enforcement personnel are driven to crime by high gas prices.

Minden Police Officer Arrested For Stealing Gas From City [KSLA]
(Photo: KSLA)

There's a much deeper story here, and it begins with Oyster, a respected, self-made businessman who turned a single station into Oyster Petroleum, a profitable firm in Redwood City. Oyster is nobody's fool. Don't think he isn't well aware that the Chevron station across the street is selling regular for 70 cents less.

Putting the price way up over $4 a gallon isn't about making a profit. It's about making a statement to a multinational corporation. After Shell forced him to pay higher prices for gas in San Francisco and jacked up his rent, Oyster says, he decided to fight back.

"I got fed up,'' Oyster admits. "It makes a statement, and I guess when people see that price they also see the Shell sign right next to it.''

In fact, far from making a huge profit, Oyster is going out of business. He has operated the Shell station at Sixth and Harrison for 22 years, but he's walking away from it at the end of the month, handing over the keys to Shell officials and expecting them to shut it down.

"I'm getting nothing for the station,'' he says. "I just give them the keys and walk away. They told me they were probably just going to fence it and bulldoze it anyway.''

Oyster says Shell jacked up his rent in an attempt to put him out of business so they could replace him with their own station and employees, and it worked. He says that independent dealers don't make a profit on the gas they sell, much like the way movie theater owners make all of their money on concessions. Shell denies this.

"All I've got is gas and cigarettes,'' he says. "And you can't sell that many cigarettes.''

So Oyster took matters to their logical conclusion. If it took $4 gas to get people's attention, he'd give them $4 gas.

"I'm going out with a bang,'' says Oyster. "And I don't care if I don't pump a gallon on the last day.''

Dealer prices gas over $4 in protest [SFGate via Freakonomics]
(Photo: Liz Mangelsdorf)

There's a lot of talk in the media about how gas prices are affecting consumer buying habits and hurting retail stores. What about you? Are you feeling the pinch? —MEGHANN MARCO

(Photo: superchou)

Take this example from the Detroit Free Press:

"My view is that when prices were exploding last spring and you got all this baloney about the world economy and China and India consuming more fuel, I didn't believe it then," said Jim Collins, a 70-year-old retired finance manager with General Motors Corp....

"But when the prices decrease as rapidly as they did in September, I thought" President George W. Bush "was doing that to set the stage to be treated favorably during the midterm elections," Collins said.

Please don't accuse us of being leftists, please, please...wahhhhhh! Is there an actual gas price conspiracy? Who knows. Here's something to help you find cheap gas after the election... — MEGHANN MARCO

Consumers grow suspicious as gas prices rise [DetroitFreePress]

He writes, "I looked at the pump, and the Ultra Premium 94 button was stuck. I pulled out the button so the next poor soul filling up didn't get stuck...I only noticed the mistake because I print out receipts for tracking my budget."

Sticky buttons turn to sticky fingers...

Price at the pump has yet to react to the initial supply disrupt as stocks are "adequate" and the spacer isn't due to impact for several weeks, LAT reported.

So for the time being, keep lighting those cigars with flaming barrels of crude.

"We will not resume operation of the field until we and government regulators are satisfied that they can be operated safely and pose no threat to the environment," said BP President Bob Malone in a statement.

WSJ reported the leak was around 200 gallons, which is less than five barrels.

While that might seem overcautious, BP is just exercising its short term memory. It wasn't but this March 2, 2006, when a BP worker discovered a large oil spill in western Prudhoe Bay. Over 267,000 gallons splooged out, the largest ever on Alaska's north slope.

Both the March 2 and this August's oil splooge were due to a corroded pipeline.

The Wall Street Journal offered some tips on getting the most out of your trip to the gas station. You may have seen the article already but we haven't and you learn through repetition, right? Tip 4 is pretty awesome.

There's also a free eBook [pdf 440 kb] from Lulu.com called 62 Ways to Save at the Pump.

There's also a thing called a bicycle.

[via StopBuyingCrap]

Exhibit A

Exhibit B

The equal voice given to such diametric views serves as a testament to the Trib's editorial integrity.

"A gas station's credit card promotion in Pennsylvania turned into a 7 hour price war with a competitor.

Both Latrobe Pennsylvania stations started out Tuesday with regular unleaded for $2.89 a gallon.

A BP station countered by offering the first discount. The independent station across the street took their price a few cents lower.

Within a couple of hours both stations were selling for $2.36 a gallon and drivers were lined up for blocks.

Just before 9:00p.m. both stations gave up the fight. They raised their prices back to where they started Tuesday."

"Pennsylvania Gas Price War" [WZZM13]

All of this in aid of uncovering that it's cheaper to fly than to drive.

Why? Because they're freaking journalists and that's what they do, hardcore investigative reporting. Not all journalism is done with press releases and calling up a Rolodex of usual industry mouthpiece suspects, you know.

"Driving a Hard Bargain" [via Fark]