We couldn't have picked a better time to take a family road trip. I'm not as surprised by the sudden hike in the price of gas as I am by the reaction of other people to it.
Thursday morning, I had to get gas. I had been putting it off. So I was kind of shocked to see all of the people in cars, loitering around the pumps, waiting for someone to pull out.
I guess the fear of having to spend an extra $2 per tank of gas is too much for people.
It's really a bit nonsensical. I mean, you have to be out driving in order to get gas. Did you think that the gas in your car was suddenly going to dry up or something? It's silly, pulling into the pumps to top off your tank an maybe save $.50. Worse yet, it just gets everyone worked up about a shortage of gas.
Actually, that's what I'm worried about more than paying $210 for a round trip in the van down to Virginia this coming week. I don't want to get down there and then find out that there's no fuel available for me to get back. Did you see that some places in Georgia were charing upwards of $6 per gallon?
Here's a thought for all you Europeans who are already paying double what we do for gas: If your gas prices increased by 20% overnight, you'd be howling, too. As I have said before, maybe your prices are higher, but your countries don't run on gasoline like ours does.
It's a big scary cascade. I've already seen store prices on grocery items increase by a measurable amount as a result of this gas business. People I know are looking at the price of gas and wondering how they're going to afford the travel required for their jobs or to get food. I fear that if they do make it to the store, the prices will be much higher than they expected.
Think about it... Higher price of gas, leads to higer cost of delivered items, leads to reduced purchases of non-essential goods, leads to higher prices of essential goods, leads to reduces purchases of essential goods, leads to stores closing and hunger. Just basic economics.
We're never going to see gas prices in the $1-$2 range again. I would be surprised if gas ever dropped below $2.50 again. On the radio yesterday, an economist was talking about how the price of gas never really adjusted with inflation. We should actually be looking at higher prices for gas than we currently are.
Another interesting item I picked up on the news- Service stations pay for all their gas in bulk, and then charge pennies on the gallon as their share to earn money. So when they're faced with an extra $10,000 for a shipment of gas, most privately owned stations don't keep that kind of cash on-hand, and so they don't buy their gas.
Now I expect that if the price of gas returns to normal, they may buy back in, but that means there could be many potentially closed service stations around.
Moreover, you'd think that a station run by a gas company - Mobil, Texaco, Shell - would not have this problem since they're getting the gas from the source. Not so. Mobil, for instance, doens't own any service stations in the US any more. They apparently saw how all of the big convenience stores were selling gas as a loss-leader to their high-profit consumables (You come for cheap gas that turns them no profit, but you buy a $.02-valued cup of coffee for $.95.), and they said, "Screw that! You people sell our gas, we're outta here!" And now the only people selling "Exxon/Mobil gas" are the Indian guys on the corner who pay more and more for the franchise license each year.
As a result, you'll note that the price at a gas company-branded station is higher than the price at the convenience store across the street, where they're buying gas in bulk for a region, and they don't care that they don't make a profit on it.
Judging by the way my boss at work (have I mentioned that I work for a petroleum industry construction company?) flew out of the office for an emergency today, it can only mean one of two things: Somebody got hurt or something's on fire.
I think they're working on a local fueling station, but we do do work in Baton Rouge. I wonder how soon before our guys are back down there making everything work right again. What a mess.
Maybe it's callous thinking about how I'm going to pay high prices for gas while on vacation, while there are so many people suffering from the hurricane, but consider: If someone doesn't do something about gas, we're going to have a much more widespread problem than what is now being concentrated on in Louisiana and Mississippi.
