When pundits and analysts subject us to explanations about how “supply and demand” affects gas prices, I can’t help but feel that they think we’re stupid. Their flimsy, farfetched excuses wrapped in the immutable laws of “supply and demand” are becoming laughable.
“ On Wednesday, a Venezuelan rebel group was seen drinking tequila together, in a Caracas cantina. Cleary a revolution is imminent in this oil producing country. Unfortunately this has exerted upward pressure on the price of gas…” O.K. they haven’t said that quite yet, but it’s getting close. A bad storm, a political protest in an Emirates somewhere, a trade imbalance, unemployment figures, overdue refinery maintenance, it’s all grist for the price raising excuse mill.
When there is a drop in the price of oil, and we ask why gas prices haven’t dropped in response, the answer is, “Oh, we have an inventory of oil purchased at the higher price –so this drop may not be reflected at the gas pump right away.” When the price of oil goes up, however, oil companies strangely, haven’t had the foresight to “purchase an inventory” at the lower price. Oil price increases never “take a while to be reflected at the pump”, they go up immediately or even before the news “breaks”, especially if it’s a weekend or (God help us) a long weekend.
I love the insistence that there is “no collusion” in the setting of gas prices. What nonsense. Are we to believe that that each gas company has sophisticated, hair trigger machinery for measuring supply and demand that they use to independently and simultaneously conclude that a price hike is warranted? Older readers might remember little things called “gas price wars”. We don’t see them much anymore, do we? But there’s no collusion among gas companies.
Anti –trust cases which clear oil companies of collusion in fixing gas prices and insist that “market forces” control gas prices are counter –intuitive, corporate wagon -circling.