Wednesday, September 10, 2008

Hey, it's time for the weekly gas rant. Gasoline on the market was down $.12 per gallon yesterday. At the local stations here, it was up from $.15 per gallon to $.22 per gallon.

There's now a $.37 per gallon difference between what gas costs the station and what they are selling it for. How the heck does that get explained? Oh that's right. Supply and demand. Wrong.

Demand is down between 5-7% year over year. Oil is now $43 cheaper per barrel or approximately 30% cheaper than its all time high. Gas however is only down 9%. Well, at the stations it's only down 9%. On the market it's down 26%. Last time I checked, 9% wasn't even close to 26%. So it proves that gasoline prices have very little to do with supply and demand, but everything to do with perception.

Even though hurricane Ike is going to miss the important oil infrastructure of the gulf, the perception among the public is that "this is bad, now oil will go up." Well, in fact, oil on the market has gone done. To a cheat, perception is reality though. So because the perception among the public is that oil should go up, it goes up at the stations. Ignoring the fact that demand is way down. Ignoring the fact that it's far cheaper on the market than it has been. Ignoring reality.


Plang said...

So what is the actualy cost per gallon there? Right now I'm dealing with $3.89 a gallon. I think we're getting hosed.

Tim said...

Our gas is $3.74 now. Our taxes are $.68. That means that gas on the market should roughly be $3.06. Instead, gas on the market is $2.69. That's where the $.37 difference comes from.

boilerdowd said...

$3.95 went up $.30 yesterday afternoon.