Originally Posted by
Jack G
I have been trying to understand how the radical changes in the price of gasoline is determined. My simple analogy tells me price changes occurring at the pump are not consistent or closely connected with the changes in the price of crude oil.
Your first stop on figuring this out is a study of economics, without that, you are groping in the dark. The price of gasoline is WAY more volatile than, say, shoes, paper or even milk. WHY?
BECAUSE: The harnessing of energy is the fundamental change that came about during the industrial revolution. It took many of us away from the basic tasks of raising food (because harnessing of energy meant that farmers could produce so much, that most of us can pursue interests other than growing food); this led to a TREMENDOUS change in how our world functions. Energy and energy prices drive EVERYTHING and you will NEVER change this.
But it ALSO means that fluctuations in the gasoline supply (and petroleum supply, of course, since that's where gas come from) will drive hysteria and instability. Examples:
1) If gas prices are rising and I have 8,000 gallons in tanks at my station that I paid a low price for, I MUST raise my prices FAST so I have the capitol to pay for the next expensive trunkload.
2) The average consumer (who has an IQ of 100, but operates like their IQ is 45) will run out and buy "gas before it goes up more" - meaning demand just temporarily went up, driving up instability even more.
3) Energy is used to distribute and provide energy - in an unstable market, this is like "charging interest on interest" - it becomes a vicious cycle that no one can control.
But the above is not an answer to your question, and it's not meant to be. It is only a start.
When in college, I thought economics was going to be boring and I'd get my worse grade in those classes. As it turned out, I earned a 4.0 in both classes, I learned a LOT and the experience made me way less frustrated an angry about economic matters - only because I understand WHY stuff like this happens. You can blame greed or politicians or other countries or 'rich people' or dull-witted consumers or whoever you think is the problem. OR, you can understand what is really happening. Sure, policy and the profit motive are invovled, but then again, who here gives ANYONE a break when it comes to dollar bills? Not a damn one of us, the dollar rules all, and that is true for everyone who posts on this forum - and everyone who doesn't.