Saturday, April 07, 2007

Gas prices

It's not even close to being summer and gas prices are on the way up. Somehow the detention of the British sailors in Iran helped increase prices.

I still don't understand how an event like this leads to the immediate increase in the price of gasoline. I understand why it would raise prices for crude oil but how does the price of gasoline (which has already been refined, processed and is in the pipe line) increase because of this crisis. I just don't get it.

As to prices here's a tale of two gas stations. One is a BP. One is a Hess. They are about two blocks apart from each other on Rhode Island Avenue. At BP the price for regular is $2.95 a gallon. At Hess the price for regular is $2.73. That's a difference of 22 cents a gallon. Who in their right mind would be buying gas at the BP station.

I have to assume that this is the precursor to $3 a gallon gas for the upcoming summer.

1 comment:

Arthur (AmeriNZ) said...

The oil companies will look for whatever excuse, no matter how irrelevant, to raise prices (and their profits). Some petrol stations here used to say they couldn't cut prices when the price of crude dropped because they had to sell off the more expensive petrol they already had. Of course by that logic they should hold-off raising prices until the cheaper petrol is sold off, but it doesn't work like that--they do everything they can to keep prices up.

And, just FYI, petrol prices here on Friday (around NZ$1.52 per litre) were the equivalent of US$4.13 per US gallon, and that was after an Eater Weekend price drop. Prices are generally the same among all stations in an area, which actually leads people to suspect collusion and conspiracy in pricing, even if it doesn't exist (I have no evidence either way).

So, if there's a wide price variation that could be a good thing for those who shop around, but a bad thing for those who can't.