I remember the original gas crisis. One dealer was charging twice the normal price. I think it was $1.69 a gallon in 1973 (old old memories). People were paying the price when it was not available anywhere else.
When you have been in business, you might understand some of the complexities of protecting your income.
I too remember the so called gas shortage of the early 70's when gas went from approximately $.30 gallon up to around $.65 per gallon, but as soon as the oil companies got the prices where they wanted them the crisis was over. Then a few years later in the late 70's early 80's I don't remember what they used as their gimmick for raising prices that time, but that is when gas went to approximately $1.00-$1.25 per gallon. Then a couple years ago there suddenly became a shortage of refineries and that is when this last price increase started. I don't know what the price of crude is right now but I know Monday that it was at about $95. a barrel from an all time high of about $147. which is a drop of just over 35%, but gas prices haven't reflected a 35% decrease. As a matter of fact since the summer's high,
before Ike of $4.099 gas had only dropped to $3.659 which is less than an 11% drop. The pricing I used for my example is in the immediate area around my home. (Within 10 miles) I have operated business of my own several years ago and I found that being fair and treating your customers the way you would like to be treated usually brings them back.
But then again I remember when Katrina hit our gas prices went up .30-.50-1.00 very quickly and talking to people in the south they were really confused because they didn't go up at all. And supposedly same thing, fuel shortage caused by Katrina damage but then why would FL, GA and the carolinas not be affected at all.
I fully understand the need to have a reserve capital on hand in case prices suddenly shoot up for crude and for a while the price of crude was appropriately inflated to justify their crap, but seriously I haven't seen any international news of supply really being down in the last 3+ years and meanwhile Mobil has increased their profitability about 100 fold to the tune of over 3 billion/year or something. Clearly they don't need all that in case gas crude goes up and they're just increasing profit margin because they can.
If memory serves me right I think the Carolina's did see quite of bit of an increase in fuel prices when Katrina hit.
Yep, that's crazy, hopefully you're doing alright up there and still have power... I'm seeing the same around Louisville. 87 was at or below $3.99 on Friday, but with Ike approaching Texas they started raising the prices that afternoon. I was seeing $4.15-$4.21 on Saturday. Then the remnants of Ike hit and did some serious damage to the area, knocking out power to the majority of the area and many are still without power and will be so for a week or more. I saw $4.35 yesterday, and one report on the news showed a sign showing $4.99.
With everyone in the dark, gas has suddenly become a precious resource. Those stations that do have power either have bone dry tanks or have some seriously long lines. The news shows people running out of gas waiting in line, and some are even getting into fights over it. It's chaos. I've never seen anything like this before. Glad I topped off before this mess.
Thanks, hope you did well through the wind storms! I faired pretty well through the storm but I still have friends today w/o power! Yikes... grocery stores tossed out all their perishables in fear of liabilities of selling the goods, that was SAD SAD SAD to say the least... hundreds of thousands of dollars of food thrown out, and they weren't allowing ANYONE to take it.
I haven't paid attention to gas prices because I won't need it for another 10 or 12 days, but I think it's still up around $4.30 for unleaded.
I don't know what the price of crude is right now but I know Monday that it was at about $95. a barrel from an all time high of about $147. which is a drop of just over 35%, but gas prices haven't reflected a 35% decrease. As a matter of fact since the summer's high,
before Ike of $4.099 gas had only dropped to $3.659 which is less than an 11% drop.
We'll never see a 1:1 relationship between the price of crude oil falling and the amount gas falls. That could only happen if the cost of crude was the only thing going into the cost of gas. But since you have all these other fixed inputs on the price of gas, the relationship cannot be even. However, cost of crude accounts for almost 75% of the cost of gas, so in your example, if crude drops 35%, gas should drop 26%. But obviously something is amiss since it only went down 11%.