Wednesday, August 17, 2005

Soaring gas prices

I'm sure we can all agree that gas prices are getting ridiculous. Here is an article that asks how the spike has affected you:

Ken Brawley has done the math.

He used to commute from Denison to Texas Instruments in Richardson in his trusty pickup, a 130-mile round trip at 13 miles per gallon – or $25 a day at today's gasoline prices.

But now he and a dozen or so TI colleagues pile into a 15-passenger van in Grayson County and ride to work. Mr. Brawley, the captain and morning driver, rides free; the others pay $60 a month.

Pretty innovative. Makes sense to me.
The surge in gas prices – including a spike of 20 to 25 cents a gallon at some stations in less than a week – has many motorists rethinking their driving patterns, adjusting their budgets and sometimes abandoning their cars completely.
I certainly have. It costs me $100 per month for my truck to get to and from work.

One motorist, who gave his name as Marcus B., recalled a recent afternoon when he filled up his company truck at 4 p.m., then returned three hours later in his Chevy Lumina to find prices sharply higher.

"It's Bush. The government," he said while filling his tank at a 7-Eleven in Oak Cliff. "You need to pay attention to the low-income people in the world."

Say what now? You say that without anything to back it up. Idiotic people or bad reporting? I say both.

But the pace of price increases and uncertainty over the causes shake consumers no matter what their circumstances.

"That's the thing that's such a killer – you see prices spike up so quickly. And you wonder how it happened," said Dr. Suzanne Shu, an assistant professor of marketing at Southern Methodist University's Cox School of Business.

"We consider prices fair if we know what's driving them."

Actually, that's not completely true. I know that OPEC is part of the problem and I don't think it's fair at all, but that's just me. I understand the sentiment though. She must be neighbors with Marcus B., because neither is paying enough attention to what's going on in the world to understand the true problem.
Over the last 20 years or so, gas and milk prices have climbed more than 80 percent, according to the U.S. Bureau of Labor Statistics. But milk prices have increased gradually. Gas prices are up more than 50 percent in two years.

"The other thing about milk is that it just gets absorbed into the rest of the grocery basket," Dr. Shu said. "So if your bill is up a dollar or two, you don't know if it's the milk or the steak or the laundry detergent that's driving it."

Everyone seems to know the price of gas.
That's a good point. I just thought about this the past couple of months. I used to could get a gallon of milk for $1.99 regular price. Now I'm happy to see a gallon on sale for $2.50. And the same for 12-packs of sodas.
"Nobody's giving us a reason for this," Ms. Wood said. "I don't understand it."
Someone else not paying attention or looking things up.

"It seems like it's going to be like this for a long time," he said. "It's just going to keep going up and up."

Petroleum the new gold In the short term, that's probably true, and for a lot of reasons.

"It seems in the old days, in an uncertain market, gold bore the brunt of investors' insecurities," said Dr. James Smith, a professor of marketing at SMU's Cox School.

"They wanted to hold something that had value.

"Today, it seems petroleum has taken that role."

That drives crude oil prices higher, Dr. Smith said. So does an evolving world economy, particularly the strong growth in the emerging markets of China and India.
Both are major players in the global commodities market.

But that could change quickly in a major recession, and inevitably one will occur, he said.

"It wouldn't take another Great Depression to do it," he said. "A strong recession, like the kind we had most recently back in '97, would do it. Commodity prices will soften up, and oil will be leading the way.

"And gas prices will be back to $1.80."

And actually, gold is a horrible investment, but I understand the point.
I went to the pumps this past Friday and gas was $2.39 per gallon. Tom Thumb has a deal where if you buy $50 worth of groceries they give you 6 cents off per gallon at their pumps, otherwise you get 3 cents off with their reward card. I filled up with the 6 cent discount. The NEXT day the price was up to $2.43 and today it's up to $2.53! How in the HELL does the price go up that high that fast? Once again, it's OPEC taking advantage of the situation. I'd say we should definitely start drilling in ANWAR, but we all know where the opposition will go with that argument.
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