Saturday, March 17, 2007

Gas price conspiracy? Revisited



I suppose that I should have expected it. I was at a gas station today, and the price was about $2.60 per gallon. Two of the other customers were extremely upset arguing that the pump price was going up at the same time that the crude oil price was going down. They were claiming that the price had nothing to do with the cost of gas to the gas company. Well, I tried to argue with them, but it was obviously futile. Just on the microscopic probability that these two gentlemen actually read my blog, the figure from gasbuddy.com shows that the price at the pump is closely related to the price of crude oil. The most obvious difference is that the price at the pump doesn't vary as much day to day as the price of crude because gas companies bear inventory costs to smooth out these price swings for their customers.

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