These prices are nuts!
OK... recently I was thinking about not having posted to this weblog in a while. I just haven't had anything worth commenting about. This morning, gas prices went up from yesterday's prices by 25 cents or more per gallon. I decided to share my feeling of shock. The highest price I saw today was $3.56 per gallon (super unleaded). I am sure the same station was selling gas for 60 cents less per gallon the day before.
No true economic force works that fast. These changes are purely emotional and not based, in a strict sense, on the theory of "supply and demand" that we heard so much about in high school. Sure, the refineries damaged by hurricane Katrina in the Gulf Coast area are causing a fuel shortage scare, but come on! Aren't we smart enough to see past this? I could see a gas station owner jacking up prices when it cost him A LOT MORE to fill up his underground tank and was therefore forced to pass it on to consumers. Luckily, I gassed up earlier in the week. These increased gas prices haven't affected me yet because my tank is full. Why then are they affecting my local gas stations? Just like myself, I am sure he didn't buy any fuel since yesterday. If it's not costing me any more to drive my car than it did yesterday, then why is it costing him more to pump gas than it did yesterday?
What worries me is that we have crossed the $3.00 line. If people get used to seeing that big number 3 up on the price signs, they may forget that anything over $2.50 seemed outrageous to them at the start of the summer. If the government taps the reserves, will prices drop drastically the next day? I think not. The reason that will be given is that it takes time for the increased production to affect the market.
So let's recap... negative things have immediate effects on economics but positive things "take time" to result in economic improvement. Got it?
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