Supply and Demand: The magic words that govern our economy.When the supply goes up as the demand decreases, prices drop.When the supply gets skimpy as the demand increases, prices increase.That's all an American needs to know about economics.Well, most Americans know this already and they are not too happy about it when it comes to gasoline.
The supply of gasoline depends on the availability of crude oil.The supply of gasoline depends on refining capacity.The supply of gasoline depends on distribution capabilities.Right now it seems there is plenty of crude, the refineries are keeping up (after a sag due to Katrina), and the tankers keep pulling into the service stations with gas to spare.The Gasoline Shortage of 1973-1974.In 1973-1974, you could buy gasoline only on odd days or on even days, not both.
Some stations were out of gasoline. What happened to cause those unfortunate conditions? Read about it at http://en.wikipedia.org/wiki/1973_oil_crisis.The 1974 shortage was a pain to me because I was traveling around the country at that time. I rented a car at Hertz and was told, "You have about an eighth of a tank.
You can fill it up on the New Jersey Turnpike today because your license plate says so. Don't wait until tomorrow! You won't be able to get gas.".That was called the "odd day" and "even day" system.I thought, I probably have enough to get back to the airport.That is called "fanciful thinking.
".I found myself in the deep stuff and had to find some "illegal gas." I was lucky, the company I was visiting gave me a shot out of their pump but they were not happy about it.
They were under the same restrictions as the service stations. They could have all gone to jail.To see what happened to create the gasoline shortage of 1973-1974 go to http://en.
wikipedia.org/wiki/1973_oil_crisis It started with the Arab's being angry over the Yom Kippur War, restricting supply to those they didn't like such as Israel's allies (us), and OPEC's desire to quadruple the price of crude.The Gasoline Shortage of Right Now.The lowest cost I can remember for gasoline is about 10 cents per gallon.
I guess I'm getting old. Even after WW II the gasoline price in Salt Lake City dropped to 13 cents during some gas wars. The lowest post-war price I remember was at a Stinker« Station.
The price was 11 cents. It stayed that low for only a couple of hours.Some say that the current cost gauging is due to Bush War II. We are supposed to be getting 25% of our oil from Iraq, the reason for the war.
However, production is continually interrupted by the insurgents and we get less. But this problem existed before the present price hikes.There is a great worldwide demand for oil. Because of China and India and other countries who want to enjoy the internal combustion engine, the demand is going to get worse.
While oil reserves diminish those that control oil are getting every penny possible from each barrel.We Americans are use to low fuel cost.That's why we buy SUVs that gobble up a gallon every few miles.
In Idaho every farmer and would-be-farmer has a truck with a huge engine that gulps down gasoline like a bear in a camp kitchen.We get angry with high fuel prices.I often traveled abroad back when I worked for a living.I became use to the high cost of gasoline. A liter of gasoline in England cost about the same as a gallon of gasoline in the states.
Not once did I ever hear an Englishman complain about the cost of gasoline which came from the North Sea crude just a hop and a swim away.I have some sad news for Americans. The oil magnates just love to gouge us and the government could care less. We will continue to pay through the nose.A Lesson in Economics: What governs gasoline price?.The following two URLs will tell you something what goes into the price of a gallon of gasoline: http://www.
html and http://www.econedlink.org/lessons/index.
cfm?lesson=EM60&page=teacher.The largest costs included in the price you pay at the pump are the cost of crude and taxes. That is typically about three-fourths of the total.
The rest is refining and distribution cost and profit. Lately the oil magnets have been juggling the item called "profit." That's easy to do if the price of crude goes up. They can just use the percentage method and make trillions of dollars.What Can We Do to Reduce our Gasoline Cost?.
There are a number of sources on the Internet suggesting what you can do to reduce consumption. One that is not mentioned is that you can just buy the amount of gasoline you need for a few days instead of filling your tank. Alternatively, you can let your tank drop to ╝ and then fill it up. What are we doing here? We are reducing the storage of gasoline in our tanks.
This for a while will reduce consumption, the supply will go down, and the price should follow.Of course, once everybody starts doing this the average daily consumption will stabilize again and the price may or may not.There are those in some areas who are able to stockpile gasoline at a low price by joining a club that has the storage capacity and is willing to pay for the computers it takes to manage the program.
Right now some people in such clubs are paying as low as one dollar a gallon or even lower. They paid for the gasoline some time back and now they are cashing in on their wisdom. When the price of gasoline goes down, they don't go to the club station.They want to preserve their very-low price gasoline.
My, they are smart!.Taxes are based on a fixed tax per gallon. Go to http://www.lowellsun.com/business/ci_3837609 to see what the tax is in your state or area.
Some states like New York not only charge an exorbitant state tax but also county taxes.Some states are temporarily suspending the gas tax.Other states are considering reducing the tax.
Wherever there is talk of reducing or suspending taxes there is fierce opposition. (See the above URL.).You can't imagine the excuses given for keeping the tax.
One is that we would not conserve gasoline if the taxes were lifted.Politicians just know everything.Where do you buy your gasoline?.One of the suggestions you find in the articles below to save operating cost is to shop around for gasoline. Some web sites give the lowest gasoline prices by area. I suggest that you try http://www.
gasbuddy.com/.The lowest price for me is at Costco. You have to be a member but there is always a significant price reduction per gallon.
The lowest reduction that I have seen is about 10 cents per gallon but recently I've seen 30 cent reductions.Things you can do to reduce gasoline consumption.Following are some web sites that give ideas to reduce gasoline consumption:.To read 31 ways to reduce consumption go to: http://www.
howtoadvice.com/savinggas.To read 45 ways to reduce consumption go to: http://www.howtoadvice.com/ReduceGasBills.
To chose the proper octane for your vehicle go to: http://www.howtoadvice.com/GasOctane.
To read a PDF from Big Brother go to: http://epa.gov/otaq/consumer/17-tips.pdf.To become more frugal about energy cost try: http://frugalliving.about.
com/cs/savinggas/a/savegas.htm or http://frugalliving.about.com/library/weekly/aa022503a.htm.For some good information from Advance Auto Parts try the following URLs: http://www.
advanceautoparts.com/english/rtsg/default.asp http://www.advanceautoparts.com/english/youcan/html/ccr/ccr20030101gm.html and http://www.
The bottom line is that we must conserve.What do you think would happen if we decided to buy gasoline only when we absolutely had to and then just enough to get us to where we are going? We could back up the pipelines, the ports, and the distribution centers.There would be a surplus again and the price would go down.
What if we combined trips, eliminated other trips by car and truck, and used our bicycles more or even walked to the store? There would be a surplus again and the price would go down.What if we parked that gas hog in the driveway and purchased a gas miser like the Toyota Corolla« or other such vehicles? There would be a surplus again and the price would go down.What if we just slowed down?.The wind-resistant force increases with the square of the speed of the vehicle. That was the purpose of the national 55 mile per hour speed limit, to save gasoline and diesel fuel.
Well, Texas is in the process of raising their speed limit to 80 miles per hour.Those Texans just have to get there!.But what if we individually decide to reduce our gasoline consumption?.
The supply of gasoline would increase and the price would drop.Well, I just love to dream.The End.
Gasoline, price, gauging, crude, refining, government, taxes, conservation, better, mpg, economics, supply, demand.copyrightę2006 John T. Jones, Ph.D..John T. Jones, Ph.D.
(firstname.lastname@example.org, a retired VP of R&D for Lenox China, is author of detective & western novels, nonfiction (business, scientific, engineering, humor), poetry, etc. Former editor of Ceramic Industry Magazine. He is Executive Representative of IWS sellers of Tyler Hicks wealth-success books and kits. He also sells TopFlight flagpoles.
He calls himself "Taylor Jones, the hack writer.".More info: http://www.tjbooks.
com.Business web site: http://www.aaaflagpoles.com.
By: John T Jones, Ph.D.