The price of gasoline has gone up 20 cents in the last two weeks! The reason… according to one article I read is: Concerns over falling gasoline inventories from decreased refinery production and fewer imports have boosted oil and gasoline prices lately. On Wednesday, the government reported that total U.S. motor gasoline inventories fell by 3.8 million barrels to 216.4 million barrels, a sharper decline than the 1.4 million barrel drop that analysts had expected.
That sounds reasonable, I just don’t buy it (No pun intended).
I don’t mean to be a nay-sayer… well… actually I DO mean to be one. I have been driving long enough, paying for gas long enough, and watching the price at the pump long enough to know there is are much better predictors of when gas prices will go up. Here they are…
Predictor #1: Holidays. A week or two prior to any major travel holiday, the price of gas will increase. Currently the next travel holiday is Spring Break when thousands of kids and their parents take trips. THUS the price of gasoline increased. Included in this are the holidays of Memorial Day, Labor Day, Thannksgiving, Christmas, and New Years.
Predictor #2: A Hiccup In The Middle East. All that has to happen is for some Imam or terrorist to mention anything to do with oil exploration or production and gasoline prices will go up.
Predictor #3: Wall Street Bulls or Bears. If the market goes up, has a “correction,” or goes down will result in “panic at the pump” and prices will increase.
Predictor #4: The sun rises for two months in a row. That has to mean that somewhere something has gone unnoticed that should have caused gas prices to rise that has been missed by those who set the prices. So just to make sure, an adjustment will take place at the pump in the form of a price increase.
Predictor #5: The moon goes through it’s cycle for three months in a row. See above.
Predictor #6: Oil companies see a chance to make some money. Maybe this one should be #1 instead of #6.
I know all that may just be me venting my frustration over something I can’t control. But then again, maybe I’ve got a point! If you know of any other predictors that signal rising gas prices I’d like to hear them.
It is simple economics. Ninety percent of changes in gas prices can be explained through the interaction of supply and demand. For example, gas prices do increase around holidays; however, the holiday is not the reason for the increase in prices. The reason for the increase in prices is the increased amount of travel which increases the demand for gas during these times. Our expectations about what will happen with the stock market or in the Middle East also increase or decrease the demand for gas today.