(Weather Guru)
Wed Aug 31 2005 10:26 PM
Re: Katrina Domino Effect

I'll echo that sentiment with Lakeland, FL I go to work at my school around 6am. On Tuesday morning going to work, gas was around $2.61. By the time I passed by on the way home from school around 3pm, it had moved up to $2.73. So, figure about 12 cents in 9 hours.

Today beat even that. My wife and I were going out to dinner. Passed by a gas station at 4pm. Price was $2.73. By the time we came by at 6pm after dinner, it was $2.79.

Whether it was coincidence or not, every gas station I've seen so far in Lakeland that spiked prices over the last 2 days has been a Citgo or a Shell. In fact, right now there are BPs directly across the street from Citgos (one by my house in fact) where the BP is holding fast to $2.63 while the Citgo is at $2.79. I can tell you with all honesty it will be years before I will ever get gas at Citgo or Shell again.

What I never understand (well, I know why, I just don't like it) is how the gasoline industry is one of the only industries that is always allowed to break the law without repurcussion. I worked in retail - I know how the industry works. I buy X number of goods at price Y. I want to make a profit, so I sell my goods at price 1.2Y (for a 20% markup profit). Now, I've already paid for those goods that are sitting on my shelf. If the cost to me to buy them suddenly goes up, it literally does not affect my instantaneous profit margins if I sell what I still have at my current price. If I want to buy more goods to sell, sure, I'll pay more for mine, but I can choose to raise the prices to cover that extra expense to me once I've bought and paid for that new batch. That's how it should work.

The gas industry, though, gets to hold us at gunpoint, as it were. Bob can have 10,000 gallons in the tank in the ground he paid $2.50 wholesale for, and he chanrges $2.69 at the pumps for profit. That's fine. Now, crude closes a little higher on the markets. Bob suddenly goes out to his sign and jacks the price up to $2.79. Did Bob have to buy more gas at a higher cost to him? No, not yet. It's the same 10,000 gallons in the ground.

How is that not considered illegal price gouging under many states' laws? In Florida when we had the hurricanes hit here, our Attorney General was going ape and hitting on stations like mad with fines/etc. So ... why aren't they doing it now? If that Citgo had a tanker pull up today and offload a full new tank of gas, I could justify his higher prices, since he's got to make his profit for that newer, more expensive fuel dump. I'm betting my butt, though, he didn't get a new tanker today. He's prospecting - trying to take advantage of "panic pumpers" to line his pockets. Sure, he's going to have to pay more for his next supply, but do you honestly think that he'd have absorbed that cost and not raised prices later? Yeah...I thought so.

This is what infuriates me the most right now. These people raising prices at gas right now should be held accountable by the law under the price gouging statutes. They should have to provide documentation of higher paid-for prices before they should legally be allowed to raise gas by a certain percentage increase.

I know, this is a myopic consumer view of the free market system, but it's one born out of frustration with the stranglehold the gas industry has on our lives. I'm watching countless images of devastation, loss, anguish, and I've yet to have my soul recover from the pain I feel watching it. And then I go out, to try and get some balance, and I come across gas stations profiting out of misery and panic, and it infuriates me to no end.

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