Gas Shortage

[cd34]

I was on a plane when the first Gulf War broke out. Gas was .99/gallon when I took off, $1.55/gallon when I landed.

Gas stations use average pricing, however, they also do anticipatory pricing. So, if they know the next tank is going to cost them 1.50/gallon, and the current tank was .80/gallon, they immediately raise the price to cover the 'new' tank cost.

However, due to some fluke in the economics, price drops do NOT filter down as quickly and take months to work in.

In some states, they are not allowed to raise the price until they get a new tank filled. Also, in some states the gas company cannot own any of the stations.

However, no matter what the gas station owners say (and I wanted to be an owner a few years back and am I glad I didn't do that), they are gouging because they can. Its a product that people need and no matter how much the customers bitch and moan, they will still buy gas.

Exxon did a ton of research to find out what type of advertising worked best to get people to buy their gas -- they determined that there are two factors that make their gas sell quickly. Company sponsored Gas cards or cheap prices. If you accept more people and get more gas cards out there, people will buy even if there is a slight premium because tomorrow's money is easier to spend than today's money.