Wednesday, January 18, 2006

Can Someone Explain Gas Price Fluctuation to Me, PLEASE?

Anticipating slower traffic this morning due to the snowfall overnight, we left a little early for work this morning. I was impressed to see gas prices for $2.09 at one station, and told Alaina we would have to stop there on the way home to fill the Jeep. I didn’t think we had time to fill it then, despite our early stop.
On the way home, as that same station came into view, my jaw hit the floor: $2.45! It was a 36 cent increase in less than twelve hours! As Alaina pointed out to me, things could have happened today that I don’t know about, but this was as if we had just declared war on Iran or something. We didn’t, did we?
So anyway, still reeling from the shock, and thankful to find another station selling unleaded for only $2.35, I began pondering, what in the world makes gas prices fluctuate so much – seventeen percent – in one day? Can anyone explain this to me, or point me to a site that does? My E201 Microeconomics class in college gave me some understanding of pricing based on supply and demand, but it didn’t prepare me sufficiently to understand this . . .

4 comments:

Margaret said...

It's America, dude. :) Haha, I don't think that makes sense.

Andrew & Alaina said...

You made me laugh, but I'm really looking for a more detailed (and accurate) explanation :)

Jen said...

I took 1.5 years of economics and my conclusion is that the big oil guys everyday get together and spin a wheel and make bets and whoever wins the bet, makes up a number off the top of their head and they all get a good laugh b/c they are making TONS of money.

(did I mention I got a C in all my econ classes?)

Catherine said...

There was an article about this in the Star today - something about people getting spooked about Iran and Nigeria and whatnot. Oil by the barrel prices rose precipitously, which then affected the prices at the pump...

It seems like the smart thing would be for everyone to get together and agree not to get spooked over stuff that hasn't even happened. It seems like that would be a smart thing to do with the stock market too...