Sunday, October 12, 2008

Shocking: Gas prices collapse

How many months ago was it when we were shocked at gasoline prices bouncing well above $4 a gallon? I think it was June or so. I took a long road trip in July, over 5,000 miles, and spent $800 on gas.

Now we're in a national if not global financial crisis, and gas prices are plummeting. Down like the Dow is down. A few days ago a friend exclaimed that she'd just paid $3.70 a gallon, and there we were passing a station with gas at $3.49. Ripped off for two bucks!

So, today what did I do when I saw gas a hair under $3.10 a gallon? I looped back around, stopped and took a photo of the sign, and took on a half-tank of unleaded regular. This was in Key Largo at the Liberty station. Later I saw the same price at a station on Palm Drive in Florida City. More typical was $3.19.

Excuse me, where is supply and demand in this gyration? We need to stop spouting this garbage about supply and demand ruling our prices. There may be suspicions that future changes in real supply and real demand may cause some difference in prices, but the prices went to the sky because of a frenzy of greed among those with the power to raise prices. Now the prices are coming down because those people sense the mobs with pitchforks around the corner.

Try this argument sometime with the person who tells you that he had to raise the price you pay because of inflation. No, inflation is what comes from individuals deciding to raise prices -- or to pay higher prices to their suppliers. It's zillions of those individual decisions that cause inflation. Prices don't go up on their own. This is one of the problems we have with our capitalism. We regard its outward effects as immutable as dogma. We think the effects stem from heavenly rules, and meekly bow down and submit.

Sorry, supply and demand is a theory.

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