FACE TO FACE: Gas prices go up and down in lockstep - is collusion the reason?
When pundits and analysts subject us to explanations about how supply and demand affects gas prices, I can't help but feel that they think we're stupid. Their flimsy, farfetched excuses wrapped in the immutable laws of supply and demand are becoming laughable.
News flash! "On Wednesday, a Venezuelan rebel group was seen drinking tequila together, in a Caracas cantina. Clearly a revolution is imminent in this oil-producing country. Unfortunately, this has exerted upward pressure on the price of gas."
OK, they haven't said that quite yet but it's getting close. A bad storm, a political protest in an Emirates somewhere, a trade imbalance, unemployment figures, overdue refinery maintenance, it's all grist for the price-raising-excuse mill.
When there is a drop in the price of oil and we ask why gas prices haven't dropped in response, the answer is, "Oh, we have an inventory of oil purchased at the higher price so this drop may not be reflected at the gas pump right away."
When the price of oil goes up, however, oil companies strangely haven't had the foresight to purchase an inventory at the lower price. Oil price increases never take a while to be reflected at the pump, they go up immediately or even before the news breaks, especially if it's a weekend or, God help us, a long weekend.
I love the insistence that there is no collusion in the setting of gas prices. What nonsense. Are we to believe that each gas company has sophisticated, hair-trigger machinery for measuring supply and demand that they use to independently and simultaneously conclude that a price hike is warranted? Older readers might remember little things called gas price wars. We don't see them much anymore, do we? But there's no collusion among gas companies.
Anti-trust cases that clear oil companies of collusion in fixing gas prices and insist that market forces control gas prices are counterintuitive corporate wagon-circling.
It's mostly sour grapes but I don't believe them anymore. Oil companies should just come out and say, "Look, we only have five or 10 years before cost-effective alternate energy sources are developed, so we need to gouge you while we can." I'd buy that.
Face to Face columnist Jim Nelson is a retired Tri-City teacher and principal who lives in Port Moody. He has contributed a number of columns on education-related issues to The Tri-City News.
