I just completed a road trip from my home in the Detroit, Michigan suburbs to Colorado and back. The trip took me through Indiana, Illinois, Iowa, Nebraska and Colorado, and we made a side trip to Wyoming. Gas prices in Iowa and Nebraska were the cheapest at around $4.30 per gallon or lower, I think mostly because of the higher ethanol content. The highest price was $5.79 in Joliet, IL and prices here at home are around $5.49.
#I've long pondered how it is that gas prices at nearly all local stations are the same, it is something that I think is artificial in that the prices don't change because a station's cost has changed but rather because the competitors price has changed. But, who decides to increase or decrease first? I would think that if there were real competition that there would be some variability in pricing.
#However, a thought recently occurred to me. The last significant fuel shock in my life time was in
the mid 70s due to an OPEC oil embargo, and the big story then was about long lines at gas stations. Why is it that there are not now long lines at the pumps? I think the reason is that the gas prices at all stations are in sync and change at the same time so that there is no real reason for people to queue up at one station over another. At current prices, if a station had prices at $0.05 or $0.10 lower I bet people would go to that station over another and soon there would be a line at that station until it ran out of gas. With the lack of variability in pricing there is no real reason to seek out a specific station and we continue using whichever is most convenient.
#I don't know exactly what is happening, but something just doesn't feel right, and I bet you the gas companies will be announcing record profits. Higher prices should be bad for business but not if all prices are the same. In this case the rising tide causes all fuel company profits to rise and that doesn't feel like a market, it feels like collusion, but I bet it never gets investigated let alone charged.
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