Friday, June 30, 2006

Integrity in Gas Prices

I support the concept of those companies who process crude oil and/or sell gasoline to consumers to make a profit. There has been much activity with gas prices going up and down on a regular basis. The price of a barrel of oil is constantly changing. What this article is about is the fact that gas prices at service stations are constantly changing. This occurs even when the same supply is in the tanks to be sold. Deliveries do not occur as often as the change in gas prices.

The change in gas prices at gas stations brings into question why the prices are changing so much with the same supply in the tanks. The price of gas should remain the same until a new supply is delivered. The price charged can be calculated based on the amount of gallons left and the number added to the tank. The cost of supply is known for both quantities. If prices were adjusted based on delivery of additional supply, then the prices would be more stable at the pump and, I believe, the public would be less likely to be irritated. At least the price changes would have some degree of logic.

I must state we all like to see gas prices go down for whatever reason but we do not like to see prices go up. The most logical sense would be to have a more stable/consistent price. This would allow the public to better adjust their driving habits where they can. With the constant change they cannot plan in their budget how much they will need for gas to go to work, run errands and other necessary traveling. It has also been stated that the changes in the price of a barrel of oil takes a few months before the supply at the pump is affected. However, when the price goes up on oil, the price at the pump seems to go up at the very report of higher oil prices.

The information in this article, I believe, is something that everyone seems to have an opinion about. We must understand the nature of business to make a profit but when the perception is that business is charging higher prices than what the public feels is normal, the public becomes irritated. Those in the business of processing crude oil for delivery to gas stations must understand that the operation of their business is not well received with the public.

There has also been much information about the fact that there are different requirements for gasoline and environmental concerns from various states. I understand the need to satisfy the needs of individual states to impose environmental requirements. If states would discuss their needs and generate a set formula for content of gasoline production it would ease the process of creating gasoline for the public. This, I believe, would help to reduce cost and possibly reduce the price at the pump. Anytime a common set of criteria for a product is established, it is beneficial to the overall process and efficiency. If the process were to become more efficient then the oil companies would be able to charge less for each gallon sold.

In summary we as individuals can reduce our need for gas if we consolidate trips and walk to those places we can instead of driving. If states were to discuss their needs and generate a consistent formula that could be applied to all states then the possibility exist that gas prices could be reduced. Oil companies need to make a profit to stay in business as all companies do but if the efficiency can be increased the cost would be reduced and a potential reduction of prices at the pump.


Post a Comment

<< Home