Friday, August 27, 2004

Consumer Tip of the Day

As I was confronted with another $2.15/gallon gas station today, I thought about the reasons for the spiralling gas prices. One reason, of course, is the increasing demand, both here in the U.S. (where demand is ever-increasing) and places like China (which is undergoing rapid development). Another reason for gas prices, in my belief, has to do with the rapid consolidation of the oil industry in the 1990's.

But another factor is the separation of gas prices from fluctuations in demand. In most industries, if prices shot up by 100% over a couple of years, demand would decrease. But gas companies (and OPEC) can confidently raise prices knowing that--in the short term at least--people will still need a relatively similar amount of gas.

On the most minute level, there's the question of what to do when you are in the middle of nowhere and your car is out of gas and the only station around is Shell, a company that seems to take the whole "black gold" thing a little too seriously. What I do whenever confronted with these situations is I buy gas, of course--but in relatively small denominations, two or three gallons. Later, once I find a station with a rate that's more reasonable, I will fill completely fill up my tank. I know I'm beating you over the head with what is already obvious to practically the entire world, but let me say it a bit more clearly. Don't fill up your tank all the way at gas stations charging prices higher than local competitors! Thank you. This has been a consumer advice moment brought to you by the National Association of Affiliated Gas Consumers.

On another note, look into them hybrids. I'll do the same, the next time I purchase a car, though I'm thinking about shifting to public transportation for a few years.


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