Ups, downs of gasoline
www.timesdaily.com February 18. 2003 12:00AM
Gas prices got you down? They got to me a little last week as I drove to Montgomery and back for a meeting. I think the prices went up about a nickel between the time I left Wednesday and the time I returned Friday night.
The recent fuel price hikes seem to be a hot topic.
Q: Who makes the decision to either raise or lower retail gasoline prices? Also, why do all the major companies end up with price changes at the same time?
A: The decision to raise or lower gas or oil prices are entirely up to the individual companies that sell the products, but market factors seem to be the major thing prompting the changes.
Sometimes, those factors can be as simple as the time of the year. For instance, in the summer, when more people are taking car trips and vacationing, the demand is higher, and prices increase.
Lately, the threat of terrorist attacks, labor strikes in Nigeria and Venezuela, colder-than-average temperatures and the impending war with Iraq have caused gas prices to increase to the highest they have been since Sept. 11, 2001.
"It's just like milk or anything else you buy or sell," said Adam Kelley, a spokesman for AAA Alabama. "It's a market-driven product. It's supply and demand."
On Monday, Alabama's average gas price for regular unleaded fuel was $1.60 per gallon. That was up 18 cents from a month ago. Kelley said the South has been blessed with prices below the national average, so I guess we should feel good that we're about a nickel below the rest of the country.
Kelley said his office gets more complaints about companies that use the price increase to get a competitive advantage by artificially lowering prices in an effort to draw customers away from their higher-priced competitors.
In other places, prices are set based on what nearby stations charge. It's sort of like keeping up with the Joneses. When one goes up, the others follow suit. The cost from the supplier is roughly the same for all stations, but the individual businesses can choose how much to charge at the pump.
Q: What exactly is gas price gouging?
A: Price gouging is when oil and gas companies artificially increase prices at the pump even though the market factors haven't created supply or demand issues.
The AAA's Kelly said the national AAA office has recently expressed concern that "it's getting to the point where there are concerns about possible price gouging, but no one is saying it's happening yet."
Kelly said skyrocketing fuel prices certainly give consumers a reason to spend a little time shopping for the best prices.
"The thing that we would advise is to shop for your gasoline like you do your groceries," Kelly said. "A lot of people buy gas based on convenience. They need to look for the best deal possible."
Managing Editor Robyn Tomlin writes Just Ask, which runs Tuesdays in the TimesDaily. If you've got a question, e-mail it to justask@timesdaily.com, fax it to 740-4717 or send it to Just Ask c/o TimesDaily, P.O. Box 797, Florence, AL 35631. Include your name and contactinformation