Gas Robbery Re-visited

I predicted, in my New Year's blog post, that we would continue to complain about high gasoline costs regardless of the price. I am hearing it everywhere I go, yet the price is relatively low. I too am perplexed about current prices, and therefore complaining.

The world price has been in decline for some months now and the price of gas has also gone down, but not totally proportionally. This is bad enough. But now, while the world price of oil is hitting 5 year lows and dropped even further today, the price at the pump has increased 22% in the last 10 days, from 72 a litre to 89.

I must give the gas companies credit for being creative in their explanations and justifications for this increase. This is what they say. "The demand for gas is increasing because of its low cost. People are driving their SUVs again and it is putting demand on the supply, therefore the prices are rising."

Now, I am one for market pricing and paying a fair price for a commodity, as long as there is not monopolistic gouging going on. But here is why this explanation just does not make sense to me. The last time I checked, gasoline was refined from crude oil. Crude oil prices are dropping because of lack of demand. There is a connection here. How can demand for something be up, and down, at the same time? I think, in fact I know, that the oil companies are not making much money when the world price is below $40 a barrel. Therefore, they are making up for it by charging more for the refined product, a strategy that has always been based on world prices, but now is not.

It was not that long ago that gas was in the low 60's and there was huge demand. There was no raising prices because of demand then, as eventually the rising world price pushed up the end product. Why is it different now?

We consumers are at the mercy of the collusion of the major oil companies. When will we get organised and boycott one specific brand until that company brings their price down, thus forcing a price war? It is the only way.