| Supply and Demand: The magic words that govern | | | | “profit.” That’s easy to do if the |
| our economy. | | | | price of crude goes up. They can just use the |
| When the supply goes up as the demand decreases, | | | | percentage method and make trillions of dollars. |
| prices drop. | | | | What Can We Do to Reduce our Gasoline Cost? |
| When the supply gets skimpy as the demand | | | | There are a number of sources on the Internet |
| increases, prices increase. | | | | suggesting what you can do to reduce consumption. |
| That’s all an American needs to know about | | | | One that is not mentioned is that you can just buy |
| economics. | | | | the amount of gasoline you need for a few days |
| Well, most Americans know this already and they are | | | | instead of filling your tank. Alternatively, you can let |
| not too happy about it when it comes to gasoline. | | | | your tank drop to ¼ and then fill it up. What |
| The supply of gasoline depends on the availability of | | | | are we doing here? We are reducing the storage of |
| crude oil. | | | | gasoline in our tanks. This for a while will reduce |
| The supply of gasoline depends on refining capacity. | | | | consumption, the supply will go down, and the price |
| The supply of gasoline depends on distribution | | | | should follow. |
| capabilities. | | | | Of course, once everybody starts doing this the |
| Right now it seems there is plenty of crude, the | | | | average daily consumption will stabilize again and the |
| refineries are keeping up (after a sag due to Katrina), | | | | price may or may not. |
| and the tankers keep pulling into the service stations | | | | There are those in some areas who are able to |
| with gas to spare. | | | | stockpile gasoline at a low price by joining a club that |
| The Gasoline Shortage of 1973-1974 | | | | has the storage capacity and is willing to pay for the |
| In 1973-1974, you could buy gasoline only on odd | | | | computers it takes to manage the program. Right |
| days or on even days, not both. Some stations were | | | | now some people in such clubs are paying as low as |
| out of gasoline. What happened to cause those | | | | one dollar a gallon or even lower. They paid for the |
| unfortunate conditions? Read about it at | | | | gasoline some time back and now they are cashing in |
| The 1974 shortage was a pain to me because I was | | | | on their wisdom. When the price of gasoline goes |
| traveling around the country at that time. I rented a | | | | down, they don’t go to the club station. They |
| car at Hertz and was told, “You have about an | | | | want to preserve their very-low price gasoline. |
| eighth of a tank. You can fill it up on the New Jersey | | | | My, they are smart! |
| Turnpike today because your license plate says so. | | | | Taxes are based on a fixed tax per gallon. Go to to |
| Don’t wait until tomorrow! You won’t | | | | see what the tax is in your state or area. Some |
| be able to get gas.” | | | | states like New York not only charge an exorbitant |
| That was called the “odd day” and | | | | state tax but also county taxes. |
| “even day” system. | | | | Some states are temporarily suspending the gas tax. |
| I thought, I probably have enough to get back to | | | | Other states are considering reducing the tax. |
| the airport. | | | | Wherever there is talk of reducing or suspending |
| That is called “fanciful thinking.” | | | | taxes there is fierce opposition. (See the above URL.) |
| I found myself in the deep stuff and had to find | | | | You can’t imagine the excuses given for |
| some “illegal gas.” I was lucky, the | | | | keeping the tax. One is that we would not conserve |
| company I was visiting gave me a shot out of their | | | | gasoline if the taxes were lifted. Politicians just know |
| pump but they were not happy about it. They were | | | | everything. |
| under the same restrictions as the service stations. | | | | Where do you buy your gasoline? |
| They could have all gone to jail. | | | | One of the suggestions you find in the articles below |
| To see what happened to create the gasoline | | | | to save operating cost is to shop around for gasoline. |
| shortage of 1973-1974 go to It started with the | | | | Some web sites give the lowest gasoline prices by |
| Arab’s being angry over the Yom Kippur War, | | | | area. I suggest that you try |
| restricting supply to those they didn’t like such | | | | The lowest price for me is at Costco. You have to |
| as Israel’s allies (us), and OPEC’s desire | | | | be a member but there is always a significant price |
| to quadruple the price of crude. | | | | reduction per gallon. The lowest reduction that I have |
| The Gasoline Shortage of Right Now | | | | seen is about 10 cents per gallon but recently |
| The lowest cost I can remember for gasoline is | | | | I’ve seen 30 cent reductions. |
| about 10 cents per gallon. I guess I’m getting | | | | Things you can do to reduce gasoline consumption. |
| old. Even after WW II the gasoline price in Salt Lake | | | | Following are some web sites that give ideas to |
| City dropped to 13 cents during some gas wars. The | | | | reduce gasoline consumption: |
| lowest post-war price I remember was at a | | | | To read 31 ways to reduce consumption go to: |
| Stinker® Station. The price was 11 cents. It | | | | To read 45 ways to reduce consumption go to: |
| stayed that low for only a couple of hours. | | | | To chose the proper octane for your vehicle go to: |
| Some say that the current cost gauging is due to | | | | To read a PDF from Big Brother go to: |
| Bush War II. We are supposed to be getting 25% of | | | | To become more frugal about energy cost try: or |
| our oil from Iraq, the reason for the war. However, | | | | For some good information from Advance Auto |
| production is continually interrupted by the insurgents | | | | Parts try the following URLs: |
| and we get less. But this problem existed before the | | | | [ and [ |
| present price hikes. | | | | The bottom line is that we must conserve. |
| There is a great worldwide demand for oil. Because | | | | What do you think would happen if we decided to |
| of China and India and other countries who want to | | | | buy gasoline only when we absolutely had to and |
| enjoy the internal combustion engine, the demand is | | | | then just enough to get us to where we are going? |
| going to get worse. While oil reserves diminish those | | | | We could back up the pipelines, the ports, and the |
| that control oil are getting every penny possible from | | | | distribution centers. There would be a surplus again |
| each barrel. | | | | and the price would go down. |
| We Americans are use to low fuel cost. That’s | | | | What if we combined trips, eliminated other trips by |
| why we buy SUVs that gobble up a gallon every few | | | | car and truck, and used our bicycles more or even |
| miles. In Idaho every farmer and would-be-farmer | | | | walked to the store? There would be a surplus again |
| has a truck with a huge engine that gulps down | | | | and the price would go down. |
| gasoline like a bear in a camp kitchen. | | | | What if we parked that gas hog in the driveway and |
| We get angry with high fuel prices. | | | | purchased a gas miser like the Toyota Corolla® |
| I often traveled abroad back when I worked for a | | | | or other such vehicles? There would be a surplus |
| living. I became use to the high cost of gasoline. A | | | | again and the price would go down. |
| liter of gasoline in England cost about the same as a | | | | What if we just slowed down? |
| gallon of gasoline in the states. Not once did I ever | | | | The wind-resistant force increases with the square |
| hear an Englishman complain about the cost of | | | | of the speed of the vehicle. That was the purpose |
| gasoline which came from the North Sea crude just a | | | | of the national 55 mile per hour speed limit, to save |
| hop and a swim away. | | | | gasoline and diesel fuel. |
| I have some sad news for Americans. The oil | | | | Well, Texas is in the process of raising their speed |
| magnates just love to gouge us and the government | | | | limit to 80 miles per hour. Those Texans just have to |
| could care less. We will continue to pay through the | | | | get there! |
| nose. | | | | But what if we individually decide to reduce our |
| A Lesson in Economics: What governs gasoline price? | | | | gasoline consumption? |
| The following two URLs will tell you something what | | | | The supply of gasoline would increase and the price |
| goes into the price of a gallon of gasoline: and | | | | would drop. |
| The largest costs included in the price you pay at the | | | | Well, I just love to dream. |
| pump are the cost of crude and taxes. That is | | | | The End |
| typically about three-fourths of the total. The rest is | | | | Gasoline, price, gauging, crude, refining, government, |
| refining and distribution cost and profit. Lately the oil | | | | taxes, conservation, better, mpg, economics, supply, |
| magnets have been juggling the item called | | | | demandcopyright©2006 John T. Jones, Ph.D. |