Adding Fuel to The fire

Posted on April 22, 2014 under Storytelling with one comment

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Pumped. Or Hosed?

 

I’m puzzled.  But that’s not unusual.  I was driving past the gas pumps the other day and noticed that the price of gas had jumped 12 cents a litre.  The previous week it had dropped by 3 cents.  Now, I am not a long haul trucker, so wild swings in gas prices rarely get my attention.  Actually, I hardly notice it now that the kids have left home and we have downsized to one small, fuel efficient vehicle.

I am going to go out on a limb and offer an allegedly fabulous prize if anyone can explain to me in simple English, or any other language for that matter, how the price of gas is determined.

I understand a thing or two about economics.  I have a cursory knowledge of the laws of supply and demand.  I have lived through many wild gyrations in the stock market.  I understand the correlation between bond prices and interest rates.  And when the price of gold whipsaws, I am rarely surprised.

There are other things that also befuddle me.  Our national postal system, in an attempt to attract new customers and improve the bottom line, recently increased the price of stamps by 30%.  Wow.  You should have seen the lineup of small business owners at the post office, eagerly waiting to do a mass mail out to their customers.  This should also enhance business at Christmas time for the handful of people, mostly older Canadians, who still send cards.

Do you understand cable and internet bills?  How about trying to decipher the myriad of phone packages available to a bewildered public?  And electricity rates.  These things are all perplexing, but like lemmings, we simply take our medicine, follow the crowd and pay higher and higher prices for everything.

But how do they calculate gas prices?  I watch the news and when reports come up about a glut of oil on the world markets, I pay attention.  When I hear about the price per barrel of oil plummeting, I rub my hands in eager anticipation of a drop in prices at the pump.  Wrong.  You are so wrong.  This is merely a clear signal that prices will go up.

Having no one, not even an economist, explain to me how gas prices work, I did some study and have come up with my own theory.

You simply take the number of sheiks and divide it by the number of billionaires.  You then multiply this by the millions of the great unwashed masses.  (That’s you and me, by the way).  You toss in a bit of supply and demand, add a dash of the Bakken shale gas find (no fracking way), a hint of El Nino, a pinch of pestilence, plague and polar vortex, along with several layers of taxation and … presto!  Gas goes up 12 cents a litre.

Thankfully, rum prices are not subject to these wild fluctuations.  Admittedly, the price continues to rise, but, as of yet, it has not reached its true value.

 

 

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