I was driving in to work this morning (in the mustang - that’s mine in the header). I realized although it wasn’t an emergency yet, I needed gas. Where I get off the highway (after my 28.5 miles on the interstate) there is a fill station. From the fill stations it’s less than two miles to my office. Since I was running a bit late, I decided I was going to skip the fill up and do it on the way out of town instead. The price per gallon for regular unleaded fuel was $2.99 per gallon.

On the way out, I stopped at the same place I had driven by in the morning. I inserted my debit card and when prompted, lifted the nozzle and selected my grade. The thing is, that the price per gallon was now $3.09. It had gone up $0.10 per gallon in the eight hours I was at work. Knowing I can’t beat the system, I filled my 16-gallon tank (although it only took 13.75 gallons to fill) for the grand total of $41.01. This is outrageous, because in January I was filling up at the excessive rate of $2.39 per gallon.

Now, I’m not an expert, but an increase of $0.70 per gallon (that is a full 30% increase) in four and a half months seems ridiculous. What on God’s green earth can make a price fluctuate like that? Is it the crude oil supply? Nope… Crude production is just as steady or better than it was in January of 2007. In fact, the cost of crude oil is down since January. I guess I can’t blame OPEC….. THIS time.

So where’s the cost increase coming from? It’s simple. We’re dealing with the laws of supply and demand here. The only problem is that in this case, the supplier is setting the demand. The refineries and sellers of the finished petrol is making less than the demand, which raises the price. It happens every summer, since (according to all studies) people drive and travel more in the warmer months. Each May or June, the big oil companies (U.S. and European based) make less fuel, and raise prices. See the graph below of the fuel prices in Pittsburgh, PA for 05/2002 - 05/2007:

Notice how the price steadily rises, then sharply falls for a brief period. The Average White Guy’s theory is that big oil uses these rapid drops in prices to lull us into a sense of security. It goes something like this…

Guy 1: Dude…can you believe that it’s January of 2006, and the cost of gasoline is $2.43 per gallon? It was only a year ago that it was $1.70 per gallon!
Guy 2: Yeah that sucks, but at least it’s not $3.20 per gallon like it was back in September. That sucked.
Guy 1: Yeah, I guess you’re right…the price DID come down.

And that’s how it happens…the price goes WAY up, then drops off suddenly…then it goes back up again to less than the major spike. Take the biggest spike in the graph above. It topped out at $3.20, then dropped to $2.06, then climbed back to the $2.90 mark before long. $2.06 to $2.90? WTF?! Well, at least it’s not $3.20, right? If you buy that logic, you’re a damn sucker.

Look again at the graph above. The price in August of 2002 was $1.27. The price (as I mentioned above) is $3.09. That’s an increase of 243% in just five years. Now I’m sorry, I’ve never seen a commodity’s price increase like that in as little time as gasoline. Somebody is really going to have to explain this thing to me. Somebody is going to have to prove to me that this hike is legitimate and necessary to continue to meet the demand, otherwise I’m calling this what it is, a crime.