Sunday, April 09, 2006

A relief for gas prices?

Gas consumers can hopefully soon find a relief in prices, but not before they go up once more. Surveys showed that prices increased by 7 percent over the last two weeks and about 42.4 cents throughout the last 6 weeks. Because of refiners converting to new specifications, it added on 14 cents to what distributers and consumers pay. Higher crude prices also added to the increase in cost and because of all of this, retailer's profit margin sank as buying prices rose more then retail prices. Consumers should not worry too much because with an increase in the refining capacities could end the increasing prices. Once the refineries get out of their idle period, gasoline prices will increase and peak, then finally slip in the coming two to three weeks. I think even though they will increase at first, this is good news for both consumers and retailers. Even with a slight increase, once the prices finally fall, consumer purchases should increase greatly. Therefore the retailers profit margin will rise again. Anytime gas prices drop even just a few cents, people are running out to the cheapest station to fill up while the low prices last. As soon as these prices drop, the quantity demanded will increase. Just how long it lasts will depend on how long the decrease in prices will.

1 comment:

Adam Marzheuser said...

I sure hope that this is true because I don't know how much more I can stand seeing gas at a price higher than $2.75 a gallon. I know very well that consumer demand for gasoline is inelastic considering how much we need it in our lives. But I'll always be much happier once the prices go down, even if just a little.