Gas Price increase
Two very interesting entries at
Knowledge Problem regarding this spring's gas price increase.
The
first gives a bit of background:
bq. In spring, our thoughts typically turn to … the seasonal increase in gasoline prices (what did you think I was going to say?). It all started with this
New York Times article on 6 March, which noted that consumers are complaining about high and rising gas prices.
More -- talking about oil industry profits and quoting Joe Sparano, an oil industry trade group president:
bq. He also emphasized that oil company profits, though up recently, are not out of line with other industries.
bq. "Our industry had a profit margin of about 6.3 percent and all industries are at 6.7 percent" for the fourth quarter of 2003, Sparano said. "That's not excessive."
bq. That profitability fact is important, because it is consistent with the hypothesis that the root cause of higher gas prices is fuels regulation. The seasonal pattern of price changes is also consistent with that hypothesis.
The
second entry lists specific reasons for the increase and explains each one:
bq. 1. High world crude oil prices.
2. Existing environmental regulations making supply more inelastic.
3. New air quality regulations taking effect in 2004.
Interesting reading -- we notice the increased price every time we fill the car but don't know the reasons behind it. Good stuff to know.
Posted by DaveH at March 23, 2004 9:47 AM