Gas Price Fixing

With the high cost of gasoline (since last summer...before Hurricane Katrina hit), there's been a lot of talk about fixing the gas price at a set amount. Oil companies would then have to give at least two weeks notice for any increases to the price, thus giving time for consumers to adjust to the new price. This is SO a bad idea!

There is already gas price fixing on the East Coast. Nova Scotia will be the last of the four provinces to institute this practice, starting July 1st. Studies have shown that gas price fixing is actually more costly to consumers, by at least 1 cent a litre, but Nova Scotia's rationale is that their constituents want stability in pricing. Well, if world oil prices spike significantly, oil companies can apply to the province to have the two week cycle waived...How does that improve stability of gas prices at the pumps? In effect, by fixing the price of gas, the oil companies don't have to compete for your business, therefore more money pours into their already fat wallets. Yes, it will be stable...for the oil companies!

What I learned in Economics 101 is that it's all about supply and demand. The greater the supply, the lower the price to move the product. The lower the supply, the higher the price that can be commanded. As users of the product, consumers get the short end of the stick. If you're sensitive to the price of gas, then let the market forces rule and buy gas when the price is down. Consider buying gas when you still have half a tank of gas. Small price to pay for the inconvenience of filling up more often, compared to buying at whatever the price is when you're faced with the big "E" on the gas gauge.

In fact, I've noticed trends in gas pricing. Whether it's the day of the week, time of day, before a long weekend, whatever. Wherever you are (except maybe on the East Coast), take a mental note of these trends and adjust your gas buying habits accordingly. If you notice the gas price goes up just before the weekend, fill up during the middle of the week, then top up as required on the weekend, if you can't wait until the middle of the following week. Sounds simple doesn't it? Of course, those of you with those huge gas-guzzling vehicles like Hummers (which, I noticed, are decked out in nice shiny accessories, and never seem to be muddy since they're probably never taken off-road) don't have to worry because you don't really care what the price is as long as you can occupy as much space on the road and parking lots as you possibly can.

Better yet, do you really want to stick it to oil companies? Take public transit, bike, or walk. You'll be and feel healthier. Yes these options may take a little longer, and there's more effort required on your part, but you'll save money and the environment. Public transit doesn't serve you well? Write to the politicians that represent you. Contact the transit services. Still can't get out of your car? How about carpooling? Plenty of HOV (High Occupancy Vehicle) lanes popping up on the highways and city streets. If you share a car, you'll get to your destination faster. Still can't do it? There's always the last resort of buying a small gas-sipping car. If you're the only one in the vehicle, do you really need to be in a Lincoln Navigator? You can go to the other extreme and get a Smart Car. Easy on gas, easy to park. Too extreme for you? There are plenty of offerings from the North American Big 3, as well as imports, that are easy on gas. If you think you need a large vehicle to carry stuff from Home Depot, consider how often you do this and whether renting a vehicle whenever you require that kind of capacity would do the trick, instead of commuting daily in a V8 with a lot of empty space behind you. Home Depot even provides an on-the-spot rental truck service. Might save you some substantial coin in the long run.

If you complain about the price of gas, then I think something that I've said resonates with you and you can adjust your transportation needs accordingly. If you drive a large vehicle and want to keep it, well there's nothing I can say to convince you to change, so I guess we'll see your wide-butt vehicle on the roads and occupying two spaces in the parking lots.

Either way, fixing the price of gas is not the answer. Let market forces decide the price so that consumers can benefit.

As a post script, let me offer this. After Hurricane Katrina hit last September, the price of gas was about 20 cents higher per litre at the pumps than it is now, with the current cost of a barrel of oil at almost record levels. Do you really think oil companies are looking after consumers' best interest? Supply and demand. Supply and demand...

Wings Over The World