Utah Gas Prices – Where have all the talking heads gone?
A few months ago, I wrote that Governor Huntsman’s “monitoring” of gas prices was just political BS, and that purposely encouraging a misunderstanding of basic economics for political gain was a bad idea.
Well, it turns out I was wrong: just the threat of State oversight made Utah gas vendors stop being greedy, and now Utah enjoys some of the cheapest gas in the nation!
(OK, you’re onto me: that was BS too. But Utah really does have some remarkable gas prices right now.)
Anyway, my friend and former neighbor Kerk (who is also an Economics professor at BYU) has an excellent post that could serve very well as a follow up to my aforementioned rant:
Current Gas Prices (December 2008)
Look at the above map from GasBuddy.com. The price of gasoline in northern Utah these days is about as low as any place in the US. If you live in Utah you know the press here goes into fits of apoplexy whenever gas prices in Utah are higher than the rest of the country. Last Spring all we heard about was how the greedy gas station owners were profiteering and charging unfair prices to Utah drivers. In 2006, KSL radio host, Doug Wright, tried to organize a one-day boycott of gas stations because Utah gas prices were the 4th most expensive in the nation. Now that prices are down no one is talking about who is being unfair to who. Using the same arguments, one could argue that motorists are now colluding to drive down the price of gas and harming gas station owners. Of course this is silly, but it makes as much sense and is just as logical. Inevitably, in the future some time the price of gas in Utah will rise above the national average and our local press will go nuts again. Remember this picture when that happens.
Brilliant!
I think we’d all be better served with an understanding of basic economics. That way we can let our news media go back to talking about family-pet hit-and-runs, celebrity lookalikes, local American Idol runners up, and the like. That’s right, Doug Wright: we should be boycotting you.
Seriously though. Whenever you hear some news anchor or some politician spouting out things that are blatantly stupid, you should ask yourself: “Are they stupid, or do they just think I’m stupid.” Then ask yourself which is better. Do you want news by dumb people, or news for dumb people?
Interestingly, I heard it reported that because of relatively lower wholesale gasoline prices, station owners are actually making more money right now with low retail prices than they were making with high retail prices. Go figure.
Yes, we are being (relatively) gouged on super cheap fuel.
Outrage, anyone?
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December 8, 2008 5:24 pm
By Reed, December 8, 2008 @ 10:04 pm
Jordan and readers,
It turns out that gas stations make a flat rate on gas. That is how their contracts are set up. It’s the oil companies and refineries whose profits fluctuate. Gas stations make money on selling candy, soda, CD’s that normal record stores refuse to carry. Because people are probably more willing to spend money on a candy bar when their gas costs $2.00/gallon than when it costs $4.00/gallon, gas stations probably do better when gas prices are down.
By Jordy, December 8, 2008 @ 10:13 pm
Thanks for the clarification, Reed.
By Russ, December 9, 2008 @ 10:01 am
My father-in-law owns a gas station. Gas station owners were basically losing money on fuel when prices were as high as they were. Now, they are making some of the best profits on fuel they have had in years. But, if all they sold was gas, they would go out of business. Soda is a gas station owner’s cash crop.
By Luke Graybill, December 10, 2008 @ 11:25 pm
I have always been a bit mystified when I try to “get in the head” of a gas station owner. Why on earth would anyone WANT to purchase and run a gas station? These people almost always look incredibly stressed out, are generally in quite a bad mood 90% of the time, and don’t appear to be doing very well anyway – lots of gas stations look as if they are teetering on the brink of bankruptcy. Granted, my observations are not very scientific, but there it is.
More on topic though, I stop in to the Chevron on Main St, Spanish Fork almost every day, to purchase soda (Russ is right). A few weeks ago, I noticed that they had their gas priced 10 cents higher than the station across the street, and I asked the woman at the register if the owner has any control over the prices. She replied that the owner can set them to whatever he wants to. I didn’t tip her off on their ridiculous pricing that day, but quietly paid and left. Now, I don’t know if she was just a paid lackey or if she actually knew what she was talking about, but if it’s the latter, then that contradicts the notion of a flat rate on gas at the station.