Saturday, September 13, 2008

Fuel Economics 101

It's amazing what you can learn if you just ask a question or two instead of assuming you already know the answer.

Why are gas prices spiking today?

Gouging, right? It's the evil big oil companies ripping us off again!

Actually, no, it isn't.

I stopped in at a few gas stations, some chain and some independent to see exactly what was going on. I got pretty much the same story from both sides, with some slight differences. Basically, what has happened is that the slide in crude prices combined with the supply interruptions from Gustav and now Ike, have combined to create a shortage of bulk fuel in Tennessee, and that means the retail outlets are running dry.

Here's how it worked.