I have a history with gas. I mean the kind you put into your car’s tank. In my youth, I was a gas pump jockey, before I became a radio disc jockey, or a TV news jockey.
You see, in an effort to get me off the couch, my dad offered to pay me two cents per gallon for the gas I pumped at our family store. We had 3 pumps, back when you could say “Exxon” without thinking “Valdez” or “oil spill.” I was the guy who “put a tiger in your tank!” We sold a lot of gas, for about 30 cents a gallon.
That is, unless we were in a gas war. This had nothing to do with tensions in the Middle East. It meant that the station down the road would cut their price a penny, down to 29 cents. We would counter with 28-cent gas. The competition would go to 27, and so on, until we both bottomed out around 23 cents, losing money hand over foot. Prices would gradually go back to normal, and peace was restored.
Every now and then, the oil companies would jack up the price a couple of pennies, and people would yell, “When it gets up to 35 cents, I’ll just walk!” Well it soon did, but I never saw an increase in pedestrian traffic. Now we’re thrilled if it creeps down toward two bucks a gallon, because it has been so much higher on occasion.
That’s why I called Patrick DeHaan. Officially he’s the head of petroleum analysis for Gas Buddy, but I call him the Gas Guru. He’s the guy you see on TV when the cable news channels try to explain why gas prices suddenly shot up, or slowly went down.
In fact, that was my first question. Whenever there’s a stiff breeze in the Gulf, or if there is an incident in Iran, gas goes up 25 cents in the blink of an eye. However, even when the wind fails to blow Al Roker’s hat off, it takes a good 3 months before prices creep down to normal.
“It does appear the oil companies pass along increases quickly,” DeHaan said, “although it varies from city to city. Each station buys gas at different times, so for some it might take a day or two. But the stations are reluctant to pass along a decrease. Sometimes they try to make up what they lost if their replacement cost was higher than expected. But thanks to competition, it always comes down eventually.”
Yes, good old competition. “It’s a game,” DeHaan said. “They monitor each other, much like the airlines. They charge whatever the market will bear.”
What about the politicians, I asked him. When gas prices are up, they take no responsibility. They blame it on the oil companies, the weather, or the Saudis. But when prices are low, they’ll bellow, “Since I took office, gas prices are down, so you can buy more Slim Jims and Red Bull!”
DeHaan laughed and said, “Believe me, other than the taxes you pay on each gallon of gas, politicians have little or nothing to do with the ups and downs you see at the pump.”
DeHaan also talked about some of the myths many of us have believed. “First, the oil companies don’t jack up prices before every holiday,” he said. “It might seem like it sometimes, but they merely react to the world market, and that’s why prices fluctuate.”
Also, unlike my gas-pumping days, you’ll rarely see a branded tanker truck, like Shell or Chevron. “But wherever you buy gas, it’s good quality,” he said. “Today’s technology ensures that water is quickly detected. There will be times when your local station might have a leak in their tank, but that’s very rare.”
He added, “If Shell, for example has excess supply, they’ll sell their gas at a cheaper price to the independent stations. The gas might not have the additives used by Shell, but it’s still top-quality.”
DeHaan concluded, “Some consumers think the oil companies are run by greedy villains, but most of them are good, decent people. Are there bad apples? Sure, and they have had to take responsibility for oil spills, price gouging, and other bad actions, but they’re paying for their misdeeds. The market dictates prices, and the government demands quality and safety, so all things considered, Americans have an abundant supply of affordable fuel.”
So pray for moderate weather, and a Middle East with no more missile attacks on oil facilities. If prices skyrocket, I may have to go back to pumping gas. And I will be forced to charge way more than the 2 cents a gallon I got from my daddy.
