I saw in the Press the other day a letter-to-the-editor screed by River Rat lawyer Gary Schenk. His ruminations frequently appear on the editorial page where he uses his post as a Grand Rapids Community College trustee as a soapbox. Shyster Schenk's most recent rant had to do with his completely-discredited fever-swamp bloviations of collusive price-fixing on gasoline by oil companies. (I suppose someone has to represent the Michael Moore contingent of political paranoia in River City.) His "evidence" is the failure of gas prices to fall in anticipation of a drop in crude oil prices.
Well, as far as the economics of gas and oil prices, Schenk has his head up his, well you know where. But the man likes dark places, so I suppose we shouldn't be surprised. Actually Schenk's proof of collusion by oil companies is no proof at all. Anyone who has charted gas and oil prices knows that gasoline prices don't rise and fall ahead of moves in the crude price -- they trail it. It's pure supply and demand in a very competitive market. Moreover, it's not the only thing pushing the price of gas.
The other major factor in gasoline prices in the U.S. is refining capacity. (Well, actually excise taxes are big component too -- let's leave that for another day.) Because that capacity is tight, especially in a country that hasn't built a new refinery in a quarter-century, while oil companies build up stocks of gasoline (in all the myriad of formulas dictated by the federal government) in anticipation of the summer travel season, that also pushes up the price this time year. It also falls like clockwork every year when demand falls in the autumn.
Even with all that, gasoline is still cheaper than that bottled tap water you and I pick up at the gas station. I suppose it's too much to expect a trustee of one of our institutions of higher education to grasp the basics of Economics 101. Then again, maybe we shouldn't be too dismissive of Schenk's ravings about what crooks the oil barons are. It takes one to know one.