2010-12-30 / Editorial

Pricing folly

The sign in front of the gas station reported the cheapest low lead gas price about $3.05 a gallon in the morning Monday. But by 5 p.m. the price had changed to $3.19 a gallon. What had happened in those eight hours to make gasoline prices rise 14¢ a gallon?

Well, the price increase was predicted and Tuesday it was reported by GasBuddy.com that the price in Michigan had risen 6.5¢ per gallon Monday with the state average $3.13 Monday. The national average is $3.03, increasing only 4.3¢ per gallon.

But the real kicker is that the prices a year ago were 52.4¢ less than they were Monday and are 32.7¢ higher than a month ago.

The culprits are oil producers jacking the barrel price up to above $90, with a prediction of over $100 by oil magnate T. Boone Pickens, who reportedly has a history of correct predictions. It’s reported that Pickens is now blaming the federal government because by pumping stimulus money into the economy it “translates to higher prices at the pump.”

An article in the Bay City Times Friday blamed Speedway gas stations because they have 225 gas stations in the state so they can control the price. When competitors see Speedway increasing their prices they jump on the bandwagon.

Also on the front page of the Times Friday was a story about how General Motors wants to triple its goal for electric cars produced. The new Chevy Volt will have an estimated sale price of $41,000 and will get between 50 and 100 miles on a charge. Exceed the charge limits and a 90-mile to the gallon gas engine kicks in to charge the Volt battery.

The federal government is giving a $7,500 tax credit for buyers of the Volt, plug-in hybrids and electric cars. But the credit will phase out after 200,000 eligible vehicles are produced. The $7,500 tax credit would bring the Volt’s initial cost down to $33,500. So the question becomes at what price per gallon of gasoline will people be forced to drive electric cars? With each gas price increase more people will convert to electric auto technology as long as the price for recharging the car remains at a level that is affordable.

Unfortunately we are not at an adequate solar energy level for battery maintenance yet, or solar technology for continuous battery operation without a gas engine charger.

If Speedway and the oil producing countries keep jacking up the price per gallon Chevy might not be able to build Volts quick enough to satisfy demand. Then maybe Speedway and OPEC will see the folly of their pricing practices.

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