Gas gouging or supply and demand?
by
Gas prices spiked over the weekend. Some filling stations ran out of gas. Many experts blame Hurricane Ike. Many motorists blame big oil, which they allege looks for any opportunity to “stick it to the man.”
I spoke to Mike Williams, Executive Director for the Tennessee Petroleum Council.
He tells me almost all gas stations in Tennessee are owned by independent contractors. They price their product the way they see fit. Prices differ for many reasons including the different contracts that various independent gas stations have with their suppliers.
Gas stations affiliated with major brands like Exxon or Shell get priority over non-affiliated stations.
If these unaffiliated “Joe Blow” stations want gas, if they can get it, they have to pay the “spot” price which obviously is higher, and that will be reflected in their price.
There is no product coming into Tennessee right now.
Why? Because almost all of Tennessee’s gas comes from one pipeline that originates in the Gulf of Mexico.
The gas starts in Houston then goes to Atlanta, to Chattanooga and then to Nashville.
The problem in a nutshell: Hurricane Gustav shut down refineries and then of course Ike barreled through the region again disrupting production.
This is all about simple economics: When supply drops and demand increases, prices go up.
Friday prices spiked because so many people decided to fill up. We had plenty of gas to get through the weekend then we ran low because citizens got scared and began hording gas and topping off and filling up tanks. So we ran out. Suppliers couldn’t keep up with the demand.
Topping off hurts everyone, Williams says.
Is the media to blame? Williams says no but any time there is a rumor, whether on the internet, or through the media, it often becomes a self fulfilling propriety which is what we saw this past weekend.
Loading …Emails have been pouring in – Below are some:
“Currently gas prices in Cookeville are posted at $3.89 all the way up to $5.04 per gallon.
-Jennifer Thompson
There is a rumor flying around Clarksville today that this afternoon Gov. Bredesen is going to announce this afternoon that there will be NO gasoline available to TN within 48 hours. Any truth?
-Carol Sims
Hello, I am just sending this message because of the sudden price gouging that is happening here in Lawrence County. I was driving thru Lawrenceburg at about 1 this afternoon when I noticed that the gas at the Rick’s BBQ Country Store was at $3.79. When I drove on about 5 miles toward Ethridge, the gas at the Rick’s location there was at $4.09. That seems like a big jump in less than 10 minutes of travel. Thirty cents is a lot of difference in about 5 miles.
Another thing that got me was that the next store down had gas at $3.69. I think that this is truly messed up. I know that the Hurricane may be causing some problems but I don’t think that will cause the gas to go up that much that fast, 10 minutes or less. I don’t think so.-Robert Pope
The Mapco in White House has always been the first to jump their gas prices when crude has risen and the last to lower their prices when it went down. That was bad but what they have done now is criminal. Of course, I can’t prove this but I KNOW it’s true. When I went to work this morning at 4 a.m. I noticed they had no price on their sign and their nozzels were bagged! I suspect they have gas in their tanks and when everyone else gets the price to the max, they will have gas then at the premium price! Nowhere else has been out of gas although there have been lines. It is obvious what these crooks are doing and if there is any way you could look in to this I’d be eternally grateful!
-Eddie Guinno
Gouging? Fuel at $3.75+ just before Labor Day, Drops to $3.30 after labor day and back up to $3.99 today. Call to Hollingsworth Oil in Springfield today- We are not running out of fuel but major fuel brokers are putting some local distributors on ration to prevent exhaustion.
-Michael Werner
I’m sure y’all have gotten this a lot since yesterday. I know I have personally watched a Wal-Mart in Shelbyville raise their price. When I came home yesterday afternoon it was $3.45,last night at 10PM when I went to work it was $3.59,this morning at a.m. it was $3.65,now at almost 4 p.m. (less than 24 hrs since it was $3.45)now it is $3.87. There was a refuel truck there last night and there is no way they should be able to hike gas prices over 40 cents on 1 gas truck since they have already paid for that gas. This is really messed up that they are taking advantage of a bad situation and ripping people off. Please take time to look at this problem since I’m sure Shelbyville isn’t the only place this is happening.
-Jason Bradshaw
According to the reports the gas stations here are raising prices and some will only take cash, is it legal? Maybe someone should report this to authorities. This is word on the streets of Maury County.
-Sheila Murphy
I understand that due to Ike forming in the Gulf gas prices may spike. However there are a couple of issues I have a problem with.
1) When the price of oil drops, such as it has over the last couple of months, the price at the pump takes quite a while to reflect a price drop, however, when there is a “concern” such as the effect Ike may have on the offshore as well as the on shore refineries the raise in prices is basically immediate. Why is this?
2) Price gouging during these situations at the service stations. Example: in Madison there are two Mapco service stations approximately 2 blocks apart. The price for a gallon of regular gas at one is $3.59 while at the other it is $3.79… a.20 cent difference and this seems to be the trend through out the area.-Joseph Cronin
I stopped at the BP gas station on Providence Blvd in Clarksville TN 3 days ago. I went into the store to prepay $20 and pay debit. I have a charge on my statement for the $20 plus an additional authorization hold for $75. It’s currently still being held. It put my account negative and I’m unable to purchase diapers and wipes for my daughter. Now that’s messed UP!!
P.S. I’ve heard about Kroger doing this from the people on post (Ft Campbell).-Megan Pitt
Andy, my father lives in Tulsa, OK and his gas prices have not gone up at all in the last 24 hours. His price for regular is $3.49. For the last month I have noticed that within a 5 mile radius of my home in La Vergne that I can find gas prices fluctuating up to .30 cents on a regular day. Now I am seeing a .70 cent jump since this time yesterday. In Smyrna the gas is currently $4.09, however if I go 2 miles into La Vergne the Exxon has it for $3.79. How is this legal? Besides I was under the impression that our gas supply was affected by the pipelines and oil rigs located in and around New Orleans. Galveston sends it gas to places to the west of us like say Tulsa, OK. Shouldn’t our local lawmakers be looking out for us? I feel that we are being gouged on a regular basis her in middle Tennessee. Can we sue somebody or get some one to pay attention to the common man being taken advantage of?
-Trent Smith
Report suspected price gouging:
Online: www.tn.gov/consumer
By Phone: 615-741-4737 or 1-800-342-8385
Helpful Links:
Hi Andy- Since Hurricane Ike here in Murfreesboro, TN we have an interesting
deal on gas prices. If you go North of I-24 on HWY 96 most stations are
$3.89 a gal. If you go south of I-24 on Old Fort Parkway and Memorial Blvd.
almost all stations are $4.19, one is $4.09 and one is $4.49 a gal.
This is in an area less than 1-4 miles apart- now if that’s not price
fixing and sticking it to the avg. consumer I don’t know what is. These
stations are different brand names, etc.
I know you can report it to the state but I figure most politicians are in
the hip pocket of the oil companies and it would do no good. The nat’l avg.
was reported as $3.80 a gal. last night on the news.
THAT’S MESSED UP!!!
What is the legal definition of price gouging? These businesses are subject to completive market forces. The consumer has the ultimate decision in making the purchase. Collusion or price fixing is a problem, but charging what the market will bear is not. Price gouging should be limited to those instances where the consumer has no choice, i.e. federal state and local governments that can tax and spend at whim. Also government regulated fees such as long distance access charges paid on local phone service when that service is never used.
gas prices at k&m market in linden tn are 4 dollars and 77cents
I’ve not heard anyone talk about the prices in Lebanon……
A whopping $4.71 at the K-mart gas station!!! And $4.49 at the Pilot, which is usually one of the least expensive places to get gas. I opted for the ‘bargain’ price of $3.99 at BP down the street. How ridiculous, to say the least. And what gets me is so many people just keep on keeping on. They could care less, I suppose, if gas goes up to $10 or $15 a gallon, at least it seems so from their actions. Can you say ‘RATION’? That’s what happens when people refuse to police themselves.
Another thing that bothers me…… Why in the world did they post these ‘10 gallon limit’ signs at the gas stations? I think many of us knew exactly where that was going. Did they really think that most people, out of the kindness of their own hearts, would oblige them? Please….. Could it actually be that it was very carefully executed, so as to create the panic that DID OCCUR, in order to justify driving the prices up? I mean really….. You don’t put up a sign like that unless you’re going to enforce it. Doesn’t take a rocket scientist to figure that one out. But unfortunately, there’s always going to be a certain factor who will play right into the hand’s of the ’suits’.
NOW, many stations are out of gas…… Good old supply and demand. Looks like we’ll have to revisit the ’70s….or worse.
Andy I’m an old lady and even I know IF we didn’t buy gas one day it
wouldn’t hurt anyone but us. The next day those needing gas would go out
and buy it erasing any loss from the day before, duhhhhhh
Andy, I fully understand and agree with the explanation of supply and
demand. What I wonder about, however, is if Nashville’s average price is
$4.04, why is the price in Westmoreland $4.25 today? Does it cost that
much more to ship the fuel another 50 miles to upper Sumner County?
Perhaps it’s the added expense to overcome gravity to get up the
Westmoreland hill.
KC, Pilot in Lebanon has been 3.99 since yesterday. Filled up last night at about 6.
The $4.49 was over the past weekend. The $4.71 at K-mart was just last night. There were NO CUSTOMERS, at least when I drove by.
I stopped there just after 9pm tonight. One pump did not have a bag over the
handle and a lady was pumping gas. I noticed that she had the bag in her
hand (she must have removed it herself)she used a credit card and pumped
her gas, took her receipt and left. The moment I pulled up and swiped my
card the employees come out and say they have no gas and they hadn’t had
gas since earlier in the day. I asked them what the girl in front of me was
just pumping then and they said they didn’t know. I asked one of the
employees if that lady worked there and she said no. I’m sorry but she
either worked there or they knew her and allowed her to get gas. I know the
girl in front of me was pumping gas as we could see the gage and I heard the
click of the pump when her tank was full. The flat out lied to me about it.
Gas price in Mt. Pleasant Tn. is 4.19 for regular.
I understand we aren’t getting supply, but how is it that other states are fine. My family is from michigan and my parents aren’t haveing any problems. Why are we the only ones not receiving?
No gas.. anywhere… can’t get to work.. techs at my work can’t get to customers… Doesn’t need anymore explanation than this.. Nashville will shut down soon if something doesn’t happen!
oil under $100 dollars a barrel and gas still over $4.00 a gal?
Why is there a gas shortage? I have had trouble getting gas since last
Saturday! This past weekend i was unable to find gas at 5 differnet
stations in White House and thought that by the end of this week, there
would be no issues. I live in White House and work in Metro Center and I
am having to spend an hour or more every couple nights to find gas. If you
talk to folks outside of TN such as KY, there are no issues there. I just
don’t get it!
Andy, we just drove 700 miles back to Middle Tennessee from Fort Worth, Texas. First of all let me say there was no gas shortage there! And the prices were $3.54 to $3.69 for Regular Unleaded. There was gasoline readily available through Arkansas, and again prices were posted at $3.55 per gallon to $3.69, finally as we passed through Memphis and before we reached Jackson, Tennesse, the Pilot Station off I40 was selling regular Unleaded for $3.54 per gallon. As we came into Columbia, Wham! “No Gas” at some stations and those that did were pricing it from $4.09 per gallon for regular unleaded to $4.19 per gallon. Now, let me see, Texas was directly hit by Ike, the refineries and rigs are there on the coast, and they have gas available for reasonable prices and Tennessee has ‘no gas’ signs and exorbitant pricing. What is wrong with this picture? Perhaps the distributors think Tennesseans will just follow blindly. This is definitely gouging and profiteering!
Welcome to america and the new world order! countrys like saudi arabia and costa rica pay 42 cents a gallon for gas. us fat dumb fluorodated dumbed down americans pay 4 bux a gallon because we allow tyrants to rule over us. Oil is more plentiful than water. the oceans are brimming with it but the oil co’s create false scarcity to drive up profits. remember the 70’s? oil “shortage” i had a buddy who worked on an oil platform and he said the big oil co’s were tired of making a a piddly buck a gallon so they wanted to charge up to 5 dollars a gallon. so bam oil is out oh noess! total scam. its all greed. and us nashvillians are getting ripped off again by this fake gas shortage. watch “end game” on google video and “terror storm” on google video as well. great documentarys that will wake you up to this new world order that is destroying our way of life. And next summer it is planned 6 to 7 dollars a gallon. their main goal is 10 dollars a gallon. and guess what? suckers will happily pay that much because they are ill informed and wont do anything about it.