Marketing Genius from Maple Creative


Marketing tips, observations & philosophy, plus a few rants and random musings - from those who practice, preach and teach marketing, research, advertising, public relations and business strategy.

Saturday, July 02, 2005

Gas Prices

Jim Nester and I were discussing gas prices the other day. He had stopped at the gas station on Wednesday morning to fill his gas tank and found himself staring straight down the barrel of an eighteen-cent per gallon price hike. Get this straight: the day before, the price had been eighteen cents less. Overnight, the station owner had rasied prices by eighteen cents. On a 20-gallon tank, that is an extra $3.60 to fill the gas tank.


Our discussion turned to the economics of gasoline and oil ... and what could possibly contribute to such a sharp price spike. The dealers association seems to always talk about state taxes. In West Virginia, the state adds a surcharge of $0.41 cents per gallon to the price. But wait--that $0.41 is a fixed amount, not a percentage. The state tax did not, logically could not be the source of the increase. Regardless, the dealers always seem to talk about the taxes.

And don't get me wrong, I'm not trying to pin the price spike solely on the dealers or station owners. As I understand it, they are largely at the mercy of the petroleum corporations. Then too, the companies that transport and distribute the gasoline from the refineries to the dealers add their charges. At the source, the price per barrel, whether imported or domestic crude oil, is a huge deteminant.

The price of gasoline is a sensitive, personal and relative matter. I have a theory that everyone's price perceptions related to gasoline are tied to a historic, emotional benchmark. We all remember the price of gas at the time we started driving a car--and paying for gas out of our own pockets. It was a matter of pride, back then, to pay for my own gas at 88 cents per gallon. That's my benchmark. In my mind that's what gas SHOULD cost. Anything over $0.88/gallon is expensive ... and in a way I have this nostalgic notion that gas will someday return to that price.

What did gas cost when you started driving?


Blogger Jen said...

I think it was about $1.00 per gallon. For some reason $1.02 sticks in my mind. To me, anything over $1.39 is expensive. I don't know why $1.39, unless that is what it was when I was going to college or started work. I just know that 2.35 is WAY TOO MUCH!!!

12:58 PM


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