Warmer weather means more travel and more travel means more gasoline purchased for families across America. A frustration for the working class American, smaller trips now require you to budget your gasoline consumption in a way you have never had to before. With gas prices on average reaching $4 per gallon and the average gas tank holding 12 to 17 gallons the price in driving around becomes quite an expense. And the argument is the same for drivers in the ground transportation market, more impactful if you consider chauffeurs are driving on average three times the amount of an average driver. Chauffeurs typically fill up their tanks at the end of each business day, accounting for approximately $60 spent daily filling up on gasoline (depending on vehicle model) or $360 in a given week.
But with gas production at an all time high, why is gasoline still so high?
The Carmel Car & Limousine think tank consisting of a group of inquisitive workers with a load of questions started our journey with a few facts. We knew that domestic production is at the highest rate it has ever been at 49%, and as a result the US has decreased its dependency on foreign markets for oil. We knew that domestically, Texas, the Gulf of Mexico and other cities are major players in sustaining the local production of oil. We knew producing domestically did away with importing costs from other countries, and we knew that the East Coast’s recent polar season resulted in cars that were parked for weeks on end. People weren’t really buying gas as normal since vehicles weren’t really getting around. That meant gas wasn’t being purchased and gas reserves were in abundance. And knowing all of this meant diddly squat if we couldn’t explain why gas was so high, so we did what any 21st century inquiring mind would do, we googled it!
And here is what we found: there isn’t enough crude oil! The increased drilling has not yielded an increase in crude oil and crude oil is the essential ingredient found in gasoline. So all of our assumptions about increased drilling and the North East’s polar vortex limiting vehicle usage means nothing when you don’t have the key component available to lower the demand. That’s Economics 101.
Then we wondered who determines the prices at the pump? That would be the street, the gasoline retailer in any given community that bases his price primarily on his competition. The gasoline retailer one mission is to ensure the delivery of his next tank of gas. To make that happen gasoline retailers have to consider state tax, overhead, competitor prices, and overall profit. This is why in any given area you’ll find gasoline stations off by a penny or so but nothing significant. The variation in pricing is so small that it’s not significant enough to have brand loyalty with customers.
And that is pretty much a straight forward, plain language explanation to a very large and complex topic. We hope you can utilize Carmel Car & Limousine Car Service and its blog as a go to source in matters that not only apply to our industry, but to the driving community as a whole. Many of the topics that affect the everyday driver also affect chauffeurs, just at a heightened rate. Carmel is happy to stand as a resource for shared information.
And remember, the next time you need a ride, just Carmel it! We’ll be there for you!
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