Gas Prices And Differentiation

May 23, 2007

Everyone wants to know why are gas prices so high?  The “oil industry” says it is all about supply and demand.  Of course if that was the case, then profits should not be at ridiculous levels.   Make no mistake, I am a capitalist and I believe in our economic system.   So, why $3.50 per gallon?   If it is based upon commodity pricing like milk then it does ring true…  but in that environment, the oil Companies are basically charging what the traffic will  bear.

 So, what is the “average” consumer to do?   Try the discount gas stations…. I like Costco or Stop & Shop….  I saw a TV show which says the gas is just as good as the “name brands.”   AND, they are discounted by at least $.20+ per gallon.   This is a classic case of differentiation in the marketplace.  Why pay more for Mobil, Exxon, Amoco, BP?  Especially if the gas is fundamentally the same.  

And, by the way, if the issue is refinery capacity, and better gas milage for our cars why is it taking us so long to figure those things out?   Is this America?

Just one man’s views!

Rich

Bizvice:  Business Strategy, Marketing & Entrepreneurship

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