An article today on MSNBC.com wonders why gasoline prices jump suddenly when there is an event in the Middle East, or at a refinery...but when that event is over, why do gas prices slowly decrease?
My theory has always been that gas stations want to get every last penny out of us. So even if they bought gas that are in their tanks now at $X/gallon, they will charge $X plus something when something happens so that they can make money. When the event is over, I underdstand that it can take a bit to lower the price, since they have that higher priced gas in the pipeline. Ha ha, petroleum humor...in the pipeline.
Well, economists have always thought that there was some funky "economics make no sense to me" kind of issue that the market jsut took care of. But no! In this article, it says "The main result: is the person in the street and we (dudes with thick glasses and all those damn pie charts) were wrong." In fact, the results were so vexing he called it “a serious gap in a fundamental area of economic theory."
So there. Chalk one up for the little guy.
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