Tag Archives: Falling Gas prices

Gas Prices are Falling, the Sky is Not

It has often been said that there are at least two sides to every story, and somewhere in the middle is the truth.

I have been thinking about that saying lately as I read the news coverage about the falling price of oil and gas which depending on who you ask is either the best thing ever for consumers, or the beginning of the end of western civilization as we know it.

There are many oil companies in and around Texas and when a gallon of gas sold in the $3 to $4 range they were giddy and beside themselves as they swam Scrooge McDuck style in their big vaults of money.

To be perfectly honest oil companies probably do not have a big money vault, but if they did there is no doubt that they were swimming in it.

With the average price of a gallon of gas below $2, and falling, many oil and gas companies are   shedding employees as they try to stay competitive in a changing market. Photo R. Anderson

With the average price of a gallon of gas below $2, and falling, many oil and gas companies are shedding employees as they try to stay competitive in a changing market.
Photo R. Anderson

Now, that the average price of a gallon of gas is below $2, and falling, those same companies are screaming that the only way they can remain in business at such low prices is by shedding employees as they try to stay competitive in a changing market.

Former oil executives are also telling anyone who will listen that the price of oil will soon rise again much like the phoenix rising from the ashes and that $5 a gallon gas is coming.

All the while the bulk of the country finds more money in their pockets since the price to fill up at the pump is dropping.

More money not going to gas means more money available to spend on other things which in theory should help the economy.

Restaurants and other retailers should benefit from consumers spending less money in gas to arrive at their establishments.

Plus, companies spending less on gas to ship items means they are less likely to need to pass the costs on to those same consumers.

While I do not have an advanced business degree it seems a very simple equation that lower fuel costs are good and higher fuel costs are bad.

When I first started driving many years ago, gas was still under $1 a gallon.

I remember the uproar when the stations had to add the third line of their signs when the price of a gallon of gas had the audacity to cost more than a buck.

The rumblings continued each time gas surpassed another dollar milestone as people dug deeper into their wallets each time they went to the pump as $3 and even $4 gas became a part of life.

The only people who would benefit from $5 a gallon gas also happen to be the only ones saying that it is coming. I guess they are hoping for a self-fulfilling prophecy.

Of course gas is not the only factor affected by the laws of supply and demand.

Prices are higher when demand is great and supplies are low.

Conversely prices tend to drop when supplies raise and demand drops.

The factors of supply and demand are not limited to just oil commodities and play a role in the world of baseball as well.

When a team is red hot and demand to see them in person is high, the prices go up. When a team is struggling in the standings and the turnstile prices usually do not go up.

Under dynamic pricing fans are charged more to see the Boston Red Sox and New York Yankees compared with other teams where demand is not as great. Photo R. Anderson

Under dynamic pricing fans are charged more to see the Boston Red Sox and New York Yankees compared with other teams where demand is not as great.
Photo R. Anderson

Teams call this the dynamic pricing model. In Houston the Astros use this practice to raise the price of admission whenever the Yankees and Red Sox come to town since they know that more people want to see those games and are willing to pay the higher prices.

Personally I have always thought that the same seat in a Ballpark should cost the same amount of money regardless of who the opponent is but it seems that dynamic pricing is here to stay as teams try to find ways to make as much money as they can.

Ticket prices are just one of many factors that go into the makeup of a competitive baseball franchise just as the price of a gallon of gas is just one of the factors that drives the economy.

Falling gas prices will not doom the economy and baseball fans will still pony up the dough if they want to see a team bad enough.

So with Spring Training around the corner it is time to take advantage of the low gas prices and take a road trip to see the action at the Ballpark.

Just don’t be surprised if you see oil executives in fancy suits on the side of the road holding up their sky is falling signs along the way.

Now if you’ll excuse me, I have a Spring Training trip to plan.

Copyright 2015 R. Anderson