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Whenever I tell people that I work on an oil rig in the Gulf of Mexico, one of the questions that often comes up is “why is the price of gasoline is so high”?
There are so many variables that affect the price of oil, gas, and diesel that is is often difficult to give a fair answer in a short amount of time.
Until yesterday, I would always offer a similar response:
“It’s the war in the Middle East…it’s supply and demand…it’s the cost of production…etc…”
After overhearing a conversation between a gas station manager and his assistant a couple of days ago, I now have a totally new appreciation of how the price of gas is determined at individual gas stations around the country.
Here is what I remember of their conversation:
“Hey Jimmy, the Citgo Station down the road just changed their price to $2.57 a gallon!” said the assistant.
“They did?…There goes any profit margin I had left in that last delivery!” The manager said.
I noticed that the gas station was currently charging $2.65 per gallon.
“Let’s lower the price of each grade and make them $2.59, $2.69, and $2.79.” The manager said.
“Alright, if you cover the cash register I will go out and change the sign.” said the assistant manager.
“Wait, let’s just lower the price on the regular gas and leave the medium and premium grades as they are.” the boss said hesitantly.
“OK, whatever you want to do.” the assistant said back.
“Well, what would you set the gas prices at?” the manager asked?
“Your the boss, whatever you think is best” the assistant responded back.
“Alright, lets just do that! Lower the regular to $2.59 and leave the other grades alone!”
There was no complex formula, no directive from a corporate office, no price fixing between competing stations, just a casual conversation between an employee and a manager.
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