Two weeks ago today, gas prices across the Chicago area jumped substantially. Usually this would mean a dime or maybe a quarter, but this time the pop was a stunning 80 cents. Stations charging $2.59 in the morning were updating their signs to $3.39 by mid afternoon. Not a few stations...all of them. The jump was attributed to a unforeseen issue at the Whiting, Indiana refinery, a storyline we have become accustomed to. I have several questions that have been unanswered.
The first issue involves simple economics. Prices should shift based on supply and demand issues. Unless there was a run on gas for late summer travel plans, the demand was probably not the catalyst. The refinery issue certainly suggests a supply shortage, yet no station in the chicagoland area suffered from a weak supplies. The tanker trucks have remained on schedule and no one who needed gas has been denied. So why the price increase?
Secondly, as oil prices decline, station owners always claim the current inventory must be sold prior before prices can fall. Why did prices skyrocket immediately and dramatically after this refinery problem?
Most concerning is the fading capitalistic principle of competition. Each and every station across Chicagoland jumped the same amount..at the same time. Does this suggest that the Whiting refinery supplies gas to each and every station? BP, Citgo, Shell, Thorntons, Marathon...all increased in unison. As with so many industries, the barriers to entry are sky high and prevent any real threat to this monopoly.
There have been few if any details concerning the issue at the refinery. We have become so complacent and trusting in the system that few have questioned the price explosion. Big money has no transparency, little regulation and bankrupt morality.
Just yesterday the local news did a story on mayor Rham Emanuel and attorney general Lisa Madigan demanding answers about the crippling increase in gas prices. I will not hold my breath for a follow up story with anything but vague, maddening answers.