The writer is a Latham resident and a freshman at Holy Cross in Worcester, Mass., where she studies economics.
Americans everywhere are asking the question, “Why am I paying so much for gas?”
Since gas prices began to drastically rise in 2000, consumers have been experiencing an economic strain when “filling up” at the pump. Pressures from consumers as well as the national government are urging the car industry to make more fuel-efficient cars with better gas mileage, but this is not solving the problem. As prices fluctuate, Americans tend to feel they have little or no control over pricing. But if we, the consumers, aren’t controlling the prices … who is?
Although there is involvement from the government and foreign suppliers in gasoline prices, the price we pay at the pump is a product of the supply and demand market for gasoline. Suppliers of gasoline are able to price gas at what they do because we, the consumers, are willing to pay that price.
The inevitable question is, at what price will we, the consumers, no longer be willing to buy? Seven dollars a gallon? $10? $15? $35? Without any intervention, gas prices could continue to rise to a point where consumers are not willing to buy — effectively causing the gasoline and motor industry to collapse entirely.
In an attempt to avoid such a collapse, I’m proposing that a combination of more consumer education and state and national legislation could help to keep gas prices lower, while giving consumers more control. If legislation could be passed to allow consumers to purchase and use prepaid cards for 50 gallons (basically the equivalent of three full tanks) at any time in a given calendar year, this would help the problem two-fold.
First, my belief is that this would begin to make all customers better informed consumers. Due to the need to make the decision on when to lock into a price, more consumers would begin to educate themselves on gas production, refinement, state and national gas taxes. Knowing such information would allow consumers to buy gasoline at the lowest price they can get.
Secondly by allowing consumers to purchase 50-gallon prepaid cards, gas companies would work more effectively to make decisions to drive down prices input costs to gain the lions share of the market. Competition among gas companies will produce lower prices for the consumer.
Why would gas companies work hard to cut costs and lower prices? Such legislation, if enacted, would provide billions of dollars of “new” revenue for these companies. Just think of the revenues for lost and expired cards, and cards with excess dollars left on the balances. By way of example, in 2013 it is estimated that $77 billion was spent in the prepaid credit card industry nationally. Additionally, this “locking in” option would give the industry more stability, as it would be able to smooth out the highs and lows of the market.
So, let’s urge legislation of such a program as described to give consumers more control of this supply/demand equation. Such a system would help allow the future and trust in one of the most important industries in the United States to be more consumer controlled.
