PRICE GOUGING:

Thinking About Strategies

I’ve been thinking about strategies. Actually I’ve been thinking about the 15 cent increase, inflation, the FED, energy and food, investigations, and conspiracies. A strategy is a coordinated or concerted plan of action undertaken to achieve a pre-desired end to something.

You see last Thursday we all saw an across the board increase in the price we pay for fuel at the pump of 15 cents. While I use the 10% ethanol blend in my PT Cruiser, lawnmower, weed wacker, and chain saw; the 15 cent price spike pretty much applied to regular unleaded, premium, and diesel fuel as well. This must have been some pricing strategy by all of the fuel retailers because the spike occurred everywhere (regardless of the company or the brand) at almost the same moment. In actual truth, the jump occurred at the locations to get fuel in Rochelle and DeKalb in ka-ching, ka-ching, ka-ching unison while the harmonious jumps to the prices of 13 cents in Creston and Malta occurred about two hours later. There was a brief window of opportunity to top off your tanks at these locations at the not-so-excessive prices and many took advantage of the brief arbitrage.

The fact that the apparent unitary price bump/spike occurred everywhere at virtually the same instant for the same amount led me to TH*NK that this had to be some coordinated strategy of the oil companies to “ding” the consumers. I had already been on-line checking world-wide news and developments when a friend and neighbor stopped at the house to tell me I had better fill up immediately because a price jump was coming. I logged off and topped off my gas supplies for all of my fuel thirsty vehicles and gizmos. I then went back on-line to find out why the spike occurred. I found not one single development, catastrophe, or explanation. I found nothing to justify the jump!

This jump was not unexpected by me because I had felt that the recent further cut in interest rates by the FED of a quarter of a point would trigger a further drop in the comparative value US dollar relative to the basket of other world currencies and crude oil would re-price accordingly. The Dollar may still be the “official” currency of OPEC, but it is the value of the Euro, the British Pound, and the Japanese Yen relative to the US dollar which sets the market price for crude world-wide. When the dollar drops relative to the Euro, the Pound, and the Yen; the global price of crude (and distillates) adjusts accordingly. Sometime down the road the “at the pump price” increases occur as well. It is tragically funny how quickly the upward pricing occurs while the downward trends take their sweet time. This must be all a part of the grand strategy at work. It’s no accident, is it?

Since fuel costs figure so predominately in the pricing of our food supply, it can’t be too long before we witness the “cost push” factor of inflation in what we all pay at the stores for what we eat. Since this is an election year and the electorate is clearly not a group of “happy campers” over the perceived gouging of their households for energy and food consumed, there will undoubtedly be more Congressional investigations forthcoming. The record setting first quarter announcements of profits reaped by the oil companies triggered a barrage of hearings, investigations, and inquiries. We didn’t learn anything from them, now did we? There will be bravado/grandstanding, but little relief!

A strategy is a coordinated or concerted plan of action undertaken to achieve a pre-desired end to something. There is a distinction which must be made here. The coordinated or concerted plan of action is only a “strategy” when the ultimate goal is for the common good or general well-being. In my dictionary, when the ultimate goal achieves bad (or negative) things; we don’t have a strategy, we have a conspiracy. I TH*NK that subtle line of distinction has been crossed!

I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.

Copyright 2008 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.