Oscillating Fuel Prices

Nearly every week for the past couple months we've received an email from the England corporate telling us to fill up the fuel tanks tonight because at midnight, prices are increasing again.

(In the big picture, putting in another 50 gallons we might not have out of the 800 gallons we already burned through this week, probably doesn't make much of a difference - individually - but will save England thousands of dollars that day across the 3,000 trucks they have running.)

Yesterday we got a message saying hold off on filling until tomorrow because fuel prices are dropping!

My last post about the American food distribution system being so highly dependent on diesel fuel got me thinking. Imagine the week when a few dozen million Americans decide for the first time to buy the bulk of their food locally, instead of from their usual supermarket. A few days later, faced with a bunch of unsold food, the grocers decrease their order for next week's food. Consequently, the trucking companies don't carry as much food and don't purchase as much diesel. While only a small fraction of the total diesel used that week, the truck stops have left over fuel and delay purchase of more from their suppliers. In an effort to unload some of this extra fuel, the suppliers drop their prices and next week's supply of fuel at truck stops has a lower price. That lower price of diesel fuel is then calculated into a lower price in shipping costs which reduces the price of the goods being carried. Do you see where this is going?

The price of fuel is so closely tied to demand and use that small changes in demand and use can affect the price. When that price becomes high enough that it is a substantial portion of the cost of the goods being transported with it, the price of those goods might well vary also. (Though in reality I don't think grocers or other retailers will vary their prices often enough to cause an oscillation in buying habits. Or would they? Hmmmm.)

Bottom line - fuel prices are going to oscillate up and down even more in the coming years, but still trend upward. Hopefully the American public will choose to get off this rollercoaster and not respond to each drop in fuel prices with a buying spree, instead maintain their reduced fuel habits for the long term. Though ironically, if enough people did that, the oscillations would smooth out and the price of fuel would likely stabilize at a lower point. Clearly, without government intervention, this could all become a huge mess for society.