Sunday, December 28, 2014

Relief at the Pump

With our travels over the holidays, we've seen a massive decline in the price of gas at the pump.  The production in North Dakota has added some much needed supply to the oil market, and the Saudis are not lowering their output to protect prices.  The result has been welcome relief in the cost of a gallon of gas, and some stations in our native Minnesota have already decreased prices below $2.00.

The timing of this was certainly a boon to the US consumer as it frees up discretionary dollars that could be used for holiday gift-giving.  As we've seen in the past, the confident American consumer can drive an entire economy, and the benefits of this activity for many can be substantive.  It's great, great news.

Unfortunately, the news is not universal.  There are two laggards to this party, and both are proactively gouging the American consumer:

  • Airlines, often the first industry to raise prices in periods of increase fuel charges, have done very little to their pricing structure.  I have a number of upcoming trips ahead of me, and the costs (and full flights!) are shocking.  Ultimately, someone will likely blink in the industry and will lower costs, to which others will follow.  But for right now, all of the airlines appear to be quite content to reap the profits afforded by low fuel and high ticket prices.
  • Deliver companies - specifically Fed Ex and UPS - are actually RAISING prices in 2015.  The change has been touted to account for the larger size of packages being shipped (dimensional weight versus physical weight), but everyone is in agreement that all that is really being done is a sizable rate increase that will impact all who ship, or receive goods, via those two methods.  
Indeed, the relief afforded via reduced fuel helps the US consumer, and ultimately the economy.  It is just unfortunate that the relief is not universal.

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