The writer is a marketing and media consultant.
To the Editor:
In his April 18 column, "What about the gasoline prices?" Keith Crain writes about the effect higher gasoline prices can have on the industry, our government and the public.
Little is reported about the causes of rising gasoline prices. One of the drivers of oil prices is increased consumption in nations where industries are growing and more members of large populations are buying cars.
But, from all that I have seen, I think the current spike in the price of oil is again driven by speculation on oil futures. I say "again" because that is what drove the last spike that contributed so heavily to the collapse of our economy and the auto industry.
Another factor that is rarely reported is the effect of gasoline distributors. Essentially, local distributors set the wholesale prices the retailers must pay, in part based on prices the distributors pay at the refineries or pipeline heads. That, and local tax rates, is why today gasoline is around $4 a gallon in Detroit and around $3.60 in Nashville. I'm not knocking the distributors. Gasoline is much cheaper in America than in other countries. We have the lowest distribution cost in the world. But their role needs to be considered.
In a free market, we must let prices of goods rise and fall, but it is important to examine the reasons for the changes. All of the media could do a better job of explaining what is happening.