A Micro (Really Micro) Economic Observation

In the anti-gravity category:*

Last year, when gas prices were moving up toward record highs, the company that operates the vending machines in our building raised its prices. My twelve-ounce can of diet liquid caffeine carbonation went up, as did the prices of all the anti-diet items in the snack machine one pace to the left. This was concurrent with prices of almost everything everywhere going up and being blamed on the high gas price.

But since gas prices have come down to the lowest seen in years, the prices of these other things are still at their elevated levels.

The main effect of the lowered gas prices, then, appears to be higher profit margins for the purveyors of consumer goods. If they were wise, they’d plow those increased profits back into their businesses to improve their products, distribution systems and other practices, so that when the next increase in their operating costs comes along they don’t have to pass it on to the consumer right away — using the fat years to store away surplus for the lean years.

Wishful thinking.

*I.e., the what-goes-up-doesn’t-always-come-down category.

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