Price Stickiness

They behave in step functions. Big pops...and big drops. That's how prices roll.

Think about the volatile oil biz. Prices go up...then there's a bomb scare in the Middle East or Argentina or Venezuela or Nigeria, and prices move. Fast. So prices suddenly run up to an average 4 bucks a gallon at the pump. Middle East peace breaks out all over the place. Do pump prices suddenly go back down?

Nope. They're sticky. They stick on top. Like...why would it be in the best interest of the gas station owners to suddenly adjust to their lower costs and prices. They stick up there, then slowly, gently fade, sticking to the higher prices, creating higher margins for the stations...until they fade back down to market rates again. Waiting and waiting for them to pop and stick again.