Riddle Me This About Gas

[TheSiege]

the price of gas in each state is usually around the same price, give or take a a dime. And it verys a little more from state to state due to taxes right? Ok.
If there are several oil companies that import oil in the US, and several refineries that convert the oil, why are gas prices the same, roughly, at TexaCo, Chevron, Sinclaire and so forth.
My understanding was that oil per barrell price was determined on high of production the oil company is in. More production, cheaper prices, less production lower prices, why doesnt an oil company increase production, lower the price, and then get the larger share of the market?

So question one, Why are gas prices the same, roughly, at all gas stations?
And two, Why doesnt one of the oil importers lower prices to get a larger share of the market?

 

[jjoyner]

Because Cost per barrel Vs. Surplus of demand = GREATER demand on the production side which in turn = LESS SUPPLY driving up the cost...it might work for 2 hours and then it would flatten back out...

simple economic rule....the basic eco rule actually

Supply and Demand...

 

[MrChad]

You're also assuming that the oil industry is a perfectly competitive market, which it is not.

 

[mobobuff]

I think the price difference of here (Michigan) and California is probably more like 7 dimes.

 

[meltdown75]

Whatever gets the guys in the suits lots of $$ is the system which will remain. The consumer? Who the hell is that!??! hahah!

 

[dmcowen674]

Originally posted by: jjoyner
Because Cost per barrel Vs. Surplus of demand = GREATER demand on the production side which in turn = LESS SUPPLY driving up the cost...it might work for 2 hours and then it would flatten back out...

simple economic rule....the basic eco rule actually

Supply and Demand...

^^^^^^^^^ Bullsh!t ^^^^^^^^^^^^

Originally posted by: MrChad
You're also assuming that the oil industry is a perfectly competitive market, which it is not.

^^^^^^^^ Bingo ^^^^^^^^^^^

 

[osiris3mc]

Um, OPEC.

 

[mugs]

Gas prices are the same at all gas stations in the same area because people will drive out of their way to save $.20

 

[conjur]

Oil is a commodity...they all buy at about the same price.

The increase in gas prices is because our refining capacity is very limited (no new refineries built in about 30 years.) Also, there are many grades of gasoline required as required by regulations in about every major city (esp. those in California.) Therefore, there's not one standard grade of gasoline for each octane. Prices rise accordingly.

 

[TheSiege]

so then what was the case like 3 years ago when it was like a dollar a gallon, i know supply was high then, cause every joe schmoe in town filled every gas tank, can and barrell they owned

 

[conjur]

It wasn't a dollar a gallon 3 years ago.

The price of oil/barrel does have an effect on prices but taxes get added and there have been fires/shutdowns/etc. at various refineries and that causes price spikes, too.


Gasoline Price History
http://www.ghg.net/stuart/gasprice/gasprice.html


Oil Price History and Analysis
http://www.wtrg.com/prices.htm

 

[TheSiege]

Originally posted by: conjur
It wasn't a dollar a gallon 3 years ago.

The price of oil/barrel does have an effect on prices but taxes get added and there have been fires/shutdowns/etc. at various refineries and that causes price spikes, too.


Gasoline Price History
http://www.ghg.net/stuart/gasprice/gasprice.html


Oil Price History and Analysis
http://www.wtrg.com/prices.htm

ok well here in central utah, where i live, gas prices were $1.01 within the past 36-48 months

 

[conjur]

Might have been in the post 9/11 price drop when the economy took a big hit. That was a fluke.

 

[jjoyner]

Originally posted by: dmcowen674

Originally posted by: jjoyner
Because Cost per barrel Vs. Surplus of demand = GREATER demand on the production side which in turn = LESS SUPPLY driving up the cost...it might work for 2 hours and then it would flatten back out...

simple economic rule....the basic eco rule actually

Supply and Demand...

^^^^^^^^^ Bullsh!t ^^^^^^^^^^^^

Originally posted by: MrChad
You're also assuming that the oil industry is a perfectly competitive market, which it is not.

^^^^^^^^ Bingo ^^^^^^^^^^^

What Makes the Price Go Up and Down?

There are usually two factors behind a fluctuation in gas prices: a change in the price of crude oil, or an imbalance in supply and demand.

Price of Crude Oil: Crude oil prices are determined by the world market. OPEC has the greatest potential to affect prices, since it controls about 40% of the world's oil production and 67% of the world's crude oil reserves. Other factors can also affect the price of crude oil, such as supply disruptions caused by overseas events or natural disasters, or even rumors or speculation of potential shortages. A change in world crude oil prices can lead to a change in the wholesale price for gasoline that your local retailer pays to provide you with fuel. Retailers must react to these wholesale price changes, changes they have no control over and, in today's electronic world, are communicated, and often times placed into effect nearly immediately, sometimes several times a day.

Supply and Demand: Crude oil is "refined" into several different fuels and oil-based products, such as gasoline for automobiles, diesel fuel, heating oil, jet fuel, or chemical products. Changes in demand of any of these crude oil-based products can affect gasoline prices. Weather also has an impact - demand for gasoline increases in the spring and summer months as people drive more. However, this increased demand also increase prices for crude oil, much the way more bids for an auction item increase the price. In addition, government regulations affect the price you pay at the pump. Here's how:

From state website...

Kiss my ass....:thumbsdown:

 

[broon]

Gas prices are the same becuse they are regulated by the fed. The difference in price is usually tax.

There is no need to lower the price to gain market share. In my town there are really only two companies, BP and Conoco. The stores really don't make that much on the gas, it's what they sell inside. That's why Conoco gives discounts on gas when you buy stuff in the store.

 

[royaldank]

Originally posted by: broon
There is no need to lower the price to gain market share. In my town there are really only two companies, BP and Conoco. The stores really don't make that much on the gas, it's what they sell inside. That's why Conoco gives discounts on gas when you buy stuff in the store.

Gas stations make next to nothing on the fuel. It's not uncommon for gas sales to only be 1%-5% of their revenue.

 

[codeyf]

Originally posted by: jjoyner

Originally posted by: dmcowen674

Originally posted by: jjoyner
Because Cost per barrel Vs. Surplus of demand = GREATER demand on the production side which in turn = LESS SUPPLY driving up the cost...it might work for 2 hours and then it would flatten back out...

simple economic rule....the basic eco rule actually

Supply and Demand...

^^^^^^^^^ Bullsh!t ^^^^^^^^^^^^

Originally posted by: MrChad
You're also assuming that the oil industry is a perfectly competitive market, which it is not.

^^^^^^^^ Bingo ^^^^^^^^^^^

What Makes the Price Go Up and Down?

There are usually two factors behind a fluctuation in gas prices: a change in the price of crude oil, or an imbalance in supply and demand.

Price of Crude Oil: Crude oil prices are determined by the world market. OPEC has the greatest potential to affect prices, since it controls about 40% of the world's oil production and 67% of the world's crude oil reserves. Other factors can also affect the price of crude oil, such as supply disruptions caused by overseas events or natural disasters, or even rumors or speculation of potential shortages. A change in world crude oil prices can lead to a change in the wholesale price for gasoline that your local retailer pays to provide you with fuel. Retailers must react to these wholesale price changes, changes they have no control over and, in today's electronic world, are communicated, and often times placed into effect nearly immediately, sometimes several times a day.

Supply and Demand: Crude oil is "refined" into several different fuels and oil-based products, such as gasoline for automobiles, diesel fuel, heating oil, jet fuel, or chemical products. Changes in demand of any of these crude oil-based products can affect gasoline prices. Weather also has an impact - demand for gasoline increases in the spring and summer months as people drive more. However, this increased demand also increase prices for crude oil, much the way more bids for an auction item increase the price. In addition, government regulations affect the price you pay at the pump. Here's how:

From state website...

Kiss my ass....:thumbsdown:

Right...all the oil execs, opec, etc are perfectly clean, honest business men....

I think I'll side with MrChad's account of reality.

 

[jjoyner]

Originally posted by: codeyf

Originally posted by: jjoyner

Originally posted by: dmcowen674

Originally posted by: jjoyner
Because Cost per barrel Vs. Surplus of demand = GREATER demand on the production side which in turn = LESS SUPPLY driving up the cost...it might work for 2 hours and then it would flatten back out...

simple economic rule....the basic eco rule actually

Supply and Demand...

^^^^^^^^^ Bullsh!t ^^^^^^^^^^^^

Originally posted by: MrChad
You're also assuming that the oil industry is a perfectly competitive market, which it is not.

^^^^^^^^ Bingo ^^^^^^^^^^^

What Makes the Price Go Up and Down?

There are usually two factors behind a fluctuation in gas prices: a change in the price of crude oil, or an imbalance in supply and demand.

Price of Crude Oil: Crude oil prices are determined by the world market. OPEC has the greatest potential to affect prices, since it controls about 40% of the world's oil production and 67% of the world's crude oil reserves. Other factors can also affect the price of crude oil, such as supply disruptions caused by overseas events or natural disasters, or even rumors or speculation of potential shortages. A change in world crude oil prices can lead to a change in the wholesale price for gasoline that your local retailer pays to provide you with fuel. Retailers must react to these wholesale price changes, changes they have no control over and, in today's electronic world, are communicated, and often times placed into effect nearly immediately, sometimes several times a day.

Supply and Demand: Crude oil is "refined" into several different fuels and oil-based products, such as gasoline for automobiles, diesel fuel, heating oil, jet fuel, or chemical products. Changes in demand of any of these crude oil-based products can affect gasoline prices. Weather also has an impact - demand for gasoline increases in the spring and summer months as people drive more. However, this increased demand also increase prices for crude oil, much the way more bids for an auction item increase the price. In addition, government regulations affect the price you pay at the pump. Here's how:

From state website...

Kiss my ass....:thumbsdown:

Right...all the oil execs, opec, etc are perfectly clean, honest business men....

I think I'll side with MrChad's account of reality.

I never said that it was NOT related to the executives, but at the same time, there is NO proof that gas price fluctuation is relative to on-a-whim executive impulses to raise cost to the consumer. Basic laws apply to everything economical, regardless of ethics. No wonder universities still insist on econ in college workload...sheesh

 

[TheAdvocate]

Better question:

Some of my highly partisan friends like to constantly insinuate that prices are ballooning right in line with a BUSH/GOP financial cronies/campaign boosters master plan. Prices rose during W's first term, and everytime the public squealed, he made a speech or released some reserves.

Now, during W episode II, there is no re-election pressure, so damn the torpedoes and full steam ahead. Let's fleece the American populace in retaliation for the sub $1 gas prices back during the first Clinton administration.

I usually write that stuff off as Oliver Stone crapola because of so many market forces in play, but with prices soaring to $3/gallon by mid summer, I'm starting to believe.

I just cannot believe the Detroit automakers are happy, unless their strategy is to "upgrade" consumers from gas guzzling SUVs to leaner sedans that get twice the fuel economy. I also just hope that this puts pressure on congress to fund and support alternative fuel sources.

Thoughts?

(PS, please spare me the rhetorical crap about gas beingc heaper than milk by the gallon. I don't drink 30 gallons of milk per week - apples & oranges).

 

[jjoyner]

Originally posted by: TheAdvocate
Better question:

Some of my highly partisan friends like to constantly insinuate that prices are ballooning right in line with a BUSH/GOP financial cronies/campaign boosters master plan. Prices rose during W's first term, and everytime the public squealed, he made a speech or released some reserves.

Now, during W episode II, there is no re-election pressure, so damn the torpedoes and full steam ahead. Let's fleece the American populace in retaliation for the sub $1 gas prices back during the first Clinton administration.

I usually write that stuff off as Oliver Stone crapola because of so many market forces in play, but with prices soaring to $3/gallon by mid summer, I'm starting to believe.

I just cannot believe the Detroit automakers are happy, unless their strategy is to "upgrade" consumers from gas guzzling SUVs to leaner sedans that get twice the fuel economy. I also just hope that this puts pressure on congress to fund and support alternative fuel sources.

Thoughts?

(PS, please spare me the rhetorical crap about gas beingc heaper than milk by the gallon. I don't drink 30 gallons of milk per week - apples & oranges).

We use hydrogen instead of gas...if that fails, we revert to driving Suburbans that use half-eaten ham sandwiches and chicken legs

 

[KK]

If it was a supply and demand problem, then since 3 years ago it was half the price it is today, does that mean there is half the oil coming in as then. I have yet to see a gas station close because they didn't have gas, now why is that?

 

[jjoyner]

Originally posted by: KK
If it was a supply and demand problem, then since 3 years ago it was half the price it is today, does that mean there is half the oil coming in as then. I have yet to see a gas station close because they didn't have gas, now why is that?

That's called inflation...that happens too...

You don't see gas stations close...but you will see them cover the pump with a bag and say they are out of a certain grade..

I never said shortage...ever....But the common principle applies here...

 

[KK]

Originally posted by: jjoyner

Originally posted by: KK
If it was a supply and demand problem, then since 3 years ago it was half the price it is today, does that mean there is half the oil coming in as then. I have yet to see a gas station close because they didn't have gas, now why is that?

That's called inflation...that happens too...

You don't see gas stations close...but you will see them cover the pump with a bag and say they are out of a certain grade..

I never said shortage...ever....But the common principle applies here...

Why hasn't my mcdonalds double cheeseburger gone up to 2 bucks then? I haven't seen the bag on the pump anywhere, unless the pump was broken. I doubt it was a lack of gas as they probably all use the same tanks.

 

[Phoenix86]

Originally posted by: TheSiege
the price of gas in each state is usually around the same price, give or take a a dime. And it verys a little more from state to state due to taxes right? Ok.
If there are several oil companies that import oil in the US, and several refineries that convert the oil, why are gas prices the same, roughly, at TexaCo, Chevron, Sinclaire and so forth.
My understanding was that oil per barrell price was determined on high of production the oil company is in. More production, cheaper prices, less production lower prices, why doesnt an oil company increase production, lower the price, and then get the larger share of the market?

So question one, Why are gas prices the same, roughly, at all gas stations?
And two, Why doesnt one of the oil importers lower prices to get a larger share of the market?

Two things. First, you don't pump "oil" into your car, you pump "gas". The price of gas is related to the price of oil, but it's far from the only factor.

Second, the answer to EVERY economics questions is supply and demand.

 

[Phoenix86]

Originally posted by: KK

Originally posted by: jjoyner

Originally posted by: KK
If it was a supply and demand problem, then since 3 years ago it was half the price it is today, does that mean there is half the oil coming in as then. I have yet to see a gas station close because they didn't have gas, now why is that?

That's called inflation...that happens too...

You don't see gas stations close...but you will see them cover the pump with a bag and say they are out of a certain grade..

I never said shortage...ever....But the common principle applies here...

Why hasn't my mcdonalds double cheeseburger gone up to 2 bucks then? I haven't seen the bag on the pump anywhere, unless the pump was broken. I doubt it was a lack of gas as they probably all use the same tanks.

McDs has other products, you can't compare their sale priced product vs. a single product company. What about the price of colas? That's gone up (up in price, or down in size, or BOTH) just about everywhere.

Of course you don't tend to buy just a hamburger, you get fries and a drink. They can make up a loss leading product with a higher margin on other complementary products.

Take an economics class, this is fairly simple stuff.