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Gas Prices....someone educate me!

Discussion in 'Too Hot for Swamp Gas' started by fortunateson, Mar 14, 2019.

  1. fortunateson

    fortunateson Junior

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    I know I'll likely get the usual partisan responses to this question, but I would like to know how gas prices are determined! Collusion? Price Fixing? Free Market?

    What I really don't understand is how ALL the gas companies charge the same amount for a gallon of gas...but when you go to the grocery store to buy ANY item, the price will likely vary by a certain % either + or-.

    Someone educate me.
     
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  2. docspor

    docspor GC Hall of Fame

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    It's that convention of having giant signs in front advertising their price for all to see. So, why put a sign in front? Well, no one would unilaterally want to take down their sign...there is a branch of econ that deals with this. When a lot of others are voluntarily disclosing info & you don't disclose people assume the worst, hence, it is almost always in your best interest to disclose. There is a 1998 movie called the avengers that refused to pre screen. Turns out it was horrible.

    also, the law of one price would also suggest a convergence of prices WHEN THE CONSUMER CAN CHEAPLY get info (like via giant signs & now apps)
    [​IMG]
     
    Last edited: Mar 14, 2019
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  3. gatorknights

    gatorknights GC Hall of Fame

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    Yes, yes and yes. They're betting on futures, since the gas is already in their tank before they set prices at the pump. So I hear. Around here, there is generally a 15 cent difference between the local gas pumps, and the one on the southbound exit from I-75 is at the higher end of the price range.
     
  4. carpeveritas

    carpeveritas All American

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    There are factors concerning gas prices and variances between localities. Name brands typically include additives by the brand. Gas sold at big chain stores such as COSCO etc.. can make up the difference in sales in the store. Then you have other stores such as Grocery chains that give a discount on major brands at the pump depending on how much buy in the store.

    Taxes at the pump are also a factor in determining price. You have state and federal tax and in some cases like cigarettes a local tax as well.

    I will state that all gas comes in unmodified form to the refinery. It is then distributed to the retailer where they add additives etc.. From there is is hauled to the local gas station distance and economies of scale play a factor in the pricing as well.

    Hint - if you see an outlet replacing their tanks shop for gas there as it is more likely that you get contaminates in gasoline from outlets that have been in business for years.

    This is best site to get the information from
    U.S. Energy Information Administration
     
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  5. The_RH_Factor

    The_RH_Factor GC Legend

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    Two things to know about gas prices are that when prices drop low enough, the government wants to raise taxes and that the government already makes more on a gallon of gas sold than the oil companies do.

    Also, if the price suddenly goes up to $5.00 a gallon, cars will line up around the block to buy gas, but if you wait a couple of days, it will go down to the previous level.
     
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  6. ElimiGator

    ElimiGator GC Hall of Fame

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    I heard when Bush was in office he installed a magic button. Now, the President of the USofA just presses the magic button and prices change.
     
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  7. CaptUSMCNole

    CaptUSMCNole GC Hall of Fame

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    Wawa actually sets their gas prices lower than the other gas stations because they know how much time and money an average customer will spend once they walk through the door of their shop. That more than makes up for the difference for the lower gas price.
     
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  8. chemgator

    chemgator GC Hall of Fame

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    If you can get the oil companies to construct and repair the roads, we can get rid of the gas tax. (Actually, the gas tax would have to be closer to $0.40/gal than $0.18/gal to pay for the roads. The U.S. makes up the difference by using income tax money and/or stealing from your grandkids.)

    Whether the price goes down in a couple of days or not depends on why it went up. Gas stations are generally not allowed to gouge customers before or after a hurricane, for example. U.S. gas prices (for most locations) have never been above $4.50/gal. The highest price I can recall is $4.10/gal in 2008, just before the economy collapsed. The price was high because the economy was overheating. The price gradually climbed over several months in the summer of '08 (as the price of oil climbed to $147/bbl), so it wasn't going to "come down in a couple days" until the economy crashed.
     
  9. grumpygator77

    grumpygator77 All American

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    An independent owner of a BP station told me that the company will not allow him to sell his gasoline for less than what they dictate is the "lowest price" it can be sold for.
     
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  10. tegator80

    tegator80 GC Hall of Fame

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    My totally impressive, awe inspiring, and completely ignorant take: commodities such as petroleum products are still run by free markets and therefore supply and demand. Now that does not mean that what we see is the unfettered effect of the causes of the day but rather an attempt to manipulate things for a certain benefit.

    Think someone who builds a dam over a river. It stops the flow but eventually nature takes over and the river water WILL flow. If you are an idealist, you want to believe that the manipulations have mostly to do with attempting to make the peaks and valleys, or at least the volatility of them, less alarming and less likely to cause irrational exuberance or panic.

    As others have mentioned, where it gets odd looking is when prices are set based on projections of what the cost of the new supplies will be rather than the conditions of today. That is why a disaster in the oil field or refining area causes price jumps even though the supplies today are fine. And one of the things that markets are continually doing is to buy/sell based on what it thinks the future will be and then make adjustments after reality is somewhat different. So a price shoots up, no one buys gas or oil in an unfettered fashion, supply goes up and then the markets have to discount the sales because of all the excess. And then it eventually show up at the pump.

    Now where things get dicey, and it has gone both ways, is when "someone" tries to do something nefarious for a reason. The Syrian civil war is a prime example. The war is really a proxy war between Russia/Iran and Saudi Arabia. The Saudi's decided to teach those two a lesson and flooded the market with oil. I have called it a game of "holding your breath" where the Saudi's believe that their losses will be much easier to withstand than Russia/Iran. I think we are seeing SA going back to breathing and the supplies are leveling off. And so the prices are coming back up.

    But to the dam analogy, markets are mostly like plate tectonics. Things WILL move. But when they are stopped, it does not mean that nothing is happening, it just means that when things happen in the future, it will be dramatic (read earthquake).

    That is about all I have. Now, did I awe you...or give you a chuckle/eye roll?
     
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  11. gatorbite00

    gatorbite00 Sophomore

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    These Prices for GAS are just Nuts. Talk about Sticker Shock. WTF...
     
  12. Gatorrick22

    Gatorrick22 GC Hall of Fame

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    Collusion... which is determined by the number of refineries that the federal government allows for nationally. And the "special blended" gas that some state require. That last part should be determined by the federal government and not state by state like it is right now.
     
  13. homer

    homer GC Hall of Fame

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    25 cents per gallon jump yesterday in central Florida.
     
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  14. gatorknights

    gatorknights GC Hall of Fame

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    Ouch!!
     
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  15. RayGator

    RayGator Moderator VIP Member

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    No, you have posted good info. I’ve read similar elsewhere.
     
  16. G8trGr8t

    G8trGr8t Premium Member

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    $6.5 US$ per gallon in Belize
     
  17. QGator2414

    QGator2414 VIP Member

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  18. WESGATORS

    WESGATORS Moderator VIP Member

    Apr 3, 2007
    Hey, you're letting tire companies off the hook!

    Go GATORS!
    ,WESGATORS
     
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