Posted on 04/03/2019 1:36:53 AM PDT by ExGeeEye
This has probably been asked and answered. I may have actually read, or more likely, scrolled past articles and threads containing the Answer.
Therefore, do pardon me, and if you cannot, please feel free to pile on all the ridicule you can muster-- IF you know the answer.
And also, IF you know the answer-- please share it.
Here goes:
--Gas prices always seem to rise in unison.
***Almost as if there has been a conference among the various gas companies for the purpose of fixing the prices.
QUESTIONS:
1. Isn't price-fixing illegal?
2. If price-fixing is not occurring, what accounts for the in-unison price rises?
3. Do they think we don't notice, or care?
4. Do they notice that at least a few of us so order our lives that we never need buy gas on the day of the simultaneous price hikes, or for several days thereafter? Are they accounting only for customers who, due to length of commute or the nature of their work, must empty their tanks over a couple of days and must buy gas when they can get it regardless of price?
The C store chains all have the price computerized. A message from the home office raises or lowers the price at all pumps at the same time. No on site human involvement.
Most gas stations are not owned directly by the oil companies, but are franchised out to marketers.
The marketers know their territories, and will adjust their prices locally as they drive around and observe the competition. Those other stations may also actually be theirs, too, so the same marketer might be raising all the prices at once.
-PJ
But where do they get boy gasoline?
The “problem” = supply + demand/timing.
There.
Fixed it.
“But where do they get boy gasoline?”
It really depends on how the gasoline self-identifies.
In a limited market with only a few participants, you don’t have to actively “collude” to “fix prices”. Any businessman worth his salt knows what his competitors are selling their goods / services for, and adjusts his prices accordingly without having to collude with them.
Take the price of unleaded gas as set by the international bankers (currently $1.93)
https://money.cnn.com/data/commodities/index.html
add in taxes in the location where you buy gas.
Compare it to the pump price.
Now, of course, the gasoline in the tanks at the station didn’t actually cost the current spot price, but when the price of the gas goes up on the market, they quickly raise the pump price. (When it goes down, they make some easy money before they start dropping it to match). And if a refinery goes offline, they get ahead of the market.
The states make the most because of taxes. Some have fixed prices while others get a percentage. Gas stations will break down the cost and put it on the pump as they do not want their customers to blame them for the rise.
In California it is always the state that raises prices. I think they “collude” with the refineries.
Thank you, your response answered many questions for me. I always wondered where the marketing differentials “happened” knowing all the actual gasoline was basically the same coming out of the refineries.Very interesting, very informative. Thank you for taking the time for a complete response.
When raw materials (oil) go up, all the refineries feel the crunch at around the same time...most gas stations go p within a day or two of each other.
Nope; the price is set by both the price paid to fill the tank and the expected price to re-fill that tank.
If a station kept the price just at what it filled the underground tank they will sell out faster at lower price point and find it hard to sell the next load at a price higher than their competitors across the street.
Here’s my unscientific take based on observation over the years. When gas prices go up in unison, it’s tied to pay days, most often bi-weekly. When people get paid, money is more abundant, prices are raised to take advantage of the free flow of money. As the span between pay checks expands, money is less available and prices are lowered to attract what money is still in circulation.
I know what you mean.
I’ve driven by several gas stations late at night and they all have the same price. Then at 5:00 AM they ALL have changed their prices, and again, they are all EXACTLY the same.
And there are variations within regions. Even with the same chain. Casey’s in the Midwest is the example I’m most familiar with since they are in almost every city AND burg. Yet they will have different prices if you drive any distance away.
“How does the station owner of brand A at location 1 know to raise the price at the same time and to the same amount as the station owner of brand F at location 6, nine miles away?”
There are only a couple of major wholesale price indices. The smart station owner watches the indices daily, usually several times a day. Timing purchases by the volume in your tank versus the direction of wholesale prices is an art, but that’s how it’s done.
If you have a tankful of $1.44 per gallon wholesale gas, and the new wholesale price is $1.65, if you don’t raise your price, you won’t have enough money to replace the gas in your tank. Since most larger new stations have 10,000 to 15,000 gallon tanks, we are talking about a chunk of change to refill a tank.
A lot of stations do well to make 15 or 20 cents per gallon. Most don’t do that well. Say you are making only $.07 per gallon, and wholesale prices go up $.09 per gallon late Friday afternoon. You didn’t notice it, but your competitors did and raised prices. Monday morning your weekend manager will be crowing about the volume of gas sales, but you will be refilling your tank at a loss.
That’s why, as another commenter pointed out, most stations rely on sales of snacks, drinks, etc, to keep the lights on and the doors open.
You remind me of Maxine Waters in the congressional hearing where the big oil execs were testifying to answer the democRATS' same questions you ask here.
When she didn't get the answer she wanted, she mumbled under her breath but so her mic could still pick it up, that she would nationalize the oil industry if they didn't lower their gas prices.
Other DemocRATS members in the same committee hearing can be heard laughing in the background, as she makes her threat. Even they thought she was a loon.
I'm guessing that you probably don't want to be on the same side of the issue as Mad Maxine.
Oil, on the other hand, has millions upon millions of dollars behind getting it from the ground to a refinery to your gas station pump so it is convenient for you to bitch about the price.
Given the moratorium on building new refineries in this country, we are left with a gasoline pricing system that ebbs and flows with the market and supply and demand.
Add in your ZIP code...CVS,etc have differing prices for same item from one zip to another depending on ‘wealth statistics’....
This.
And somebody else said people like us sound like Maxine Waters and should take an economics course.
I don’t think so.
Just like I don’t need a meteorologist at course to know it’s raining.
https://www.eia.gov/todayinenergy/detail.php?id=11031
Refiners are currently switching to make summer-grade gasoline ahead of
the May 1 compliance date for refiners and product terminals. Summer-grade
gasoline has a lower volatility than winter-grade gasoline to limit evaporative
emissions that normally increase with warm weather and cause unhealthy
ground-level ozone.
Volatility is a measure of how easily a liquid (or solid) will change
into a vapor. For gasoline, it is measured by Reid Vapor Pressure
(RVP). The higher the RVP, the more volatile the gasoline. While the
Environmental Protection Agency (EPA) requires lower-volatility
summer gasoline, aside from any government regulation, gasoline’s
RVP must be limited to ensure that the fuel does not vaporize in the
fuel system. If it does, the engine can stop running.
It costs refiners several cents per gallon more to make summer-grade
gasoline, compared with winter-grade fuel, which is part of the reason
that retail pump prices can rise in the summer.
I don’t think there is collusion. Margins are razor thin on retailing gas. So while a seller will be quick to match a price drop they will rise when can to in order not to be losing money.
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