Why do most goods have relatively stable prices, while gasoline fluctuates on a daily basis?
In: Economics
There are many factors to consider here – is it producable, is it flammable or perishable, storage (size) costs to selling cost ratio, shipping (weight, flammability, etc) costs to selling cost ratio, demand and supply ratio, etc.
Gasoline isn’t producable, we can only extract what earth already has. It is flammable, which means it has a risk factor. During quarantine period, demand was 0 so the prices were in negative (they were paying us, to take the barrels) which means it was more expensive for them to store it than to simply give it away (storage cost to selling cost ratio). If a ship full of gasoline sinks, ship gone, gasoline gone, underwater life gone, too much loss, lack of supply, increase in price.
There are many other factors, for eg sometimes industries keep goods hidden (decreasing the supply) so that prices will rise and then they can sell the hidden stock at increased price. You can check these factors for any type of goods and figure how they work.
PS: I’m not in the profession so please ignore if I’m using wrong words. I’m just putting it in layman’s terms.
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