I have never, ever understood this. Gas is for the most part is a simple commodity. Sure, some prefer a premium brand (like Shell) to a cheaper one (like ARCO), but I can’t for the life of me figure out why there is such a wide variance even within a single mile or two of a city (and amongst the same brand!) I would think that supply and demand would reign supreme here. It’s the same stuff.
You get that one gas station that charges $0.10 less than all the others in the area and the lines are out to the street.
So where are supply and demand?
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Adding a .02 to this but it’s kind of not answering your question. In the recent price hike the US released 80 billion barrels in the oil reserves in order to get the market back on track. Oil companies need to refill the reserves now and then we’ll see the prices drop. So oil companies are double dipping, but until we see the reserves topped up again you won’t see a drastic drop in gas station prices.
You also need to realize that gas station pumps are a very small portion of an Oil Companies revenue. Aerospace is where the bulk of their profits come from (plastics and natural gas are other revenue streams, but I’m keeping the discussion on Petroleum).
Is this right? That it can Jack up immediately but fall like a feather based on price per barrel? I don’t think so. We need something in the middle.
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