Like, prices change every week. Most basic commodities dont change prices as much as gasoline
In: 1
Because there’s very little value added to the consumer product gasoline compared to most consumer products.
Wheat prices are just as volatile as oil prices, on the financial markets, but very, very few consumers buy wheat, mostly they buy bread, whose price mostly consists of not wheat, in a ($2 loaf of bread there’s about $0.10 worth of wheat) and when wheat prices move, the cost of labor, energy to bake the bread, and energy to deliver the bread don’t always change in the same direction and time. Contrast this with gas, in a $3 gallon of gas, there’s about $1.75 worth of oil.
That means when the underlying price of wheat and oil each move by 20% one day, the impact on the loaf of bread is 1% ($0.02 of $2.00) while on the gasoline it’s more like 10% $0.35 vs $3.00.
Latest Answers