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Thread: Question about gas prices

  1. #1
    Loves VFT's! Trapper7's Avatar
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    Question Question about gas prices

    This is what I want to know. Lets say the Chevron up the street bought gas for a certain price and then he sells the gas accordingly. So lets say he's selling it for $2.75/gallon. The fuel goes into the ground so it can be pumped to put into our cars, so it's just sitting there underground. Then WHY does he think he can put the price up to $2.82/gallon the very next day? He already bought it at a certain price, then after he gets it, why does the price go up? It's just sitting there waiting to be bought by us. Do you see what I'm getting at? Just because the oil price goes up the next day, it shouldn't effect what was already bought! I understand that if the NEXT time he buys gas, the price had gone up by the barrel, so he has to charge more THAT time....but not while it's sitting in the ground already paid for! It's like going to the grocery store and wanting to buy...lets say a green pepper, and it's 99 cents/pound, but then a produce guy comes out while you're picking out a green pepper and says, "sorry, the price of green peppers just went up, so it's now $1.99/pound". They don't do that at grocery stores, so why do it with gas??
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    Moderator Schmoderator Fluorescent fluorite, England PlantAKiss's Avatar
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    I have wondered that same thing and I heard an explanation to that. But I don't remember what it was. I remember thinking the answer was BS.

    Is gas just 2.82 there?? If so...don't complain! lol



    [Never thought I'd see the day when I'd say "just" about 2.82 gas]
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    ilbasso's Avatar
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    kinda pisses ya off, doesn't it?

    I don't think that there are any other readily sold goods that have this pricing scheme. I'm afraid you'll need to ask the CEOs why this is. From what I've heard, the gas station owners get told what the price is and have to adjust accordingly. MY question is how a gas station is selling gas for $3.84 and a station run by the SAME FREAKIN' COMPANY is $3.95 at the other locations?

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    Doing it wrong until I do it right. xvart's Avatar
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    I believe it's based on gas projections six months from now.

    xvart.
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    "Quis custodiet ipsos custodes?"

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    OMG h8 pings MrFlyTrap2's Avatar
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    Since gas is such a price volatile product, I don't believe the product is ever owned by the store. A way to think of it for example, BP owns & is manufacturing the gas all the way until it's in your tank. As a result, they can change the price of the product anywhere along the manufacturing process, including while it's in the tanks at the station. The owner of the station is told what base level gas should be set at. Lets say they are told, gas in your tanks is now $4 a gallon, the store owner can decide to sell it at $4+. Depending on competition, he may set it at $4, $4.10, $4.40 etc. I bet he or she then has to pay again another 2-15% of whatever extra 'bonus' price back to BP. But the 'phone call' can come in from BP telling the store owner you have a new price at any time.

    After getting that call, the owner has to make a choice. Selling the gas at a lower price closer to the baseline price, will draw more people to buy your candy, soda, nasty hot dogs, etc. Selling it above the baseline gets you more money from gas, but fewer cars.

    Currently store owners are now being hit with this as well. When I goto the pump I put in $25. I always put in $25 no matter if it's at $2 a gallon or $4 a gallon. Many people do that as well. I just have to drive less on $4 a gallon than I did at $2. But now store owners who may be selling gas at $.20 above the baseline are making only $1.25 from me on gas instead of $2.50. Hence, their main income product is getting cut in half.
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    Moderator Schmoderator Fluorescent fluorite, England PlantAKiss's Avatar
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    Its based on BS.

    If that's the reason, then why aren't groceries priced on what they think food will sell for 6 months from now? Hell, make it a year from now! I guess the roof repair guy will send me a bill saying "This is what we'd charge you next year to fix your roof...but we're charging you that price now."

    C'mon!!

    -----------------
    I don't fault the store owners. I know they are caught in the crunch. Its the few major oil companies and the oil producers AND the speculators creating this. That's why there has been an investigation underway for the last 6 months. Oh...have to add, I don't think the fuel-guzzling public is not also sharing blame in this crisis.
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    OMG h8 pings MrFlyTrap2's Avatar
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    Quote Originally Posted by PlantAKiss View Post
    If that's the reason, then why aren't groceries priced on what they think food will sell for 6 months from now?
    It works the same way with food though. That's what the futures market is about. When a frost comes and destroys the orange crop early, the market reacts and changes their price. I don't think food reacts as quickly, but it still feels ripple effects due to things like that. Market investors try to predict the future of a crop and gauge how much it should be sold at. If corn has a great year, you're going to see .10 an ear. If a drought comes and hits it combined with a new use for corn (besides food, feed, and awesome Halloween decor) but as gas too; expect it to be .30 or more an ear.

    http://en.wikipedia.org/wiki/Futures_exchange
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    Neps_N_Things's Avatar
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    This is kind of off subject but I do remember hearing on the news a while back that gas prices were actually going up less than oil prices by comparison. They said it was because we still had oil in reserve at the refineries bought at a lower price so it was keeping the price of gas from spiking as high as the price of oil. However as those gas reserves are depleted the gas prices are going to go up until they're inflated as much as oil prices.

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