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Where is the guy that told me that gas prices are "based on supply and demand?"

Discussion in 'Off Topic [BG]' started by lowendmafia, Sep 17, 2008.


  1. lowendmafia

    lowendmafia Supporting Member

    Oct 11, 2007
    Sacramento, California
    I cannot remember your TB name, but I had an argument with you over oil/gas prices a few months ago. I want you to explain to me how it is possible that oil price, per barrel, has dropped 33% since July and Gas prices have only dropped 7%. I am not interested in rhetoric of any kind. I am more interested in you explaining to me, with all your "facts" why this is true.

    FYI, I am the guy who asserts that OPEC and oil companies fix the price of oil (along with oil speculators) and "supply and demand" have little to do with it.
     
  2. ehque

    ehque

    Jan 8, 2006
    Singapore
    Hrmmm. Do consider that not only consumers buy oil, but that people speculate in it as well. If speculators (stockers) decide that the price is good enough to unload, the price will fall. This is still demand and supply.

    I'm speculating, though.
     
  3. Revvv

    Revvv

    Oct 31, 2007
    Georgia
    Last time I checked (which is everyday) our oil supplies are not only good, but they are growing with new oil field discoveries.

    Everytime I purchase fuel I feel like I am being raped.
     
  4. Toasted

    Toasted

    May 26, 2003
    Leeds, UK
    You clearly have no idea how oil is extracted and sold, if you did you'd understand.

    The price of oil is based on supply and demand, and that's why it goes up and down. It's also bought in futures (which IMO is a bloody stupid idea), but it does give this smoothing effect to the prices.


    EDIT: Further to this, you'll find that in the last 8 months the USD has strengthened against world markets by about 20%, so you can now buy less oil per USD than you could before. This also contributes to the smoothing effect on the prices.
     
  5. steve21

    steve21 Banned

    in the face?
     
  6. Toasted

    Toasted

    May 26, 2003
    Leeds, UK
    Fwiw petrol at my local station is $9.24USD/gallon today.
     
  7. 12bass

    12bass

    Jan 2, 2003
    Victoria, Canada
    Yep... thanks to the invisible hand of the "free market".... or something..... :spit:
     
  8. thefruitfarmer

    thefruitfarmer

    Feb 25, 2006
    Kent UK
    The demand for oil and gas, in the short term at least, is inelastic. People will use the same amount for their cars, lorries, heating and cooking regardless of the price.....

    If OPEC or some similar organisation decides to raise the price then the users will have to pay.

    Oil and gas to a point are the base of the economic infrastructure. Without oil goods cannot be moved around.

    There is a strong case for governments to either nationalise or otherwise control something that all other economic activities depend upon.
     
  9. Phalex

    Phalex Semper Gumby Supporting Member

    Oct 3, 2006
    G.R. MI

    Vaseline is a petroleum product you know......
     
  10. wazzel

    wazzel

    Dec 27, 2007
    Houma, LA

    Because gas prices at the pump are set by the stations, not the oil companies they represent. As far as I know the gas stations are not owned by the oil companies, but by individuals or a private busness. When the price of oil goes up the price the stations have to pay for gas goes up so they raise the price. When the price of oil goes down the cost of the gas goes down, but why would they lower the price at the pump? People are already paying whatever the current rate is. The thing the drives the price down at the pump, once the cost of the gas to the station goes down, is competetion between stations.
     
  11. 12bass

    12bass

    Jan 2, 2003
    Victoria, Canada
    Which doesn't happen in many areas because of collusion between retailers.....

    See here: http://www.cbc.ca/money/story/2008/06/12/qc-gasfix0612.html
     
  12. wazzel

    wazzel

    Dec 27, 2007
    Houma, LA
    Is it really collusion or basic busness practice? Go look around at other items (of equal quality)and tell me if there is a great diference in price between brands or where it is sold.

    Not saying it does not happen on a small scale, but not industry wide. I see better than a $0.30 difference in gas prices on my ride to work.
     
  13. john turner

    john turner You don't want to do that. Trust me. Staff Member

    Mar 14, 2000
    atlanta ga

    how do you think opec "fixes" the price of oil? they control the production, purposefully cutting it. (in other words, diminishing the supply). in a very real sense, both sides of the argument are correct.

    and chill out on the rhetoric and indignation, m'kay? regardless of who this individual is, he's not the reason why you're paying more at the pump.
     
  14. 12bass

    12bass

    Jan 2, 2003
    Victoria, Canada
    From my experience traveling throughout the country, no such disparity in gasoline prices exists in Canada. Large geographical areas are almost always strangely without significant price competition.
     
  15. wazzel

    wazzel

    Dec 27, 2007
    Houma, LA
    Nationally in the US there is a great difference in gas prices. Some due to local and state tax differences and some just because they can. Here in Houston gas could be found for around $3.30/gal before the storm. In other places it was over $4.00/gal (California, Illionis New York just to name a few)
     
  16. john turner

    john turner You don't want to do that. Trust me. Staff Member

    Mar 14, 2000
    atlanta ga
    i see this too, a lot. within a block of the interstate, prices are easily 30 cents higher than they are just a mile off the highway.
     
  17. Toasted

    Toasted

    May 26, 2003
    Leeds, UK
    Happens here too. £1.09/L at my local station, £1.29 on the motorway.
     
  18. Benjamin Strange

    Benjamin Strange Commercial User

    Dec 25, 2002
    New Orleans, LA
    Owner / Tech: Strange Guitarworks

    As I understand it, most gas stations make very little profit on selling gas. They are in the business of selling candy and stuff and junk. When gas prices go up, people buy less gas, the gas stations make less profit on that gas, and the sell less candy and stuff and junk. The gas increase hurts gas station owners, too.
     
  19. Doesn't happen here. Check a few cities across Canada yesterday and it was $1.29.9/L here, $1.45.1/L in Montreal, $1.32.0/L in Toronto and $1.36/L in Vancouver (average prices). On my way to work I drive past a corner with three gas stations on it, they are always within half a cent of each other. When I lived in London (Ontario) gas was always within a cent across the city.

    lowsound
     
  20. wazzel

    wazzel

    Dec 27, 2007
    Houma, LA

    Gas stations don't make that much on gas that is one of the reasons they are slow to bring the prices down.
     

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