Posted: 7/14/2006 1:20:23 PM EDT
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Can someone explain to me how gas price increases from day to day are not profiteering? Gas went up 15 cents here yesterday morning. Today, it went up fifteen more cents. The demand for gasoline did not go up since yesterday. The supply did not dry up yesterday. The gas that was pumped into the tanks at the station was not made fresh this morning. If anything, it was refined no earlier than a few days ago. How can crude oil going up one dollar and some change per barrel (two or three cents per gallon) suddenly cause a jump of fifteen cents over night? Well before any product that was purchased at that price has made its way into the system? I'd love to have this explained to me. Because supply and demand is a bullshit reason for this. Supply and demand is a trend, not an overnight occurence. (At least with a constantly purchased product like fuel.) We didn't suddenly have a slew more Americans come online overnight, suddenly buying fuel for the first time. |
I knew I tagged that thread for a reason. From Sherrick13:
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Oh look, our daily 'I have nothing to contribute, so will pop off at the mouth' response.  If you have nothing to contribute regarding the subject at hand, then move along. Let the thread die if it will die. Thanksmuch. |
Scroll up and read what I posted. Find a fault in the analogy, and discuss. |
Thank you. I apologize if this is a dupe. I figured it'd been brought up before, but I could not find a thread that explained it in such as way as I could understand what the hell was going on with it. |
It's a horrible dupe, duder. Look, I did the search for you ('gas price'): www.jobrelatedstuff.com/forums/topic.html?b=1&f=5&t=479557 |
Not today. Mods, please lock. |
If you were so genuinely curious about why prices were up, then why did you use the word 'PROFITEERING'? |
If you want to get all technical, this is really about price elasticity of demand, not supply and demand. PEoD = (% Change in Quantity Demanded)/(% Change in Price) |
No problem.  I tagged that thread, because it provided the best explanation and discussion I've ever seen on a common allegation. The explanation is simple and gets to the point. |
Because that's what it seems to be to me. I have trouble understanding thingd like price treands. Why the price jumps so damned sharply for what seems almost no reason, then drops back down so damned slow. |
see my post above. here's the cliff notes: you (we) don't buy less gas when the price increases, so there's no incentive for the sellers to keep the price low. |
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Because the supply chain is a finite, human-constructed system, the price MUST reflect the current supply and demand. First of all, petroleum must be brought forth from the ground. And it is the person who holds the mineral rights on the property that receives the greatest share of increased prices...but that holder of mineral rights often enters a long-term contract to sell said crude. And that long term contract sets the price. Then we have the crude brokers who have no storage capacity. They must sell what they buy. The crude is sold to the refiner who must carefully purchase only what they can use because their storage is limited. In high demand times, they must go onto the open market where they buy at a loss for the incremental oil they need...unless they have a break-down in the refinery where they are stuck with excess crude which they must sell. The refiners must sell their products because storage is again, very limited AND incurs a TVM problem because refined product has added value. Refined product that is stored does not earn interest like money. Refiners typically sell their product to pipeline terminal operators who run the pipeline. There is another issue...the pipeline CANNOT BE DRAINED because product is PUSHED through the pipes. And there is a LOT of inventory in the pipelines that must remain in the pipeline in order for product to flow. And at the other end of the pipeline, there is a terminal of storage tanks. Again, inventory and TVM. If the tanks are allowed to become empty, the terminal operator MUST buy at market price which COULD be musch more expensive and opens the operation to greater risk in the case of price drops. Keeping the tanks full is another issue, that being unable to purchase at a discount as well as the inventory issue with TVM complications. And finally, we have Habib or Ashook at the Quikie Mart. He buys at the price set by the Lundberg Survey, marking it up just pennies per gallon, barely enough to make ends meet. And if it is hot outside, he must contend with shrink. Gasoline and other fuels expand with heat, contracting when cool. His tanks are filled with relatively warm fuel, based on volume alone. He pays for this volume...but overnight, the fuel in the underground tanks cools, shrinking. He then must sell the shrunken fuel AND absorb the loss. And it IS significant. |