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To: FreedomNotSafety

Not especially, except for the fact you mentioned dissatisfaction with the oil companies.

I believe a lot of the public frustration revolves around the seemingly one-sided aspect of the supply-and-demand formula when it comes to gas prices.

A simple explanation would go a long way, IMO. But it’s always double-talk from TPTB.


27 posted on 04/03/2018 2:49:23 PM PDT by Bratch ("The only thing necessary for the triumph of evil is for good men to do nothing." - Edmund Burke)
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To: Bratch

The gas retailer seeks to maximize his selling price. All sellers act somewhat in unison because they have the same benchmark, oil. Together that makes pricing seem coordinated. An economic maximum is that prices are “fast to go up and sticky (slow) to come down”. Gas isn’t the only item to exhibit that behavior. The retailer will quickly raise his prices in anticipation of demand and his replacement cost of gasoline. Do you insure your house for what it cost to originally build? Or what it cost to replace today? The retailer must replace his gas, so prices go up. If his replacement cost is going down then he tries to hold on to his gain.

The retailers can manipulate prices so readily because there are so few of them. The government has made it very expensive to operate a gas station so the barrier to entry is very high and competition is limited. We are lucky that convience stores look at gas as a way to drive store sales. The retail margin on gas is razor thin. Not every transaction but on the average.

Gas ranging 40 cents within a day from say 2.40 to 2.00 is retail arbitrage. That’s free market forces at work and insure we have supply. The fact that it averages 2.20 instead of 1.60 is the government.


33 posted on 04/03/2018 5:39:26 PM PDT by FreedomNotSafety
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