Oil and Gas Robberbarons

[Don1]

I just returned from a vacation to Florida about a week ago. We drove there and back from Connecticut. I made note of the price of gas. From what I could see, it ranged from $2.33(9) to $2.69(9). That is a difference of 36 cents or 15%.

Now, on to the interesting part...often the same exit off the highway (I-95) would have a difference in prices of 20 cents, depending on gas station. The same company from one exit to the next sometimes also differed by 20 cents. The same county, same company, also sometimes had the full difference of 36 cents. And sometimes, even at the same exit, the same company just a matter of feet away would have a difference in 10 cents per gallon.

My conclusion is that the gas stations are jacking up the prices. It has absolutely nothing to do with limited supply. It has everything to do with the fact that we are trapped by the Man into paying the prices he makes us pay.

[Skink]

1. They just need electronic signage. It's just like the stock market now.

[rockymountaindem]

2. It's kind of an Occham's razor thing

Which is the simplest explanation?

1) World oil supplies are running out, and despite our best attempts to find more, we can't.

2) Prices are being manipulated by a worldwide cartel of drillers and merchants.

The problem is, I can't figure out which of these is the simplest. Seriously.

[Don1]

3. As far as oil supplies...

think of it like this.

The variable of world oil supplies should have no effect if we are talking about the same gas station corporation, just feet away at the same exit. There is no reason for the extra 10 cents per gallon. After looking at all the gas price ranges, I am certain that none had to be more than $2.33(9).

As to the question of the whole recent history of gas prices over the past couple of years, that's entirely different. I think the answer is both (1) and (2). News gets out about OPEC changing something or some foreign supplier changing the way they operate and the market and prices react. However, this is also an opportunity to sneak in manipulation of the price. They deliberately overreact to real situations and hype them up to increase profits.

[rockymountaindem]

4. Yeah, as I've been saying lately

they'll use any excuse to raise prices. Ever notice that when it goes up, it goes up immediately, but when prices fall it takes forever.

Surprise surprise.

[Don1]

8. Good point. n/t

[rman]

10. The two are not mutually exclusive

Any phenomena is as complicated as it is. One should look for the explanation that best fits the data, which is not necessarily the simplest explanation.

Why do you think it is not possible that supplies are running out -and- oil companies are trying to maximize profits?
I'd think they have good reason to try and make as much profit as possible now, because soon enough they will have to invest a lot to try and reduce the effect of declining production due to supplies running out.

[TreasonousBastard]

5. It might be a little more complicated than that...

gas companies use what is called "zone pricing" for their stations, and the price a station pays can be at least a nickel more if it's on the "wrong" side of town. The price also depends on how much gas is pumped, and whether a station uses the name brand or buys at least some of its gas from other distibutors. With high prices, bootleg gas is a bigger player, and some people avoid the cheaper stations because they don't trust the source of the gas.

There are also often local taxes and deals that some stations are stuck with. Here in NJ the strangest thing happened-- prices on the Turnpike and Garden State Parkway were lower than the local discount stations because their contract says they can only change prices on Friday, and local prices jumped over a dime during the week. By tomorrow, I expect to see Turnpike gas at its usual nickel over the local price.

[Don1]

7. Thanks.

I think the "zone pricing" explains it all but they are just not limiting the variation. I saw 10 cent variation for the same company just down the street. I don't think the same company is using different gas, especially when right next to each other. I would guess that they are merely charging according to how people are buying. People will get fooled into buying their gas if the station is right off the exit. This is my opinion. Someone should investigate these jerks.

I heard that you have it better in NJ with some kind of law to limit the variation. Is this true?

[TreasonousBastard]

9. A lot of it is just simple capitalism...

people charge what they can get. But, bootleg gas means a lot, too. Leased company stations, or company-owned stations, can usually only buy from the major who owns the sign out front, but independants can buy from anyone, and they do when the price is right. Even the majors buy from each other all the time to meet their obligations, so you never really know what gas is going into your tank.

On the interstates there might be a company station that paid for the "Shell" sign on the highway, and they will often charge higher prices because that's where most people presumably stop, and they are stuck with Shell pricing. The other guys in the area lowball that station to try to get some more business. FWIW, there's a big Exxon company station by me that just went out of business because a Hess opened a block before them and lowballed them on gas and the convenience store.

And, yeah, Joisey does have a law limiting the daily swing in gas prices, and I just read something in the paper about it again the other day but don't remember the details. I think it's a nickel a day, but I'm not sure.

All of this, of course, is niggling over details when the real questions are how did gas get up so high in the first place and is it going to stay there.

[NVMojo]

6. Shortage of fuel looming in valley

This was going on in Nevada last week ....

August 16, 2005

As increasing numbers of residents and visitors stretch the limits of Southern Nevada's inbound fuel network, leaders are planning to discuss what options might best prevent local cars, trucks and planes from running on fumes.

Clark County Commissioner Rory Reid said Monday that early next month he'll call for the formation of a special committee to address how to avert pending fuel shortages for drivers in the Las Vegas Valley, as well as the many aircraft that form the lifeblood of the local travel industry. Unless action is taken, serious shortages could arise as soon as two years from now.

Potential solutions include building a new $400 million fuel pipeline from Southern California, increasing local fuel storage capacity and adding a so-called "second straw" that would connect Las Vegas to fuel supplies in Arizona, Utah or Northern California.

more...

http://www.reviewjournal.com/lvrj_home/2005/Aug-16-Tue-2005/news/27058578.html