How does the rising gas prices work? Oil went to seventy five and

[theophilus]

today our local station went up six cents. Do they just raise the price of the gas in the underground tank that was bought when oil was seventy? or sixty?

How does this scam work? Is it true they raise the prices of gas selling on anticipation of having to pay more for oil in the future? How can that be supported?

Anyway....prices at the pump seem to go up fast when oil goes up and it takes them awhile to go down when oil goes down. Why do people put up with it?

[whistle]

1. Of course, gasoline is subject the laws of fascistic corporate ...

...oligopolistics pricing, that is maximize profits for the sake of profits, while all of the rest of us have to abide by the laissez faire economics principles

[napi21]

2. I don't know much about this, but I know most stations raise prices

at the pump when the price per barrel goes up in anticipation of what they're going to have to pay for their next fuel delivery. I realize it isn't fair, but if they paid $2,500 to fill their 1,000 gal tank last week, and they anticipate the delivery next week to cost $2,800, they try to get the additional .03 per gal before they get the bill!

[RaleighNCDUer]

3. That's it exactly.

Price at the pump goes up immediately upon the rumor of higer oil prices, but when oil prices go down we must wait for the market to 'adjust itself'.

And the oil companies pocket the difference.

That's why we need an oil windfall profits tax. It is a tax that tells the oil companies "we know what you are doing, and you are not going to get away with it". It is purely a punative, vindictive tax that doesn't come close to what they deserve.

[Junkdrawer]

4. I think your memory of active anti-trust enforcement is confusing you....

It's now "what the market will bear" and they're surprisingly open about that.

[Warpy]

5. They have to raise prices as soon as wholesale prices go up

which is what any retailer is going to do with everything in an inflationary economy.

Look at it this way. You buy a box of widgets for $100, sell it for $150, and that $50 covers the store rent, the utilities, wages for the help, and your own paycheck. Your supplier tells you that next box of widgets is going to cost $120, leaving you with just $30 to cover all the things you thought you'd have $50 to cover. You then raise the price you sell those widgets for so that you'll still have enough to meet the payroll, pay the rent, keep the store lights on and buy that next box of widgets.

That's why prices at the pump generally go up and down with the wholesale market and don't wait for new, more expensive deliveries to arrive.

However, what you're seeing isn't the $75 oil of today. You'll see those prices come September. You're seeing the $65 peak of last April right now.

[Ready4Change]

6. Instant up, dragging down.

It works that way because that's where the profit is.

[FloridaPat]

7. It doesn't cost anymore today to pump oil out of the ground than

it did 5 years ago - except Irag. Prices were really low and the oil producers were unhappy. Luckily for them, two oil people took over the US gov't and did everything they could to get those oil prices up. They did a very good job. That's why Exxon is making a profit of $39 billion every quarter.

[AndyTiedye]

8. Prices Go Up Instantly, But Down Very Slowly