Demand wont ever go down far enough for it to matter. the oil companies will still make billions.

It's different in NJ. if you pull up to a pump and I walk up to your windown and you say Fill it regular...Cash. How am I going to know how much will fit in your tank? I dont...So we pump it into the car then when its done we tell you the total.

very easy to say I messed up and put the wrong amount in your car and that all you "have" is 10 dollars.

Trust me it happens...All day many times...in the state on NJ, and Most likely Oregon. And I'm sure there are self serve places while not many but im sure SOME still exist where you can get the gas into your car before paying for it.

eggzackery


The oil companies know how far to push the limits of peoples wallets. They wont push it to far to reduce the demand, thats not smart business. They didnt get rich by accident.

Oil companies have little control over the price of oil. It is bought and sold on the open market and varies based on beliefs about supply and demand. While it does benefit them when oil is over $110 per barrel like now or was over $145 per barrel for a short time in the summer of 08 that doesn't mean they have control over it.

If oil companies could control it why would they let it drop to $40 per barrel and below in the winter of 09? Why would they have let oil stay below $20 per barrel for practically an entire decade in the 90s?

The closest any organization comes to having control over prices is OPEC and even what they can do is limited. There just isn't any nefarious group able to exercise an invisible hand to set oil prices. If there were that group would have had to have been pretty damn dumb to keep prices as low as they did up until a few years ago.

A few of the facts affecting oil prices are that oil production is static or shrinking, that doesn't look like it will change anytime soon, demand for oil is increasing, that doesn't look like it will change anytime soon either, some of the places a lot of oil comes from aren't exactly stable so neither is their supply, the dollar is crapping out which makes buying oil with dollars more expensive, and inflation is occurring while interest rates are effectively nothing which drives investors to commodities. That is a hell of a run on sentence but what it means is there is nothing, outside of the possibility of the American economy tanking again soon, that really justifies price decreases.

Look at price changes over the last year for gold, silver, and copper. You can throw in corn, soybeans, wheat, and coffee too. Most commodities cost much more in dollars than they did 12 months ago. If the oil companies were controlling oil prices they are doing a hell of a job on that other stuff too.

At street level, oil companies seem to have a fair bit of control over retail price. A couple of weeks back, on my first trip of the season to the track, I found that gas was fully CAN$0.10/L (US$0.40/US gal) more expensive in the city, than it was at the highway-side clip joints that usually charge $0.05/L MORE.

So you think for some reason an oil company decided to charge one station more than another for refined gasoline? Oil companies do not set prices at the retail level. Retail gas stations are free to charge whatever they want but most stations in an area end up with similar prices because they have to compete with each other for customers.

That doesn't mean there aren't anomalies though. There is a station over in Orlando that was charging over $5.50 per gallon while the average in Florida is around $4 per gallon. They didn't set that price because an oil company told them to, they did it because they are the closest gas station to the airport and wanted to screw people who had to return rental cars with full tanks.

Each retail gas station controls the price they want to charge, they are controlling the price of gas not oil, and they are not told what to charge by oil companies.

Unless the oil company owns the gas station.

I spoke to a station owner the other day and asked him how the higher prices affect his business from a margin perspective.

I didn't realize it until he said it but the higher the prices go, the more he has to charge just to keep the margins the same.

I realize that he is not an "oil company" but your average customer thinks that at $4/gal the guy at the local Mobil is raking it in vs. $3/gal when in reality, the opposite is true.

Even then you think the retail prices (again, for gas not oil) for each individual station owned by the oil company are set at the corporate level? They could possibly set policies of a certain % above cost for all stations, but it would make little sense.

But lets say the station owner filled his tanks @ $2.50/g on Monday and by Friday average gas prices are $2.75/g. He can now sell his $2.50 gas for $2.75. Thats a 10% a gallon profit on top of the usual margin. Im not saying theres anything wrong with that but I dont buy that the local guys arent making any money when prices go up.