Quote:
Originally Posted by Thunderball
Pretty much. Only thing is, Gasoline is not quite as supply and demand as products like fruits, automobiles, etc. That is not to say that it isn't at all. Its more like Alcohol and Cigarettes. People will buy it at nearly any price... they'll just complain about it more, the habit doesn't change a whole lot. Whereas, if lemons become too expensive, demand drops off, and people buy limes, oranges and grapefruit. If gasoline rises, people bitch, and thats about it. Your allusion to winter/summer blends and refining capacity are definitely spot on though.
Refining capacity here really hasn't been boosted in the past 20 years... thats part of why the price of fuel doesn't mimic the price of crude oil.
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Agreed about the cigs and alcohol part and that's why the gas price increase needed to curb demand is as substantial as it is. It has to be enough that large enough amounts of people on the margin no longer can afford to use gas in the quantity that they use it.