May 20th,
"Gasoline stockpiles dropped 2.77 million barrels to 223.9 million, the lowest since December."
"Oil climbed after U.S. crude stockpiles dropped as refineries bolstered operating rates"
"Refineries operated at 92.4 percent of their capacity, up from 91.2 percent the previous week."
The massive changes in prices at the pump due to refineries is only working in one direction. Also, one refinery should not have this dramatic effect. It's not like there are only four of them.
The above article is just to show what a drop in the bucket this refinery issue should be. The Kentucky refinery was reported as the official cause of the raise, on the radio the following morning.
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This does not take into consideration existing oversupply as well. For months oil companies have been telling us that containment and holding facilities are full.
The one part of this I find frustrating is that the gas in the tanks at the service stations today doesn't cost them more than it did two days ago. This is the excuse we always hear when the prices are expected to drop; that they have to clear inventory. Unfortunately for the consumer it doesn't work that way on the way up.
And in the same vein, because the price increase is clearly discretionary (like I say the current storage hasn't changed costs, and they don't all receive shipment at the exact same moment), I can't see how it's anything other than collusion. Maybe I am missing something, but when almost every major station boosts prices to the exact same tenth of a cent at the exact same time, there has to be some concerted effort taking place. It's not just supply and demand.
Location: Close enough to make a beer run during a TV timeout
Exp:
Quote:
Originally Posted by Slava
The one part of this I find frustrating is that the gas in the tanks at the service stations today doesn't cost them more than it did two days ago. This is the excuse we always hear when the prices are expected to drop; that they have to clear inventory. Unfortunately for the consumer it doesn't work that way on the way up.
Having worked at a private owned gas station years ago; I understand this. Sometimes the station would end up on top of a price change, other times they lose out. The gas in the tanks lasts for a few days of sales; and if they sell it for the lower price they end up selling out of that gas within a day. So they can be the "good guy" for a day, or make up for a shortfall earlier in the year.
Something I was wondering, I heard about the "don't buy gas on Sunday" campaign; and I know there is a bit of a debate on the effectiveness. What if there was a campaign to avoid major gas stations for a longer period of time? Like Shell, Esso, and Petro Canada? Sure- they wholesale to the smaller guys, but if their own stations are hurting, would that not put more pressure back onto them?
Having worked at a private owned gas station years ago; I understand this. Sometimes the station would end up on top of a price change, other times they lose out. The gas in the tanks lasts for a few days of sales; and if they sell it for the lower price they end up selling out of that gas within a day. So they can be the "good guy" for a day, or make up for a shortfall earlier in the year.
Something I was wondering, I heard about the "don't buy gas on Sunday" campaign; and I know there is a bit of a debate on the effectiveness. What if there was a campaign to avoid major gas stations for a longer period of time? Like Shell, Esso, and Petro Canada? Sure- they wholesale to the smaller guys, but if their own stations are hurting, would that not put more pressure back onto them?
Yeah I do understand that point here, but even so, how long does it actually take for the refinery being down to impact the supply and therefore price of gas? I know that the impact on price for the consumer is virtually immediate, but the impact on supply isn't. That to me is evidence of collusion, unless there is something I'm completely not considering?
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Location: Close enough to make a beer run during a TV timeout
Exp:
Yes, and I agree the refinery should not be so quick to jack up the price that they charge the stations. What I read yours to say was that the stations should not charge more right away; as they bought the gas for the lower price. So blame the refineries for jacking up the price and likely colluding; not the gas station. (Unless it is owned by one of the refineries.)
Yes, and I agree the refinery should not be so quick to jack up the price that they charge the stations. What I read yours to say was that the stations should not charge more right away; as they bought the gas for the lower price. So blame the refineries for jacking up the price and likely colluding; not the gas station. (Unless it is owned by one of the refineries.)
So a few things. I know that gas stations barely make any money at all off fuel - pennies on the litre (most is made off convenience sales as opposed to actual fuel or on volume).
However, what I don't understand is why the prices all seem to go up in unison. I know that lots of franchisees are locked into purchasing from a single company - so they are forced to raise their prices when their cost rises: Shell, Esso, Husky, etc, but how are those companies able to boost the prices of gas they sell to the station at the same time? Don't they all have different refineries that they manufacture their fuel out of? Shouldn't those companies sell fuel to the stations at different prices?
If that was actually the case, you would likely see prices more static since an owner with 3 stations on their corner would want to sell volume if they have a supply advantage over their neighbors.
Yeah I do understand that point here, but even so, how long does it actually take for the refinery being down to impact the supply and therefore price of gas? I know that the impact on price for the consumer is virtually immediate, but the impact on supply isn't.
How is that any different than the stock market? Prices will tank or skyrocket on the slightest whiff of speculation.
I heard some guy on CBC news complaining about the price of gas, as he was filling up his motorhome. Sorry, you're driving your own personal greyhound bus. No sympathy.
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Haha, yeah it's brutal. The worst is when you clearly already picked something up from their store (which is usually the only reason you're in there in the first place).
Rewards card?
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Extra rewards card?
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Car wash?
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6 waters for $3.99
Nope, they're 1/8 that price at any grocery store
Gator......
You know what? You convinced me. Everyone in line, sorry, this man convinced me, now I'm going to take a tour of the store and make sure I didn't miss any great gas station deals!!
Last edited by jayswin; 08-15-2015 at 08:03 PM.
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How is that any different than the stock market? Prices will tank or skyrocket on the slightest whiff of speculation.
Right but we constantly hear that the price is based on supply and demand. It's clearly not. There are times when stocks trade out of whack to their fundamentals and you don't have to buy them. You just don't have the option with gas at this point.
Quote:
Originally Posted by SebC
Funny thing - very narrow price bands could be collusion - but they could also be an extremely competitive market.
Question for those who think gas prices arise from collusion: what market would you point to as a good example of competition working?
I don't think the entire price is due to collusion, but there is absolutely an element. The production costs across companies varies, and we all know that. Yet the prices are literally identical to the tenth of a cent. So I think competition works in the oil industry in general, just not to price the final product as efficiently as it should.
conspiracy theory time: isn't it odd how the really low crude prices have hurt america's enemies the most - venezuela, russia, iran but haven't affected the u.s. much. A strategic move by the u.s. imo if we're playing the conspiracy theory game.
Right but we constantly hear that the price is based on supply and demand. It's clearly not. There are times when stocks trade out of whack to their fundamentals and you don't have to buy them. You just don't have the option with gas at this point.
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The thing is, we do actually have an option. Don't drive.
The cost of gas is just not outweighing the convenience of driving and how the majority of us have set-up our lives to rely on our vehicles. We all bitch and complain but we still drive everywhere. Myself included.
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