Who bought gas on May 15th?

[firebug]

Originally Posted by The Unabomber

How can you bring up a point about competition in the gas industry? What competition do you speak of on the consumer level? Petro Canada is and will be selling gas at the same price as Shell.......doesn't seem like competition. These alternatives that you have in mind, name a few viable ones for a person that uses a vehicle for work, be it a trade or a farmer. Are you proposing that farmer can start using horses to seed and plow?

There seems to be a lot of confusion of what competition is (and not just by THe Unabomber).

I would contend that the petroleum complex may be just about the most competitive and transparent industry any of us will ever deal with.

Can anyone name a product more widely distributed that gasoline?

You can find a distributor nearly everywhere. Not only that, they post their prices visibly without the need to even enter the premises (could you imagine the price of beef or milk posted on a big board outside of grocery stores, or home prices on realtor signs?). THis helps ensure that the price falls to the lowest possible margin that allows the retail distributor to survive. As has been discussed, fuel demand is inelastic, meaning that they could raise the prices a great deal and we would still buy it, however, we still see a very tight correlation between fuel prices and the wholesale cost of gas from the refinery.

Well what about refinerys?

Refinerys must buf their feedstock from the global open market. Meaning if Refinery A in Sarnia doesn't want to pay $US65 /bbl but a refinery in Spain will, guess who gets the oil?

On the other end, if Gas Plus is willing to pay $0.70/L for their gasoline to sell to drivers in Manitoba, why should they sell it for $0.65/L to CO-OP in Calgary.

Why not build more refinerys?
I have been involved in financing some refinery projects. Lets see, cost $2.5Billion, production output 50,000 bbls/day refined products, first production 2011.
And that assumes that the neighbours let them build the place, that construction costs don't spiral out of control in Alberta, interest rates don't rise, etc. (PM me if you are looking to become an owner of a refinery).

While it is fun to rail against 'big-oil' and it is popular in the media, anyone still not understanding the global economic fundamentals driving the price of gasoline by this point in the conversation reek of purposful ignorance.

Best regards,

Bug

[Cowboy89]

Originally Posted by The Unabomber

How can you bring up a point about competition in the gas industry? What competition do you speak of on the consumer level? Petro Canada is and will be selling gas at the same price as Shell.......doesn't seem like competition. These alternatives that you have in mind, name a few viable ones for a person that uses a vehicle for work, be it a trade or a farmer. Are you proposing that farmer can start using horses to seed and plow?

You're thinking too inside the box. When I meant 'drastic alternatives' I meant that if gas prices were such a big deal then maybe being a tradesperson or a farmer are no longer viable employment alternatives for some people. Especially if their job did not pay them enough to be able to afford gasoline. Read the above post for comments on competition. If the world worked for gasoline the way you wish then you'd only be able to get the current price for gas by shopping around. There are very good competitive reasons for the price being the same from pump to pump in a geographical area. Mainly that if you were a competitor you'd be an idiot if you didn't match a lower price across the street, you simply wouldn't get any customers. This doesn't mean that there isn't competition. As was mentioned gasoline is actually very transparent compared to other industries.

[SeeGeeWhy]

$300,000!? Wow, Kerplunk you must have some pretty high standards. That is one hell of a down payment!

The thing about this competition argument that is irking me is that for as many different companies there are out there, the product that you are buying at the pump is more or less the same. The only thing that is going to effect the gas price in the way you so desperately want it to is when some company opens up a station in every city that sells X, which can be put in cars to fuel them, but costs half as much to produce. Only then would you see "free market competition" in action. (Well, in that case it would probably be more like all out war, but you get my point).

[4X4]

Firebug has done a pretty awesome job of breaking down the reason why gasoline is not comparable to other common things we buy in the 'competitive' sense.

I'd like to chip in that the way that gas stations actually make money is by selling confectionary items and sundries. That they have to sell gas to get you in their store is just a fact of life for them.

The competition in the gas industry is not on the price of gas (like I said, read a couple of Firebug's posts to understand why), but rather points and rewards programs. So now we see grocery (and large box) stores taking over the gasoline retail business. They can entice you with saving $$ on gas, but what they give you is a coupon to spend in their store.

[Eddie Bronze]

Hey guys, I'm sure you'll be glad to know all your efforts to not buy gas on May 15th and force the price down really worked. Price sitting at $1.26 at at least one station in the city today.

[Cowboy89]

Just a follow up article for those who are interested:

Article entitled: Can a Gasoline Boycott work?

http://www.reportonbusiness.com/serv...y/robNews/home