Redstate

How come the price of gas is the exact same at two different gas stations that are across the street from each other?

If one station lowers its prices and draws more customers, the station across the street is forced to lower its prices to gain the customers back and there is a point where the stations simply cannot lower their prices any more and make a profit.

Besides that this isn't always the case. There's are two stations down the street practically across the street from each other one has its prices set .10/gallon higher than the other. I'm guessing gas card customers or maybe perceived quality of the product keeps the higher one in business.

these two hypothetical gas stations, are practicing their own oligopoly and setting prices based on each other because they can look across the street and see what the other is charging. Yet, in the macro, none of you can possibly see how five companies can do the exact same thing on a larger scale.

google "equilibrium price" or "market clearing price"

is in a market, two gas stations across the street from each other is not a market. Again, you are acknowledging that two gas stations across the street from each other work as an oligopoly setting prices based on the other, which is not a market, but not acknowledging on the macro, when five companies do essentially the same thing. This is a very fascinating discussion and I am glad we are having it.

When gas station owner #1 sees that more cars are going to gas station #2, he decides to look across the street and figure out why. He sees that even though his price is $.05 cheaper, he notices that his station looks shabbier, so he decides to lower his price to attract more customers. He looks at his costs of replacement product and decides that he can lower his prices to $.12 less that the price currently advertised accross the street and does so. This leads to more cars going to his station than the one across the street.

Gas station owner #2 notices that his business has dropped considerably and scratches his head to figure out why. He looks out the front door and notices that more cars are going to the shabby gas station across the street. He notices that the price of goods offered there is $.12 less than his advertised price and takes a look at his costs. His cost of replacement product is roughtly the same as the shabby guy's cost, but he's got a nicer place and higher overhead costs, so he decides to lower his prices by only a little bit. He chose a price $.10 more than the shabby place and noticed he gets enough customers to keep his pumps busy even though the guy across the street seems at least as busy. He sees no benefit in lower prices more at this point.

Driver #1 is very price sensitive. He's going to go to the lowest price station no matter what. He always goes to the shabby station because it's always a lower price.

Driver #2 has a family that needs to use the rest room. His wife is not going to be happy is he pulls into the shabby place so he's going to the nice station even if it does cost a little more (perceived benefit).

Driver #3 likes the nice station better and is willing to pay a LITTLE more to go there. But $.12/gallon difference? No Way! He's going to the shabby place. Well maybe for $.10 difference he thinks his British car like British gas better than that cheap stuff so he'll go to the nice station.

Now tell me how is this NOT a functioning market?

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

I have never noticed two gas stations across the street from each other with different prices.

Two stations across the Street from each other is not a Market.

As a matter of fact, I live near the intersection of two major highways. There are 4 large fuel providers, Petro, Pilot, Love's, and Rapid Roberts. Occasionally, two of them will match, but I have never seen all four of them match.

I meant what I said and I said what I meant. An elephant's faithful 100 percent.

Go to any interstate interchange with more than 1 or 2 gas stations and look. You'll usually see at least a few pennies difference and if one station is significantly less visually appealing than the others, their price will usually be several cents lower.

In my neighborhood, the Hucks usually has a lower price than the Freedom Oil that's a half block down. A mile from here I know of a BP station that is diagonolly across the intersection from a Road Ranger that is typically $.15 to $.20 difference for regular unleaded.

But you still haven't told me how 2 stations competing with each other for customers is not a market. Please explain.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

Why is the price of most any product in Walmart within a few cents of any product at Kmart? You need a new argument for the oil collusion boogeyman.

Ask not what you can do for your country, ask what your country can do for you. Washington Elected Elite

The reason Walmart is successful is because they practice economies of scale and thus Their Price is lower. Walmart agnd Kmart compete with dozens of retailers not Seven.

has little to do with oligopoly, and a lot to do with a large world markets, futures traders and uniform taxes, which tend to drive the final price to similar levels in similar markets. However, it is not at all true that all stations are selling at the same price. In Reading, PA. I can find a differencee of as much as $.10/ gallon. The prices between stations on opposite corners may tend to be fairly similar, because they are direct competitors and one can't really sell at a premium to the other, because he won't sell much gas.

market cap is a product of the worth of the stock. Comparing net profits to market cap is totally without sense. Market cap is defined as the current value of future cash flows, but market cap is determined by the market for the stock of the company and a high market cap to net income means that the Price to earnings ratio is high, and P/E ratios are high on companies that people feel will continue to make good money in the future. If it is so hard to make money in petroleum as everyone is suggesting here, then why are the energy companies flush with cash spending so little on R and D in alternative fuels? BP makes 22 billion after taxes and they can only afford to drop 70 million into R and D in alternative fuels. I don't think that is all they can afford, but like I said, why reinvent the wheel when the wheel is so profitable.

Long term the return for oil companies hasn't been great.

I'm not up on the oil business internals but figure real value per share $30 as a cost to replace not proceeds from sale.

So we are talking about roughly 200 BILLION in sunk capital costs. I'd really hate to write that off my books. Can't see them wanting to either.

What you have either is a market that consists of 6 middle men that make a reasonable profit. Not a great profit. The reason their numbers are so large is the scope of their enterprise. Not because they are able to gain monopoly rents.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

again, how five companies make a market. Five companies is the definition of an oligopoly. Yes, times are so rough that BP made more money than any company anywhere in the world last year, and turned around and spent less than one percent of that in R and D in "alternative fuels" even though you claim that they are involved in a tough business, and by that measure would want to transform themselves as quickly as possible. Yet, flush with cash they spend nothing more than a token amount to research other energy sources.

I will add that fischer tropsch for coal liquefaction kicks in at around $30/bbl. My guess is they don't see oil going away soon. Anymore than they did after WWI (our first energy crisis)

I'd call any business where your raw material can go from $12/unit to $60/unit in under 5 years tough.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

there are only five of them and they are all making money hand over fist in petroleum, a product of oil, and none of them have any motivation seeing oil going away anytime soon. Every politician in the country has weighed in on it. The people want it and it is pantamount to the long term war on terror, and yet, the companies that can make it happen don't see it going away anytime soon. Of course, they don't, they aren't doing anything to make it go away. Again, BP made 22 billion and they spent 70 million on alternative fuels. Does this sound like a company motivated to making it go away. How quick would it go away if they spent one of the 22 billion they made?

about this. If you were an owl would you want to diversify your diet from insects ?
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

...for the civil discussion of abortion the other day.

Nice breath of fresh air.

Irrational conservative. ;-)

Abortion is a subject that if you are going to talk about, you must talk about calmly.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

Mostly it's SERVE, VOLLEY, DISMEMBER.

that is why I said, that if we were oil execs we would do the exact same thing, however that is what we have anti trust laws for, so that situations like this can be regulated by the government. There are five companies all looking at each other when prices are set. That is not a market. That is an oligopoly and anti trust is supposed stop this exact situation.

in the late 1980's when energy companies were going bust by the dozens and Houston was almost a ghost town?

"Nothing works like freedom, Nothing succeeds like liberty"
Kyle

then that is not an oligopoly. Right now, though, there are by my count five. They are all making money hand over fist, and all claiming to be spending a lot on R and D on "alternative fuels". Yet, they spend a small fraction of what they make on this R and D. Everyone here is claiming that petroleum is the dominant player because the alternative fuels aren't cost effective, well that is what R and D is for and yet after 22 billion dollars in profits, BP spends 70 million on R and D. How fast before biofuels, ethanol, hydrogen, etc. becomes cost effective if BP, instead of dropping 70 million, dropped, 1 Billion into R and D. Here is everyone saying that life is rough for the oil companies. Their margins are thin and look at the eighties. Well guess what. BP walked away with 22 billion last year, and they were so concerned about future profits in this "unstable market" that they could only afford to spend 70 million on alternative fuels. It doesn't seem as though they are so concerned.

Like so called alternate fuels aren't a good investment. Royal dutch shell has an oil shale conversion process thats at break even for oil over $30/barrel. My guess is we won't see it until somebody believes he won't be slammed the second he spends billions to build a plant.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

The idiot public went on buying huge SUV's and Hummers, and are now crybabying about the "evil" Oil companies. What do you think was responsible for driving out the smaller companies.

High taxes, and environmental regulation is the culprit, so when the energy prices were low they had to merge or go under. Now there are (actually seven) big oil companies. They are stockpiling cash because they know that the price will go back down again just like it always has in the past.

But there is no overt collusion, because they are the buyers more than they are the producers. So they cannot control spot oil prices. (the biggest producers are not American oil companies)

"Nothing works like freedom, Nothing succeeds like liberty"
Kyle

there was anything overt. In an oligopoly, the nature of the market makes it rigged. I don't know if these guys are calling each other for prices and I doubt they are, but there aren't that many of them, so it really isn't that hard to set your own price based on what your competitor does.

And I am for vigorous use of anti trust laws in many situations. '
I am completely unmoved by this situation however, It seems to me that breaking the companies up into several smaller companies, like for instance splitting conoco and philips and exxon and mobile would not do a damn thing but might actually raise prices as it would most certainly raise costs.

The companies merged precisely because there were economies of scale they could realize.

"Nothing works like freedom, Nothing succeeds like liberty"
Kyle

and 25 years later, we can get long distance service through the internet. That is an anti trust success story. I say break them up much more than that. I want to see the alternative fuels division become its own company so that one of their entrepeneurs starts a station strictly for natural gas cars for instance. That is what I mean by competition. As long as they are oil companies, they will always be an oligopoly, not oligarchy, and prices will always be fixed by reading each other, and there will always be barriers to entry into the market place. Break them up so that the oil companies really do become energy companies. This isn't just about economics but frankly geo politics. They are getting fat while the Saudis get fat and fund the madrassas, and the only way to stop them is to transform them from oil companies to energy companies, the way AT&T and that whole marketplace became transformed after it was broken up. AT&T is an anti trust success story.

You need to show that we wouldn't be able to get phone service through the internet now.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

How do I prove that? You think AT&T would have researched long distance through the internet with no competition. For what.

before the breakup. ATT didn't research VOIP and most of the impetus hasn't come from long distance companies. Vonage was not a long distance, Skype is an offshoot of Kazaa which was a theft tool.

So what you need to show is that the presence of ATT would have prevented the growth of the internet, and even if the internet came about anyway would have been able to stop VOIP.

Thats a pretty hard standard to meet.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

Business has been transformed. Are you saying that this would have happened without breaking it up.

Frankly, AT&T is not the issue. The oil companies are. They are all getting fat from petroleum and yet we have here everyòne claiming that it is a tough business.

See below my postscript Apparently anticipates your reply.

On the oil company issue why don't you look at the long term graphs for oil company stock prices. I think google will let you get 20 years.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

Do you recall why ATT wanted the breakup ?
They had been fighting the antitrust litigation very successfully for a very long time. Matter of fact their organization to fight the DOJ was referred to as the well oiled machine.

They wanted to get into the computer/ data services business. They were unable to because it would have been extending their monopoly.

What a brilliant business decision that was.

And on a side note. ATT is one merger away from being fully reconstituted. Or as they are saying in Verizon's board room "What is that small moon on the horizon ?"
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

How can you compare a gov't regulated monopoly with the oil companies? You do realize that AFTER the breakup of AT&T, we had fewer phone provider choices than we currently have oil provider choices, don't you? Yet you attribute those phone companies with enough market competition to provide great innovation and price reductions (which is true, by the way).

I meant what I said and I said what I meant. An elephant's faithful 100 percent.

Communications are there now. I SAID AT&T got broken up and twenty years later the communication industry is more competitive than ever and the same could happen to oil.

But you are complaining about the lack of competition in the fuel/oil market and praising the innovative competition in the phone market when there are MORE competitors in the oil market than there were in the phone market.

Clearly, it doesn't take very many companies to cause competitive innovation and it seems obvious to me that a lack of competition is not the problem in the energy markets.

I meant what I said and I said what I meant. An elephant's faithful 100 percent.

Petrobras, Pemex, Aramco, Royal Dutch Shell, Rosneft, Conoco Phillips, Exxon-Mobil, BP, Lukoil, Citgo, Marathon Oil, Petramina, and that's just a small sample I could find in five minutes. Add in the numerous refinery owners, the independant distribution companies, the independant and chain retailers and the various futures traders and I think you would have a hard time convincing me that the oil industry is an oligopoly. There is quite a bit of competition at all levels.

Petrobras, Pemex, Aramco, Royal D,

Are any of those in the U.S.?

WHO in the world is Rosneft? They don't have gas stations anywhere I have been.

WHO is Lukoil? I am talking about stations in the U.S.? If all of these companies are real and can creáte some gas stations in the US then I would be much happier with the situation.

It's not with exploration or refining. Did you take a survey of all the gas stations in your neighborhood? So you counted five different names on the signs, compared their prices, and concluded that they're illegally colluding to fix prices?

Yes,

Of BP,

I don't know if there is collusion however if the Market is rigged then there doesn't need to be any overt collusion.

I see that there are only handful of companies and all are making obscene amounts. I also see that prices are set by the handful of companies themselves.

You have the makings of a superlative contrary indicator.

What that means.

In this case, it means that your market analysis is so poor that a person could win by doing the exact opposite of whatever you are doing.

And I'm sure it didn't startle him that you didn't know what that was.

I meant what I said and I said what I meant. An elephant's faithful 100 percent.

If you want to Challenge a specific Point then do it but insults are non sensical. I know I have unleashed passions. Has there ever been a post with this many responses and no recommendations.

...telling you something. You hit a subject that people are very concerned about, which is why there are so many comments. Good for you. But your net contribution to the debate is epsilon, which is why no one has recommended you.

You take issue with our response to your rhetorical method. You think you've backed up your assertions. That's fine, but nothing you've said adds verisimilitude to what is ultimately a bald and unconvincing narrative.

In short, you're wrong, but not just wrong. You're trying to refute the common sense of anyone who has ever engaged in a commercial transaction. Perhaps you never have! I sensed this from the start, which is why I asked if your mother knows you're out here.

tells me that I have a position that is opposite of those on this site, not a position that is wrong. It shows that we here may not be as tolerant of differing opinions as we think we are. If I published a pro choice piece it also wouldn't get many recommendations. This is tribal pack mentality as I have discovered it. I thought that supported free markets was being a good conservative, but it turns out that defending big oil is a sign of being a good conservative since the Dems attack big oil. Again, the difference is that I have been respectful to all that disagree with me, whereas the other side asks things like does my mother know where I am.

If I published a pro choice piece it also wouldn't get many recommendations.

I recommend posts that I don't agree with if they are well written, factual, and make good points. Yours certainly doesn't qualify.

If a "tribal pack mentality" means making stuff up and throwing it out there as fact, then ignoring anyone who refutes it, then I guess that you've identified your problem.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

On net balance we would have been better off ignoring you completely. (Except that I always learn something whenever Vladimir posts.)

Lesson learned.

Petrobras is the national oil company of brazil, PEMEx is the national oil company of Mexico, ARAMCO is the oil company for Saudi Arabia. Roal Dutch Shell is headquartered in the Netherlands, but operates here as Shell Oil. Rosneft and Lukoil are both Russian Companies. Lukoil actually has gas retail outlets in the U.S., I've seen quite a few of them in PA and New Jersey. Since you weren't very clear earlier in the thread that you were only talking about gasoline retailers., I just did a quick Google for oil companies. If I wanted to take the time today, I could probably easily find 100 different gasoline retailers ( and they certainly wouldn't be major oil companies, since a lot of the major convenience store chains operate large retail gasoline operations, complete with their own tanker fleets for deliveries). The point is, there are far more than five players.

I have never seen a Petrobus gas station, Pemex, or Aramco, and thus I don't believe they make any money selling gasoline in the United States. Again, I count five and actually I forgot Clark, so it is six. Six is not a market but an oligopoly.

You need to look at the business channel from exploration, recovery, refining, wholesaling/distribution, to retailing. They each have more/less competitors and are separate businesses.

Just like a loaf of bread started in the fields, processed, manufactured, wholesaled/distributed and retailed at grocery stores and c-stores.

Using your analogy you could survey 5 grocery stores in your area and find out the price of wonder bread is the same at every store and conclude there is devious price fixing and someone is making a ton of money.

Ask not what you can do for your country, ask what your country can do for you. Washington Elected Elite

______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

they are doing it solely so that they can fool enough of us into thinking they are doing something about it. They aren't actually doing anything about it. Hydrogen is cleaner, more efficient, and the best part is that the Saudis make nothing, and yet, the oil companies can't figure out how to make this technology cost effective. It has been around for half a century and no one can figure out how to make it cost effective? Why do you think that is? I think it is because no one is trying all that hard.

Usually Coal or Oil.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

Why in the hell is it the responsibility of the oil companies to try to fund a technological dead end like hydrogen?

It is their responsibility to provide fuels and make profits, it is the responsibility of people who gripe, bitch and moan to stop buying Hummers, stop opposing nuclear plants, refineries, and of shore drilling, and buy those compact fluorescent bulbs.

the only government interference that might make some sense would be to raise taxes on imported oil dramatically and offset them with income tax cuts. Now that might spur innovation and conservation.

"Nothing works like freedom, Nothing succeeds like liberty"
Kyle

but aren't you offended when BP claims to be leading the way in alternative fuels when really that is all for show. Again, read my piece again. I said that all of us would do the same in the same situation and that is because they operate in an oligopoly. The government is supposed to maintain competition. That isn't happening now. That is why if we are ever to have any competition at all, they need to be broken up.

ready to deploy, particularly in the transportation sector. There are large companies doing research with hydrogen, like G.E. with fuel cells. Hydrogen would also require a whole new distribution infrastructure, which we don't have. Given that the infrastructure itself would cost billions, if not hundreds of billions, it's not surprising taht the oil companies aren't leaping into this area. Of course, that may change in the futur if oil becomes scarce, although I think it's much more likely that you'l see them investing in shale oil or coal gassification, since that ids similar to their existing business lines and would require much less investment.

Pêroleúm is not oil. Oil is set by worldwide markets. Petroleum is set by the oil companies. I am not against big oil I am for competition and Seven is not competition.

We need more competitors in the oil business. Well, cept you can't drill in the US or Offshore. Well you can't build a refinery here. So we are forced to compete overseas against more nationalized oil companies.

Let's reduce our regulation so more competition can come into the market and drill the US and offshore.

Ask not what you can do for your country, ask what your country can do for you. Washington Elected Elite

I think you're trying to draw a distinction between crude oil, a.k.a. petroleum, and refined products like gasoline.

It's such a fine line between stupid and clever. - David St. Hubbins

According to Wikipedia (to use your source), petroleum IS oil.
http://en.wikipedia.org/wiki/Petroleum

I assumed that you were talking about refined petroleum, also known as gasoline.

Do you realize that the US imports approximately 82,500,000 gallons of refined petroleum (gasoline) every single day???

This is approximately 20% of the 400,000,000 gallons that the US consumes every day.

Once again, there is no EFFECTIVE oligopoly when it comes to petroleum products.

Also, you never answered my question on why Citigroup, in a decidedly non-oligopolic market, has a net profit rate 500% greater than the oligopolies?

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Never interrupt your enemy when he is making a mistake - Napoleon

According to you the barrels of oil that the Saudis make winds up in the exact same condition when it winds up in your tank. Why is oil sold in barrels and gasoline that goes in your car sold in gallons? WHO do you think determines what BP gets to charge you for each gallon gas after they buy the oil and turn it into gasoline. I think that BP decides for itself what they actüally charge for each gallon of gasoline they provide. How do they determine that? They look around and see what Their competitors charge and charge the same. You don't think that is an öligoopoly?

According to you the barrels of oil that the Saudis make winds up in the exact same condition when it winds up in your tank.

He didn't say that.

Why is oil sold in barrels and gasoline that goes in your car sold in gallons?

Will your tank hold the contents of a 50 gallon drum?

WHO do you think determines what BP gets to charge you for each gallon gas after they buy the oil and turn it into gasoline.

As in any market, the buyer and seller each get a voice in the transaction. Either of them can refuse to enter into a transaction to purchase fuel.

I think that BP decides for itself what they actüally charge for each gallon of gasoline they provide. How do they determine that? They look around and see what Their competitors charge and charge the same. You don't think that is an öligoopoly?

I've been here before. My husband has to purchase a lot of fuel and right now it is really sticking in his craw. We have had many a discussion about it, which usually ends up with him accusing me of not fighting fair, but I'll run over it with you.

I'm going to pretend for a moment that you have real world experience as a seller (which may or may not be true). Pretend like you are a farmer selling beef. You have a cost in each calf of $400 per calf and the current market price of the calf is $550. Are you going to take the $550 or are you going to reduce your price to $405, because you wouldn't feel right price gouging?

There are only a handful of feedlots bidding on your calf, and their entire profit is made on reducing their costs. Why would they bid you $550 if it only costs you $400 to make it? Because their competition is willing to pay $550, and if they want any calves, they are going to have to do the same thing.

It's called the market price. Right now the market price for gas looks like we're being screwed, but until and unless we find other sources of fuel that are as efficient as gas, we will pay the market clearing price. But like the calf market, if the calves were to triple in price, people would start eating chicken.

Right now, if the gov't were not in the business of screwing up the world, we would all be converting everything possible to natural gas, but the idiots have it all blocked. If you want to get mad, get mad at the slobbering retards running this nation, not the guy trying to suck black mucky stuff out of the ground and make it into something that we need.

I meant what I said and I said what I meant. An elephant's faithful 100 percent.

Again

The Price of a gallon of gas that station charges is determined by whom?

You are just wasting my time.

You and I are part of the market. We help set the price.

The guy making the stuff is part of the market. He helps set the price.

If you don't like your power level in the market, buy a gas station.

I meant what I said and I said what I meant. An elephant's faithful 100 percent.

This post will soon set Records for number of responses. I am wasting lots of people's time.

I have never gotten a Call from any oil Company asking me what the Price of a gallon should be. So, again how does BP determine the Price they charge for a gallon?

That this thread will ever set records.

I've seen threads on here with way more comments than this, so please pop that balloon now.

YOU determine the market price by where and what you buy. If most people go to the station with the lowest price, the market will compete for lowest prices. If most people pick the station with the best coffee and are willing to pay a few cents more per gallon to get it, the market will compete for the best coffee.

When the only tool you own is a hammer, every problem begins to resemble a nail. -- Abraham Maslow

markets and produced by many companies. In addition, there are very mature futures markets in all sectors. There is no oligipoly.

WHO actüally sets the prices at the pump? Are you saying that the prices that the gas stations themselves charge is determined by some publicly traded Market? When I hear that average prices are such and such you are saying that there is some sort of Market where people Trade the commodity that is gas prices at the gas stations? I don't think so?

Gasoline is traded as a commodity. That trading sets a floor price for the commodity. On top of that, you have the overhead costs and profit for the distributors (not all of which work for the major oil companies) as well as the overhead costs and profit for the individual gas stations. I don't play in the gasoline distribution business, or own a gas station (or minimart), so I can't tell you what their actual costs and profit structures look like, but I have read that the profit margins at the actual stations are extremely thin. If I had the final figures, however, I'd bet that the cost structures and profit levels are similar, since high cost players would not be able to compete. Therefore, I'd expect to see similar prices for sellers of a traded commodity. However, your meme that all prices are the same is patently false. If you look around any town, you'll see a variation in gasoline prices. My sampling of gasoline prices on just two highways around Reading, Pa last night, showed price spreads of up to $0.09/ gallon. Whenever the price of the bulk commodity changes, the spreads get larger. When the price stays stable for a longer period of time, the spreads tend to get smaller, and usually around the lower price. This is exactly how markets work. If your competitors are taking your business, you lower yuor prices (if you can).

And here I thought oil was refined into gasoline by some sort of refining process. Is super also traded on a Market? For someone as wrong as me, I certainly have a lot of protestors.

and then sold on international markets, before it gets to your neighborhood gas station. All grades of gasoline are traded on commodities markets (just look in the Wall Street Journal). Note I said international markets. We import gasoline as well as refine it ourselves here. Major gasoline distibutors buy gasoline directly from the refineries and importers. These major distributors don't alll belong to the major U.S. oil companies. In my area of Pa. two of the major sellers of gasoline are WaWa and Sheets, both major convenience store chains. They buy their gasoline wherever they can get it the cheapest.

This guy's a troll. No one is as ignorant as he wants us to think he is. Let's all pack up and move to some other thread.

nfm.

Just check my history. My last post was about Punjab.

I am a traditional small goveenment conservative. It seems you all aren't as tolerant as you claim. I guess provacative ideas aren't Welcome here.

You know, the original "Six" in hockey might disagree -- they were a heck of a lot more competitive than the 32 odd teams are today. The talent is a lot more diluted too!

The G-7 might diagree too! Granted there are hundreds of other little economies out there, but the G-7 are the competitive engines that drive the world. (Don't try to tell me it is now the G-8, because Russia ain't an economy -- its a roundout!)

How many cell phone companies are there? Are there even seven "real" companies? They seem to be pretty competitive.
And THEY are not all dependent on a product produced elsewhere in mostly hostile parats of the world.

Compete with landlines, internet, email, apple even makes a cell Phone.

If you have a car you have to have gas to run it.

You can get an electric car. you can get a car powered by peanut oil. You can get a manure powered car. (not good for the social life) You can get an alchohol powered car. You can get a natural gas powered car (propane not gasoline).

You can even get a car that runs on compressed air.

Petroleum just works best.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

Oil companies to Hockey? That is beneath me. The G7 is also beneath me? Cell phones compete with all sorts of Communications. There is no alternative to gasoline.

You like to have it every which way. The oil companies are in a low Margin business and yet they are flush with cash and feel no reason to change the nature of Their business in any manner. For some reason in this difficúlt, low margin business, the oil companies manage to make môre money than any other companies in any industry. Yet, despite all of the so calle obstacles that you find every Company that is Lucky enough to be in the business is making money hand over fist. They face Absolutely no threat from any competition outside the select Group that is in the Market. Yet, you find nothing untoward about anything that is happening.

But I disagree that there is anything morally wrong with BP painting itself as green. The typical American Consumer who votes for NIMBY politicians, hates "big oil", likes Green, and drives a big freakin SUV, is an idiot who deserves to be fleeced.

As Barnum said, never give a sucker an even break.

"Nothing works like freedom, Nothing succeeds like liberty"
Kyle

Never interrupt your enemy when he is making a mistake - Napoleon

There are more factors in the decision to buy a vehicle than just gas mileage. If you have a large family, you probably aren't going to buy a Prius for a family car. Also, if you consider the selling premium of hybrids over the smaller SUV's, you can buy a lot of gasoline for the difference in purchase price, particularly if you don't drive a lot of miles in a given year. Finally, larger cars are safer than small cars in a collision. It's a simple matter of physics.
.
Of course, if you buy a large SUV and then complain about gas prices, you just might be an idiot (apologies to Jeff Foxworthy).

Talking about those people who complain about the price of gas - while driving their big SUV's, not about SUV drivers themselves.
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Never interrupt your enemy when he is making a mistake - Napoleon

I won't respond to all of it?

You SAID the facts aren't with me and yet gas prices are always the same in any given area no matter what station you go to.

I mentioned that I didn't know the anti trust Law well. In SAID that it may not be possible?

I really don't know or care about what you learned in business school? If there is a small group of companies acting in collusion to set prices for a necessary commodity like gasoline isn't right. I don't know if there is a way to break them up but that is the only thing In see that can be done.

Did any of ever wonder why all other products comé in all sorts of variëties but with gasoline it is regular, Silver, super, and diesel. That's it? That is the extènt of the choices we have in gasoline. How comé we can have literálly hundreds of different types of bread, computers, tv's, lamps, etc. In my business there are literálly hundreds of types ofb loans. Yet gasoline comès in regular, Silver, super and diesel and that is it. Why is that? I think it because the oil companies are all getting very fat only providing that narrow product line.

...with a double shot?

Gasoline is a commodity that the marketers try to differentiate on quality, but it's tough. It makes cars go. That's about it. If you car pings or knocks, you try a higher grade.

It is because it is a commodity & consumed in mass quantities that size is an advantage.

Would you use bottled water as an example of product differentiation? We've got 50 different brands, and snob appeal in Perrier, Fiji, etc. And it costs $1 a pint, or $8 a gallon, without Federal and state tax. And it used to be free, right out of the tap. Go figure.

Speaking of other products, can you name another liquid product that is sold by volume that is cheaper than gasoline?

And you need to work on your reading skills. Refining margins may be high now, but oil as a commodity has had volatile prices and producers and refiners had lousy margins for the entire period 1983-2003.

It's such a fine line between stupid and clever. - David St. Hubbins

And a handfúl of companies make money hand over fist selling four versions of the product and nothing else. You don't find that at all peculiar.

How many other commodities are exclusively sold to make obscene amounts of money.

An earlier post implied you are a banker. You don't seem to have a grasp on basic principles of capitalism. My guess is you usually vote Democrat.

"How many other commodities are exclusively sold to make obscene amounts of money." My answer to that is, well, all of them. Note my bottled water example above. That's capitalism, and the product is a pure commodity. Evian and Dasani (Coca-Cola) don't do this as a public service, pal.

You seem obsessed about the tons of earnings energy companies are reporting. Do you have any notion what the cost structures of these companies are like? The vast majority of their earnings goes toward exploration and development of new supplies, which is one of the riskiest and most capital-intensive of businesses. They don't just put their earnings in a vault.

You might be interested in following that Oligopoly Watch link I provided in my long post. The guy probably agrees with you that the gasoline refining industry is an oligopoly, but seems to conclude that a) that's the state to which most industries in a free society gravitate, and 2) oliopoly does not imply control of the market.

It's such a fine line between stupid and clever. - David St. Hubbins

First there are at least 5 other products gas stations sell as fuel. E-85 ethanol, E-90 ethanol, E-95 ethanol. Then there is Diesel and Biodiesel.

As to why, Gas Stations only sell things that work in your car. It really wouldn't do for a gas station to sell powdered coal.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

What bio fuel is and I mentioned diesel. Ethanòl was introduced in the last couple years. So you are now impressed because the oil companies have Five variëties. How many variëties of computers are there.

______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

For consumer use?

Roughly 3. Intel, AMD and whatever chip Apple is using these days (Is it still a Motorola chip? It's been to long since I paid attention to Apple.)

Or did you mean how many varieties of operating systems are available for consumer use?

Again roughly 3. Windows, Linux and whatever Apple calls their OS these days.

Looks like another oligopoly that should be broken up!

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

I have a laptop and there a dozens of those. You can buy a Computer for as little as a few hundred and as much as thousánds and everything in between. Fuel comès in four variëties and the difference is not that great.

If it's a laptop not made by Apple it's either Intel or AMD (and the difference isn't that great). All others are insignificant.

If you're talking BRANDS then we can use the same talking point in gasoline sales. There are hundreds of gasoline BRANDS but fewer actual manufacturers closer to dozens than 5(and yes forgeign competition counts).

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

Biofuel is diesel made from organic materials. It's Willie Nelson's new hot button. And it has potential, as the original inventor of the diesel motor designed it to run on biofuel (things like peanut oil, soybean oil, canola oil, etc.) However, as diesel is essentially a waste product of gasoline production, diesel motors were soon designed to run more efficiently on diesel.

That math may be changing now, as the EPA has so distorted the diesel (now with ultra low sulfur) that it is more expensive to produce than gas, at least at certain times.

Ethanol was introduced at least 20 years ago, as that was when I noticed a difference in my fuel mileage when I used it.

And there is really no way they can change the types of fuels they offer as cars are engineered to burn a particular product and the standardization of that product is a good thing.

If you doubt that, you should have driven my husband's old propane truck. You sure didn't want to get very far from home when you were low on fuel. That stuff wasn't sold very many places.

And just the other day, I was low on fuel in my diesel truck in a small town and not one single station sold it. I nearly ran out before I got to the next town.

I meant what I said and I said what I meant. An elephant's faithful 100 percent.

Every metropolitian region and several states have their own blends of fuel. In my state you can't buy anything other than E-10. Can't say I've ever heard of E-90 or E-95 being sold anywhere... that would be of limited value as a motor fuel because of cold starting issues. We do have plenty of E-85 for sale here and it's a rip off, even with the huge subsidies.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

thread.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

...but I thought the refernce might be lost on anyone that doesn't qualify for AARP...

It's such a fine line between stupid and clever. - David St. Hubbins

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We are all heroes, you and Boo and I. Hamsters and rangers everywhere, rejoice!

With Their money however they are making commercials touting how much they are spending on "alternative fuels" and it is a drop in the bucket. They are claiming it strictly for PR.

Oil from tar sands yes, but I'm not aware that they are mining shale oil.

...and their oil shale has half the oil in it ours does,
At $65 dollars a barrel it's economically viable for them, why not for us?

oil. It it near the tar sands fields?

...are in the 3 corner region of Utah, Colo, and Wyoming. I believe the Canadian deposits are in west central Alberta.

nfm

...not proved reserves.

Canada is not actively producing shale oil, either.

If oil shale is part of the solution, it is many years off. The potential size of the resource is so big, a significant technical breakthrough might depress prices, a great disappointment to the investor that got in expecting $65.

http://emd.aapg.org/technical_areas/oil_shale.cfm

It's such a fine line between stupid and clever. - David St. Hubbins

There is a plan to use oil sands in Northern Alberta and send the crude oil through a pipeline to a U.S. refinery in South Dakota. The pipeline and the refinery haven't been built. It would take ten years. What will happen to the oil market in the next ten years?

It is in the interest of the U.S. Government to keep prices high; otherwise, we cannot become self-sufficient (get rid of our need for Mideast oil).

...the Oil & Gas Journal publishes an annual list of the largest public oil and gas companies. Twenty five years ago, it was the O&GJ 500.

Nowadays, it's the O&GJ 100.

Contrary to what the diarist says, starting an energy company has never been easier. You need some credibility (as in a track record) and a well thought out strategy, but private capital will back a startup (while extracting a pound of flesh). Sarbanes-Oxley has driven other entrepreneurs to capital markets in London & elsewhere where the SEC can't reach.

So I can't name 500, but I could name 15 significant players who didn't exist 5 years ago.

It's such a fine line between stupid and clever. - David St. Hubbins

http://www.dailyreckoning.com/rpt/OilShale.html

http://www.weeklystandard.com/weblogs/TWSFP/2007/04/post_4.asp

Wikipedia even more than the regular encyclopedia is just a starting point.
______________________________
"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

1. Much of it is on the surface.

2. Environmental problems everywhere! ANWR, offshore and everywhere else!

3. Same or less cost than buying FOREIGN oil! And keeps our dollars at home!

4. Agreed

5. True! Congress is a problem, isn't it?

6. This is 2007, not 1970, and I'm afraid national security is more of an issue than ever. You think?

”The future ain't what it used to be”. YOGI BERRA

I'm constantly amazed by how many people lack a basic understanding of how markets work.

Actually they DO teach this in school. My HS sophomore was talking about how high gas prices hurt teens more than adults (because it's a larger % of his budget) and started using terms like "price elasticity" and "demand elasticity" and actually knew what the concepts meant. God I was thrilled!

I questioned him about it and he told me he was taught it in his HS economics class that used books written by Junior Acheivement and purchased for the school by Caterpillar. And this from a public school! There is some hope left.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

one of the Junior Achievement programs at our local school. They are pretty good.

that may work, however when your competition is five other fat cats just like you all divvying up huge sums of profits that is no market. Don't give me market theory to a product peddled by six or so companies, with barriers to entry for any new company wanting to come in. If this were a market all of your great theories would work however one company setting a price and the others following is no market.

There aren't 5, 6, or 7 companies. There are hundreds of companies involved, most of them involved in just one or two pieces of the transition from oil somewhere under the ground to you being able to drive to the grocery store. Some more research about the subject at hand may be called for.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

how many different companies have you gone to for your gasoline: Amoco, Mobile, Citgo, Marathon, Shell, am I missing anyone? Does this sound like a market or an oligopoly? If there are all of these companies involved in the process of turning oil into the gasoline that goes into your car, and they are all of different efficiencies, then how does it wind up that in the end all of the gas companies charge the exact same thing for the final product? Do you ever wonder how seven companies of varying sizes and efficiencies wind up in the end charging the exact same price for the final product?

Anyway, a huge mistake you are making is thinking that BP owns and operates the station because it says BP on the sign. That is not the case. Most stations are owned by individuals. Anyone can buy or build a station and put the Exxon or Amoco sign out front, if they want to meet their requirements and pay their fees. Or they can put a sign out front that says "Joe Blow's Discount Gas Emporium" as many choose to do.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

the owner of the individual gas station is the one getting fat. Hardly. I know that the overwhelming majority of profits of a BP owned franchise go to BP, not the owner of the individual gas station.

What's this "owner of the individual gas station" you speak of? That didn't exist a minute ago. How do they fix prices at the pump with this guy in the picture? Do they implant some kind of mind control device when he signs up with the brand?

The overwhelming majority of profits produced by a gas station have nothing to do with gas. They get 2/3rds of their profit from the candy and sodas inside, despite the fact that their revenues from those items are tiny compared to fuel sales. There's not much margin on fuel.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

Yes, you missed many independent refiners. Valero Energy (SP?) is the only one I can name, but there are others.

And you missed the dozens of foreign based refiners other than Citgo (Hugo Chavez's toy, not a US company).

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

does sell in the US, and thus they are part of the "market". I don't know what you mean by "independent refineries" however I have filled up at Shell, Amoco, Mobile, Citgo, Marathon, and that is all I can think of. They are all making tons of money selling one product in four varieties and they all make tons of money doing it, and there are stiff barriers to entry for new competition. Now, that to me is no market, it is an oligopoly. I think we are all going round and round. I think that I did what any columnist tries to do which is enflame passions and spark debate. You all can call me all the names you want, but in the end I think we all just had a wonderful debate.

I thought you were talking about limited numbers of refineries.

If you want station brands there are thousands...
Everything from the big oil companies, to privately owned stations, to the ultimate corporate evil WALMART, to the local Kroger's, to the various Hucks, Casey's, FS, etc... If I try I can probably name 50 DIFFERENT station brands just in my local area (maybe more if I try a little). If you don't have a similar situation in your area, it's either because the market won't support more stations or local regulation make it difficult for independent operators to function.

If you're talking about an oligopoly in gasoline retailers. You clearly are lacking information. It takes a bit of money to build (buy) a station, install tanks and get regulatory approval, but not much more than other businesses. After that you can buy gasoline on the open market in lots of 1000 gallons and become part of the oligopoly yourself. RBOB for December delivery is priced at $1.9358 as of a few minutes ago. It's quite a bit higher for July delivery, but it should take you at least 6 months to get your station open....

I pointed out CITGO because in an earlier reply you insisted that foreign companies don't count. CITGO is foreign.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

I have filled up at five that I can remember: Citgo, Amoco, Mobile, Shell, Marathon, and I maybe forgetting one or two more and this is what I am talking about. There is no market for the gasoline that winds up in your car. These companies just wait for one to set the price and the rest follow. If you think there are more please name them.

Some pay a franchise fee, buy their gas from one place, and have a brand name. Other's don't carry any brand name, make all their own signeage and buy fuel from whoever they want. The gas station I use the most has no brand. They were an Amoco franchise at one point but they quit that and painted over their signs. If I don't fill up there I probably fill up at Super America, Holiday, or Sinclair. Guess you missed a few.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

These are just stations that I can recall in my area mind you:
Majors Oil Companies (many stations operators are actually independent franchises, but I can't tell a company store from a franchizee so they get lumped): BP, Shell, CITGO, Marathon, Exxon, Mobile (yes owned by Exxon now but you're wanting brands), Clark, Phillips 66.
Large non-major operators: Huck, Caseys, 7/11, Freedom Oil, FS, Thorntons, USCO, Harpers, Illico, Circle K, Road Ranger.

Retailers of other products who have gas pumps as a sideline: Walmart, Kroger, Sam's Club (yes that's owned by Walmart, but you asked for brands), Cub Foods, County Market.

Independents (I cheated and looked in the yellow pages for these and left out any that had a BP, Shell or Mobile attached and others who I know are franchizees): Todd's Service Center, Ralph's Norwood Gas, Santock, Inc, Parmele's Service Center, Appolo Mart, Murphy Oil Co., and about 30 others but I'm getting tired of typing.

And I live near Peoria, Il not in a major metro area.

Now what's that about only 5 companies selling 4 versions of the same product?

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

I can assure you there are dozens and dozens of other station brands out there. Some nationwide, some regional. And none of that has anything to do with refining, anyway. Most of the guys who run stations have nothing at all to do with refining fuel. Most of those branded stations aren't even owned by the company, the same way that fast food restaurants are often not owned or operated by the company who has it's name on the sign.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

but you can't name anymore. How is that? If there are so many, then name a few. There aren't and that is because it takes billions and many of them to be an oil company that is called barriers to entry http://en.wikipedia.org/wiki/Barriers_to_entry

Notice, barriers to entry can be found in many industries that have the characteristics of a monopoly.

You can assure of lots and lots of companies but name none. Right!!

or 5. Are you deliberatly ignoring information that conflicts with your claims or can you really only count to 4?

You have been presented with evidence that:
1. There are more than 4 refiners.
2. There are more than 4 retailers.
3. There are more than 4 blends and grades of gasoline.
4. There are markets where gasoline is openly bought and sold on a wholesale scale (lots of 1000 gallons). The RBOB I mentioned is the commonly quoted symbol for the currently most widespread blend of standard unleaded.
5. Other blends are traded under different symbols and it's not a market I follow closely so do your own research....

And you still insist than none of this is true...

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

is openly bought on the open market, why do the oil companies spend million in refining oil the buy in the open market. I don't believe that the gasoline that I buy to fill my tank was bought by PB in the open market. If that were so, the smart consumer would go to the open market themselves and buy gasoline on it and use that to fill their car. Again, you guys act as though since most of the ingredients used to make gasoline are bought on an open market, and they, then that means that the final product is also derived on an "open market". In my opinion, it isn't. The oil companies merely wait for one to set the price and then all the rest follow.

Unleaded gas is traded on merc exchanges, just like pork bellies and frozen orange juice concentrate. And just like pork bellies of FOJC, it doesn't make sense for an individual consumer to try to buy them on the merc. They are traded in massive blocks and there's significant transaction costs (hint: they aren't going to deliver it to your house). You also can't use it on the road, legally, unless it is blended for your region (EPA regs) and you pay taxes to the Feds and the State.

But hey, if you want to buy a few blocks of 42,000 gallons of unleaded gas that you can't legally use in your car... knock yourself out.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

in my car is the price of the unleaded gasoline that is traded on the open market on the MERC. I don't think so. So, again, who sets the price of the unleaded gasoline that winds up in my car? The individual oil companies do and how do they determine that price. I believe they determine that price by waiting for one of them to set the price and the rest follow.

and the gasoline that winds up in my car is the price of the unleaded gasoline that is traded on the open market on the MERC.

The price it's traded on the mercantile markets does not include taxes (which are significant... around 50 cents a gallon), it does not include transportation, it does not include blending, it does not include storage, it does not include marketing, it does not include any profit that might make it worthwhile being in the business... there's a whole lot of things that go into it after it's bought at the wholesale level. And that wholesale price without all that is only about $1 less than the price you pay at the pump.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

Look in the Wall Street journal or GOOGLE RBOB. You'll find gasoline trading and the recent market prices.

Who sets the price is not a single person. The simple answer is "the market" but it actually FAR more complicated than that... the costs of the gasoline

1. The cost of crude oil. This is traded in different grades on the open market with many producers. This price varies daily based on perceived supply and demand.
2. The refiners add value to the oil and produce gasoline and other products from it. They have real costs to do the refining and will cut production if the prices on the open market don't meet their costs. They'll typically increase production if they are able to make a profit doing so.
3. Gasoline contracts are traded on the commodity markets based on perceived supply and expected demands. Some of this trading is pure speculation, but mostly it's real oil companies trading real product for real consumption.
4. Companies accept delivery of the gasoline that they purchased on the above market. They pay for transportation and storage of the product. They MAY have to blend it with Ethanol or other additives to meet EPA and local specs. They may blend in other additives (marketed as detergents or octane boosters) to increase perceived market value. They MAY blend in ethanol to get a tax credit.
5. These companies either sell the gasoline to independent retailers or deliver to company stores.
6. Federal, state and local governments add cost to the gasoline and collect taxes for it.
7. The managers of the local retailers sent the final street price based on their costs of the product, their overhead costs of running their stores, and the demand at thier store. They may adjust this price on a daily basis due to the station down the street getting more customers or changes in the prices required to replace the gasoline they've sold.
8. Consumers adjust their demand for the product and change their choice of retailers based on the prices offered which provides feedback to the loop and tends to even out prices at the local level.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

I had always thought the gas contracts were traded in 1,000 GALLON lots, not 1000 Barrels. That's a significant difference in lot size.

But you're right. End consumers don't buy gasoline on the commodity exchanges for the same reason they don't buy pork bellies lots instead of the 1lb package at the supermarket. It's too large a chunk to be useful for a single consumer....

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

we have this complicate manner in which the final price is determined. There is room for efficiency and inefficiency and each company buys in different bulk and at different times. Yet, despite all of these factors driving the final price to be different somehow someway all of the companies in the end wind up charging the consumer the exact same amount. One would think that it is possible that Exxon over Amoco would wind up charging the exact same amount in the end, even though they are all dealing with upon my count seven different variables in which the final price is determined for them. How is it that it always ends up being the same final price in the end?

No, all gas stations do not sell for the same price. Take a look at this site... http://www.chicagogasprices.com/ they probably have one for your local area as well.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

for instance, where my parents live in Northbrook is .30 per gallon more than if you go a bit more north to Lake county, and why, different taxes. The differences in prices are almost always different based on the taxes charged. I don't know how many gas stations there are in Chicago but you point to a handful, some out of the city, so different taxes, and think you provide something. I know what I see. I pass by gas stations all the time and there is little or no difference.

for instance, where my parents live in Northbrook is .30 per gallon more than if you go a bit more north to Lake county, and why, different taxes. The differences in prices are almost always different based on the taxes charged. I don't know how many gas stations there are in Chicago but you point to a handful, some out of the city, so different taxes, and think you provide something. I know what I see. I pass by gas stations all the time and there is little or no difference.

for instance, where my parents live in Northbrook is .30 per gallon more than if you go a bit more north to Lake county, and why, different taxes. The differences in prices are almost always different based on the taxes charged. I don't know how many gas stations there are in Chicago but you point to a handful, some out of the city, so different taxes, and think you provide something. I know what I see. I pass by gas stations all the time and there is little or no difference.

close together, the prices are usually similar or one station becomes VERY busy and the others get NO business. How hard is it for you to understand that when one station is lower priced, most consumers will drive across the street to save a few pennies. There are exceptions and I've noted some above. There are some people who have brand loyalties or will pay more for a cleaner restroom or are willing to pay a few pennies more to avoid a left turn in heavy traffic, but the gasoline retail industry is probably one of the most price sensitive businesses there is.

Drive down the road a mile and the price is almost always different due to different competitive situations.

As you say, there typically isn't much difference in the final product offered by one station over the one across the street. It's hard to price them much differently in a competitive market.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

I don't know where you drive, but where I drive the prices are almost always the same. Where prices are different is where the taxes, which are never revealed, are different. I drive to work everyday and the gas stations I pass, Citgo, BP, and Shell, they are all the same or very close to it. In my parent's town, each of the gas stations throughout the town are all the same. So, again, within most reasonable vicinity, there is little if no difference between the prices of gas stations.

That is the way I see it.

Many do. Perhaps there's your answer.

Retailers make only a few cents per gallon. For many it's a loss-leader; some would sell at a loss if it were legal. They make a much bigger mark-up on the Bud Light, the Marlboros and the pork rinds.

It's such a fine line between stupid and clever. - David St. Hubbins

Brian named lots of names. Looks like your debating tactic is to ask a ridiculous question, get an answer, ignore the answer and claim the question wasn't answered.

I have an army of people responding to me and whatever post you are referring to I didn't notice. I don't know how many names he named but I have bought my gasoline from five companies: Amoco, Citgo, Shell, Exxon, and Marathon. There is also Clark and one other that I can't think of. Those are the only dominant players. Anyone else accounts for nothing more than a fraction. 7/11 is not an oil company. They have tanks at a select few stores.

It's a big place... if you go somewhere else you will see different gas stations. The biggest player here is Super America. The second biggest player here is Holiday. The ones you list are minorities. I haven't ever seen a Clark here. And there are a lot of gas stations with no brand at all... something you don't seem to be capable of processing. The place I fill most often is unbranded.
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Underlying most arguments against the free market is a lack of belief in freedom itself. - Milton Friedman

One of the largest gasoline retailers in PA is Sheets. It,s a convenience store chain. One of the other largest retailers is WAWA, which started as a dairy, but is also a convenience store chain. If youu're in the Reading, PA area, you'll see a lot of Redner's gasoline pumps. Redner's is a grocery chain, that also has a lot of convenience stores, where they sell gas. Lukoil( the Russian oil company) has opened a lot of gas stations recently in PA. Valero (the large refiner) also sells a lot of branded gasoline through independant convenience stores in PA. Then we also have the majors, Exxon/Mobil, Sunoco, BP, Citgo. So I've named 9 different players in this post, and I didn't even look in the phone book to get all of the independant stations. So much for your argument that ther are only 6 retailers of gasoline setting the price of gas.

great. So, in Pennsylvania, we can add one, but in the rest of the country Sheets doesn't compete with the oil companies. So, again, in the overall marketplace we still have a handful of companies that all despite a multitude of factors that could change prices from one to another wind up charging the exact same.

In a debate you consider and either accept or refute opposing points.

All I've gotten out of this is that you'd be more satisfied if gasoline were available in 31 "flavors", like Baskin-Robbins ice cream.

I agree with blackhedd, you're a troll & not worth the time. And you're certainly not pursuing a conservative solution to this supposed "problem".

It's such a fine line between stupid and clever. - David St. Hubbins

of those that have a different opinion. I guess for all of our talk most of you are no different than any of the far left loons you all condemn. I have a difference of opinion on the oil industry and for that I get called a communist, a troll, stupid, what else have I been called. I guess being provocative on redstate is not encouraged, I am surprised that one of you hasn't gone to try and ban me by now. Now, it isn't a debate. Why is that, because I don't bow down to your point of view say I am sorry and tell you that you were right. It doesn't work like that. I have my point of view. You have verbalized yours and the difference is I have treated you with respect, while you turned around and have resorted to calling me names. If I am so misguided why are all of you still now continuing this debate with me.

When I read someone that find to be totally worthless, I generally don't even finish and move onto someone else. You all have had your passions erupted. We are now nearing 150 posts and still no one but me finds this to be a good thing.

Isn't healthy, vibrant debate the point of blogs? Why are all of you getting so offended by my point of view?

You've been told, politely, about 350 reasons why your arguments don't hold water.

If you really want to research who is in the refining business, here's a report courtesy Uncle Sam: http://tinyurl.com/288bqj

Have at it. The Energy Information Administration is just full of fun facts.

It's such a fine line between stupid and clever. - David St. Hubbins

why do you guys continue to respond. There are a handful of oil companies. They produce exactly one product, in exactly four varieties. Despite the fact that it is produced with varying degrees of efficiency somehow, once it winds up in the consumer's hands it is always at the exact same price by each of the handful of companies, and oh, all the companies are making obscene amounts of money, and most importantly, unlike computers, micro chips, etc. this product is necessary for the very survival of the consumer, unless you all think we can live without cars. So, you have a rigged market, with a limited number of players, heavy barriers to entry, and they all charge the same, and at that price they all make obscene amounts of money. Call me bull headed, but I see this as a rigged oligopoly. If I am so crazy, why will this post wind up being one of the most responded to in redstate. Do we usually treat the mentally deranged with such attention?

Dude, at least a third of the responses on this diary are yours.

It's such a fine line between stupid and clever. - David St. Hubbins

aren't, which means over one hundred responses to someone that all of you now consider deranged, even though most of you have responded positively to many of my other posts. What did you think I was going to do bow down and admit I was wrong. Again, I don't usually engage those that I think are deranged for that long. I think this has been an excellent debate and the type that we need more of on this topic and others, but there was no need to call me stupid, a communist, or a troll especially by the same people that have read and recommended other works of mine. Breaking the debate into childish name calling is what I expect the loony left to do, you all should have kept your cool better. Some of you are acting like I stole something. I have backed up my assertions and you have backed up yours. I think we did exactly what sites like this are intended to do which is engage in spirited debate, the difference is that I respect your expertise on the matter, whereas you act as though I am your enemy.

your statements that you either present evidence to refute the oposition or to YES admit that you were wrong. Bowing is optional.

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

up your assertions is absurd. You've presented no evidence, no links or even rational reasoning. When presented evidence that you're wrong, you just ignore the evidence and restate your original assertion. I think the only reason this thread is so large is because it's like watching a car wreck. It's horrible, it's disgusting, but you just can't tear your eyes away.

when I read someone that I find to be dumb, I ignore them. The idea that you are all piling on the way you are because I am just so terribly wrong in a post that is creeping up to 200 responses is just plain wrong. I have about a hundred different people responding to me at once, and I do other things in the day besides this so I don't have time to respond to everyone. I have stated my thesis and it hasn't changed and if you believe I am wrong then you wouldn't need to continue on like this. You would have corrected me once and moved along. I have obviously hit a nerve and unleashed a wrath among the members of redstate.com

I don't know which posts you are referring to however I have tried hard to answer as many as possible but as you can see they are pretty overwhelming. Many of you have mischaracterized what I have said and point out refining companies even though I am strictly talking about companies that provide the final fuel that we put into our cars.

Again, there are only a handful of those companies. Anyone that says any different is fooling themselves. This market is dominated by a select few. It requires billions of dollars to enter the market and thus competition is and always will be scarce, this is not a free market but an oligopoly.

contrary. I'm done. I've finally torn my eyes away from this car wreck.

I am talking about the companies that bring the final product to the consumer, Marathon, Citgo, Shell, BP, Mobile, Clark, and there is one more I can't think of. These are the companies that I would like to see turn into energy companies and also the companies that I believe are working as an oligopoly to set the price of gasoline by playing chicken and waiting for one to set the price.

talking about! See my post below. I agree, the bigs are not nice guys; they drive hard bargains, are so tight with their money that they squeak, and will throw their weight around when they can - just like every other business in the World. But fundamentally, they don't own much oil, they have to lease drilling and production rights from governments many of which are corrupt and all of which are usually seeking to maximize their own revenue.

I think the only big still showing its brand on a station in my state is Shell, the rest are companies like Williams, Tesoro, and PetroCanada and all of them are using oil from one refinery in Fairbanks, owned by Williams last I looked, which uses oil owned by the State and the NS producers. (Except here in SE Alaska where we have to use Alaska oil refined in WA and barged back here on Jones Act bottoms - wanna talk about expensive gas?)

Sure, there are huge barriers to entry, but those barriers are not imposed by oligopolistic conspiracies, they're imposed by the huge costs and risks involved in the industry.

In Vino Veritas

boy,

what a shame it would be if the oil companies did provide a wide variety of gasoline types. I know I would be flabbergasted if the traditional three sorts was turned into a computer that had literally hundreds of fuel, not just petroleum, but natural gas, ethanol, hydrogen even, yes that would be tragic.

Also, do trolls write posts like this...

http://www.redstate.com/blogs/mike_volpe/2007/may/22/hapless_dems_blink_...

other than the different blends dictated by regional authorities that is?

Honestly, your auto is designed to run on a limited range of fuels or grades of gasoline. If you burn gasoline that is of lower grade than your car is designed to burn, it will knock or will retard its timing to prevent knocking but get lower milage (that's what my British made car does). If you burn a higher grade than the auto was designed for, you're just pooring extra money into your tank for no benefit (that's the effect of putting premium gas in my 2 American made vehicles). If you choose to put ethanol blended gas in your vehicle, they made have boosted your octane to prevent knocking or lowered your price/gallon but chances are your milage will be slightly lower due to lower energy content of ethanol.

Some brands add detergents that they claim makes your injectors cleaner and your car more efficient. Back when I drove a Camaro (in the 80's) to travel for work, I used to keep close track of my milage. I calculated a noticable difference when using Amaco branded gas (now changed to BP around here) instead of the cheaper mom and pop brands, but it did cost a little more. At the time I figured that the added milage was worth a few pennies more, but not more than a few pennies. I haven't done such comparisons in 20 years so the difference in brands may not be noticable anymore and the economics of cheap gas vs name brand may or may not make a difference. I buy cheap gas for everything but my British made car and I sometimes buy the cheap gas for it if the better stuff is too much higher or not convenient to get.

Do you really want to add still MORE variables in figuring out which fuel makes your car go best?

Socialism doesn't work. It looks nice on paper, but it's been tried and it's failed miserably every time (usually accompanied by widespread death and suffering).
Proud member of the V.R.W.C.

a lot of money by putting higher than needed octane fuels in their cars. I have no intention of wasting a minute looking for that study.

I never said that oil companies made a lot in 1998-2003. Second, mom and pop account for a fraction of the market and are totally irrelevant in setting prices. If you think some mom and pop is going to bring down BP by low balling their own prices, you are dead wrong.

I don't care what they did or didn't make in 1998-2003. What I know is that there aren't many of them, there are barriers to entry for any legitimate competitor, and despite having several different factors that determine the final price it usually winds up being roughly the same for all of them in the end, and that to me doesn't sound like a market.

I am through on this matter. I think we had a great and spirited debate. I don't believe that anyone needed to condescend or make fun of me. I think we can all have differences of opinions without resorting to name calling.

I believe the job of any columnist is to be provocative and encourage debate, and on those two fronts I have accomplished the goal. For all those that put me down, hopefully one day you will write something that sparks as much passion and fury as I wrote.

I will say this you have provoked unity here. Unity that your position is weak. Too such an extent was your position unresearched and your defenses unreasoned, that I would almost think you were working for the oil companies seeking to discredit their critics on real issues.

You have also shown that the Redstate community shares a common guilty pleasure. We enjoying taking apart stupid arguments in a condescending fashion illustrating our superior intellects. If you call being the object of the equivalent of pulling wings off flies having a great and spirited debate so be it.
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"Those who expect to reap the blessings of freedom must, like men, undergo the fatigue of supporting it."
-Thomas Paine: The American Crisis, No. 4, 1777

...who made the mistake of bringing a knife to a gun fight, but I don't want to get that whole deal started up again...

It's such a fine line between stupid and clever. - David St. Hubbins