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| 5/23 |
| 2007/3/28-31 [Finance/Investment] UID:46122 Activity:nil |
3/28 Why is there not a clear correlation between crude price and actual
price at the pumps? Am I missing something about the very
basic laws of supply and demand?
\_ One theory is that if the crude price increases, it implies
that the future supply is uncertain and could become quite
scarce. Thus, the present stock is more valuable than the
price originally paid. A immediate price increase is needed
to accurate reflect this valuation. In addition, if the supply
does become scarce, one must earn future profits with current
stock. This requires a present increase in price.
If the crude price falls, this cannot be reflected at the pump
w/o taking a present loss. Current stock was obtained at a
higher price. To recoup this higher purchase price, one must
continue selling that stock at a higher price. Therefore, a
lag is necessary.
A competing theory suggests that the oil companies just like
making money and have no incentive to take less of your money.
\_ Produce prices in Chinatown follow the same pattern. When a
storm is forecasted, produce prices go up right away; when the
storm is over, produce prices stay up for a while before going
back to normal. I personally believe in the "competing theory"
above.
\_ The prices go up suddenly because current prices reflect future
value, which includes uncertainty. After the uncertainty goes
away, it takes some time for competitive pressures to push the
price back down.
\_ There is. Anyone who tells you otherwise has an agenda. See the
following chart:
http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=24
http://www.gasbuddy.com/gb_retail_price_chart.aspx?time=72
Check the box "Show Crude Oil Price".
However, the demand of gasoline is very inelastic, so when demand
outstrips supply, the price change is quick and dramatic. Lastly,
local laws dramatically affect the price (requiring certain blends,
taxes, etc.).
http://www.gasbuddy.com/gb_gastemperaturemap.aspx |
| 5/23 |
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| www.gasbuddy.com/gb_retail_price_chart.aspx?time=24 Step One - Select a single city in order to identify price trends or to identify a historical price most accurately. Select multiple cities to compare pump prices between cities. Step Two - Selection of time duration will define how long into history the prices will be displayed. In some cities only limited price history information is available and in those cases the line will be flat for extended periods. Step Three - When comparing US cities to Canadian cities you have a choice of price units. The standard unit of measure in the US is dollars per gallon and in Canada the standard is cents/liter. Comparison of US and Canadian cities is done using recent currency exchange rates and uses the conversion factor of 1 US gallon being equal to 378 liters. For simple plotting of US cities use dollars per gallon ($/G) and for simple plotting of Canadian cities use cents/liter (c/L). |
| www.gasbuddy.com/gb_retail_price_chart.aspx?time=72 Step One - Select a single city in order to identify price trends or to identify a historical price most accurately. Select multiple cities to compare pump prices between cities. Step Two - Selection of time duration will define how long into history the prices will be displayed. In some cities only limited price history information is available and in those cases the line will be flat for extended periods. Step Three - When comparing US cities to Canadian cities you have a choice of price units. The standard unit of measure in the US is dollars per gallon and in Canada the standard is cents/liter. Comparison of US and Canadian cities is done using recent currency exchange rates and uses the conversion factor of 1 US gallon being equal to 378 liters. For simple plotting of US cities use dollars per gallon ($/G) and for simple plotting of Canadian cities use cents/liter (c/L). |
| www.gasbuddy.com/gb_gastemperaturemap.aspx Click Here USA National Gas Temperature Map Now you can see what gas prices are around the country at a glance. Areas are color coded according to their price for the average price for regular unleaded gasoline. |