Comments on: A Mathematical Look at How Gas Companies Rip Us Off http://www.dailyfueleconomytip.com/oil-prices/a-mathematical-look-at-how-gas-companies-rip-us-off/ Increase Fuel Economy and Save Money at the Pump Sun, 04 Sep 2011 14:30:58 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: David http://www.dailyfueleconomytip.com/oil-prices/a-mathematical-look-at-how-gas-companies-rip-us-off/comment-page-1/#comment-31564 David Sat, 14 Jul 2007 02:56:18 +0000 http://www.dailyfueleconomytip.com/?p=269#comment-31564 It appears the American people have been ripped-off way too long. I believe that it is time to have an energy revolution. The "opening volley" can be viewed at http://desakrisson.topcities.com Working together, we CAN help free the American consumers from bondage to "predatory oil" and their allies. It is time to put the power back in the hands of the people, where it truly belongs. It appears the American people have been ripped-off way too long. I believe that it is time to have an energy revolution. The “opening volley” can be viewed at http://desakrisson.topcities.com

Working together, we CAN help free the American consumers from bondage to “predatory oil” and their allies. It is time to put the power back in the hands of the people, where it truly belongs.

]]> By: PETROCHIEF http://www.dailyfueleconomytip.com/oil-prices/a-mathematical-look-at-how-gas-companies-rip-us-off/comment-page-1/#comment-4368 PETROCHIEF Sat, 20 Jan 2007 15:45:41 +0000 http://www.dailyfueleconomytip.com/?p=269#comment-4368 Given this explanation,the system is set up guranteeing the retailrs a profit. good but is that how the free maqrket is supposed to work? On the back of the consumer? No wonder the Mega corp make gigantuan prfis.why cant the retailers pay the price at pickup?Or better still why cant the increase in crude oil price be factored in every week instead of as the bids rise on the mercantile exchange. Given this explanation,the system is set up guranteeing the retailrs a profit. good but is that how the free maqrket is supposed to work? On the back of the consumer? No wonder the Mega corp make gigantuan prfis.why cant the retailers pay the price at pickup?Or better still why cant the increase in crude oil price be factored in every week instead of as the bids rise on the mercantile exchange.

]]> By: Sean http://www.dailyfueleconomytip.com/oil-prices/a-mathematical-look-at-how-gas-companies-rip-us-off/comment-page-1/#comment-4232 Sean Thu, 18 Jan 2007 04:37:12 +0000 http://www.dailyfueleconomytip.com/?p=269#comment-4232 You've left out the speculation aspect of gas prices and that's really the "unknown" in your equations. Wholesale prices of a barrel of oil are determined by perceived supply, known demand, and expected demand. It's the guessing of what's coming in the future that gives this whole thing a "floor of the stock market" feel. Additionally, gas stations purchase large quantities of fuel to store in underground tanks. As I understand it, the fuel is purchased and paid for up front. Vehicles purchase the fuel in smaller increments which means that the fuel is drained from the underground tanks over a period of time. The period of time between fuel deliveries to the station can and will experience fluctuations in the wholesale price of fuel. Gas stations will keep the price of gas "artificially" high in order to hedge their bet against increasing fuel costs. I think it would be very unusual if gas prices fell at the pump at the same rate at which the price of a barrel of oil fell. Scenario: a local gas station purchases a tank of gas at the wholesale rate of $1.90 per gallon. The gas station receives deliveries every 2 weeks. The retail price of the gas is $2.00 per gallon. 3 days after receiving the delivery, Iran shuts down oil production completely and the wholesale price of gas increases to $2.75 per gallon. In order to purchase the next tank of gas, the gas station is forced to increase the retail price of gas immediately. Scenario: Iran resumes oil production, but they're politically shaky. If the gas station returns to the $2.00 per gallon price of gas will they have enough to purchase the next tank of fuel? It's unknown, and that's where you find local gas prices falling slower than they increase. You’ve left out the speculation aspect of gas prices and that’s really the “unknown” in your equations. Wholesale prices of a barrel of oil are determined by perceived supply, known demand, and expected demand. It’s the guessing of what’s coming in the future that gives this whole thing a “floor of the stock market” feel.

Additionally, gas stations purchase large quantities of fuel to store in underground tanks. As I understand it, the fuel is purchased and paid for up front. Vehicles purchase the fuel in smaller increments which means that the fuel is drained from the underground tanks over a period of time. The period of time between fuel deliveries to the station can and will experience fluctuations in the wholesale price of fuel. Gas stations will keep the price of gas “artificially” high in order to hedge their bet against increasing fuel costs.

I think it would be very unusual if gas prices fell at the pump at the same rate at which the price of a barrel of oil fell.

Scenario: a local gas station purchases a tank of gas at the wholesale rate of $1.90 per gallon. The gas station receives deliveries every 2 weeks. The retail price of the gas is $2.00 per gallon. 3 days after receiving the delivery, Iran shuts down oil production completely and the wholesale price of gas increases to $2.75 per gallon. In order to purchase the next tank of gas, the gas station is forced to increase the retail price of gas immediately.

Scenario: Iran resumes oil production, but they’re politically shaky. If the gas station returns to the $2.00 per gallon price of gas will they have enough to purchase the next tank of fuel? It’s unknown, and that’s where you find local gas prices falling slower than they increase.

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