Why did gas go up so quickly - yet the prices fall so slowly

[Imagevision]

Crude oil was at $65.00 yesterday the same price it was at when gas prices were at $2.09...? Oil companies - oil companies...!

[abbeyco]

1. What I keep hearing/reading

Is that the prices are going down more slowly to capture the profits they missed when prices rose so quickly. They didn't pass on the costs to us on the front end and are recouping them on the decline of the price per barrel now.

[Imagevision]

5. when prices rose so quickly - they also did at the pumps - no logic here

[Dees]

8. True. When retail prices were being adjusted almost

hourly one must keep in mind that the laid in cost of the fuel remained the same until new loads were delivered and the cost increased. An easy way to make good money throughout the chain. Index your retail and wholesale price based on futures vs. actual cost. No such thng as a "floating" wholesale price of gas. It is a scam of huge magnitude. Watch the quarterly profits.

[Jose Diablo]

14. One of the features of the

Anti-trust laws is prohibition against what is called vertical integration of industries. For example, the auto industry is barred from owning both the factories and the retail outlets. The reason for this prohibition is to prevent the total control of the entire delivery chain of a product by a single entity and thus preventing the price gouging we are seeing now.

Somehow in the 80's, the oil industry had these restrictions removed because that is when we saw the gas station ownership changing from franchise operator owned to oil company owned using local 'managers' to operate the stations. At this time we also saw the shutting down of some refining capacity which has continued till today. By reducing capacity, artificial shortages can be made to happen. I don't know how the industry was allowed to do this, but just speculating I imagine the Reagan administration had a lot to do with it.

What we are seeing today, is the results of a lax enforcement by DOJ and corruption of a system of laws by the executive and legislative portions of our government that were designed to prevent just what is happening today.

So much for the efficiency and 'invisible hand' of competition being the best economic system. The game is rigged.

[ozarkvet]

15. Former 7/11 Assistant Manager

Wow. First day poster and my high school job I despised is actually useful. I actually had to set the gas prices for "my" store almost daily.

It was a formula based on the wholesale price of gas pumped into the storage tank(s), plus 8-12 cents. The storage tanks were never quite empty, so you'd be working with some fraction of the old average price and the new wholesale price.

To sum up something complex, as the storage tanks empty and new cheaper gas is put in, the price goes down based on the average, but which kept the same rough 8-12 cent margin.

Gas was a loss leader to get people into the store. We made all our money on Slurpees and Big Gulps, which have a 1800% markup or something (cost about 1/2 cent and sold for $1.50).

[Dees]

16. Welcome ozarkvet. Former Ozarkian myself and vet.

Thanks for your info. What troubles me is let's say the tanks are full on Monday morning at a certan laid in cost. Let's also say that supply is enough for 4-5 days. Why are retail prices adjusted upward (in some cases several times) during the duration of that fixed cost of fuel if the margin is a set amount?

[ozarkvet]

18. Margins

Oh, I am sure there are gougers out there, but I don't know.

We filled up our tanks almost daily, and twice on the 15th and 30th (when everybody gets paid and fills up), which I think is pretty typical -- the newish blends of gasoline go bad pretty quickly without added stabilizers, especially during the summer, so retail tanks are smaller than you would think.

The big scam was for the owner to "break" the pay-at-the-pump readers --- people would come in to pay for gas and inevitably buy that Slurpee, which had more profit than a whole tank of gas.

I always knew when she (the owner) needed money, 'cause her husband turn off the card readers for "maintenance."

Also, at lots of stations, gas goes up a penny every 14th and 29th and then down a penny two days later --- 'cause that's when people fill typically fill up. Watch the signs.

[Dees]

20. Wow. You really learn something every day.

Having been in business for myself for a number of years I really am not familiar with the marketing and retailing aspects of the convenience store business. We are just the dupes on the wrong end of the pump. Thanks again.

[newyawker99]

17. Hi ozarkvet!!

Welcome to DU!! :toast:

[all.of.me]

24. same at a fast food restaurant

they can sell you a burger for a buck, because the profit is in the soda.

[goddess40]

2. because with 2 oil men in the WH - they can

without fear of reprisal or consequences of any kind.

[acmejack]

3. One word answer: PROFIT

[Yupster]

4. In business it's called the

"rocket and feather" effect where prices tend to rise like a rocket, but fall like a feather.

[nonconformist]

6. Because the have-mores are laughing all the way to the bank. nt

[SoCalDem]

7. Psychology

The longer they stay at a HIGH price, the more easily they can get people to hungrily accept $2.50 gas, and say "Thank You, Master !"

People have short memories.. Few will actually remember that a year or two ago, they were humming along on $1.30 a gal gas, and complaining THEN.. Now, they make a U-turn and fill up when they see $2.50 :(

People also accept the fact that many of their "necessities" in life have TRIPLED in price over a few short years, yet their salaries have not...

[samplebytes]

11. Exactly.

I remember when I first started driving (which really wasn't all that long ago, I graduated high school 10 years ago), gas prices were just barely over $1.00 per gallon. (In fact, one time I paid $.89.9 per gallon. Of course, being in high school, I could only afford $5 worth.) I find myself trying to curb gas usage, and working from home seems to be what I needed. I used to have a 25 mile (one-way) commute. My wife still has that commute now, and I have to pay for her gas. (Granted, her job is what provides the health, vision, and dental insurance, so it evens out.) The thing is, I think gas will get below $2.50 per gallon. I'm thinking it will get to about $2.39, but that will be the absolute lowest we will see ever again.

Of course, don't expect that $2.39 for at least another month, the oil companies have to get their cut.

[SoCalDem]

13. When i was a teenager, I could fill my full-sized Dodge on $5

gas was about 20 cents a gallon then..Teenagers used their ashtrays to collect "donations" of coins from their friends.. When the ashtray was full, we got a fresh tank of gas.

[Beaver Tail]

9. GREED

Filthy corporate greed

[Benhurst]

10. Because Uncle Dick's batteries wore down. It's hard counting

all that money. " Now let's see, where were we? Three for big oil, one for me. One for big oil, two for me ... ."

:popcorn:

[Jersey Devil]

12. NJ gas $2.99 on Thursday 9/15

[PurityOfEssence]

19. Why are credit card interest rates close to 30%?

The current inflation rate's still pretty low, and it's been 3-ish to 4-ish percent for years now, yet the rates charged by major companies would make Shylock jealous.

It's the basic big-business "fuck you" that's the true heart of this country's value system. It's sink or swim jungle capitalism, unless a corporation gets in trouble, then there's some handy taxpayer-provided socialism to help keep the rich rolling along.

Sure, you can get a credit card for 7% these days if you're a good risk, but many can't, no matter how diligent they are paying on time.

As for oil, this government is literally run by old-time oilmen; it's a bonanza.

[SoCalDem]

23. for another month..Lots will be bailing in the next few weeks.

and after that date, people will be more careful since their "last option" will have been taken from them..

I foresee a bleak shopping season this year

[Imagevision]

21. Labor day-29 million auto travelers as gas goes to above $3.00 a gal.

The numbers are almost uncalculable - $10.00 extra per tankful X how many tanks used to go and return - the profits simply make it impossible to allow for going back to lower prices.

Bush & Cheney first and foremost are oilmen and the cash flowing is unimaginable, which is why George now says we must protect the oil fields so they don't fall into the hands of the "terrorists"
God Bless Amerika...!

[genieroze]

22. It's called greed. eom

[all.of.me]

25. i have a thread with some info in it

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=104&topic_id=4799726&mesg_id=4799726