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Coffee Shop
USw National Oil Strike
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<blockquote data-quote="greybeard" data-source="post: 1220464" data-attributes="member: 18945"><p>Oil companies have a margin to work within and that's it--the federal guys watch that margin to make sure no one is price gouging to the wholesalers, which is hard to do since gasoline is a traded commodity, and the daily price is public knowledge. </p><p>Oil companies don't have influence on how much your retailer charges for gasoline or diesel--the wholesaler does. The retailer does not charge you and I according to how much he paid for the fuel in his bulk tank--he charges according to how much it will cost him to replace that fuel, and that value changes every day. Crude oil is a market commodity just like wheat and corn, but refined fuels like gasoline, heating oil, and diesel are also traded on the commodity market, and the price at the end of each trading day results in the wholesaler getting what is known as "rack price". That rack price is different from one area of the country to the other. The wholesaler gets this information every day sometime around 5pm eastern time, then notifies all the retailers he supplies so they will know whether to raise their price or not. Why? A retailer can sell thousands of gallons in a single day and if he does so at a price lower than what it costs to replace that volume, he's screwed and will likely have to run debit for the next load. If rack price drops, the wholesaler also notifies the retailer, but it is solely up to the retailer whther he drops his price accordingly. It's to his advantage to keep his price the same for as long as the rack price is dropping, which is why it seems like gas is quick to go up, but slow to go down. </p><p></p><p></p><p>So don't blame "the oil companies". Blame the market, or, the wholesaler if you must but when crude and the rack price of gasoline drop but retail cost doesn't--blame your retailer. He's pocketing the difference between what lower rack price is and what he's charging you (plus his own usual profit margin of course)</p></blockquote><p></p>
[QUOTE="greybeard, post: 1220464, member: 18945"] Oil companies have a margin to work within and that's it--the federal guys watch that margin to make sure no one is price gouging to the wholesalers, which is hard to do since gasoline is a traded commodity, and the daily price is public knowledge. Oil companies don't have influence on how much your retailer charges for gasoline or diesel--the wholesaler does. The retailer does not charge you and I according to how much he paid for the fuel in his bulk tank--he charges according to how much it will cost him to replace that fuel, and that value changes every day. Crude oil is a market commodity just like wheat and corn, but refined fuels like gasoline, heating oil, and diesel are also traded on the commodity market, and the price at the end of each trading day results in the wholesaler getting what is known as "rack price". That rack price is different from one area of the country to the other. The wholesaler gets this information every day sometime around 5pm eastern time, then notifies all the retailers he supplies so they will know whether to raise their price or not. Why? A retailer can sell thousands of gallons in a single day and if he does so at a price lower than what it costs to replace that volume, he's screwed and will likely have to run debit for the next load. If rack price drops, the wholesaler also notifies the retailer, but it is solely up to the retailer whther he drops his price accordingly. It's to his advantage to keep his price the same for as long as the rack price is dropping, which is why it seems like gas is quick to go up, but slow to go down. So don't blame "the oil companies". Blame the market, or, the wholesaler if you must but when crude and the rack price of gasoline drop but retail cost doesn't--blame your retailer. He's pocketing the difference between what lower rack price is and what he's charging you (plus his own usual profit margin of course) [/QUOTE]
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