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mrmitchell
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How can you guys have $0.50 gas price variations in a single city
There's gotta be like 15 stations in Camden and all of them are $2.99 w/ one at $2.98
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rah
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Apolyton Prince of Moderators, Master of Reason
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Lord of the Ferrets
Jan 1970
time: 23:35
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For a good morning laugh, I was reading the morning paper and in the business summary section there was a tease of an article that would finally explain why gas prices rise quickly but are slower to go down. This looked like a must read. THE MYSTERY would finally be explained by known economists.
Here was an excerpt from the article.
quote:
GULF COAST CRISIS
Gasoline rides `rockets and feathers'
You're not imagining things: Prices at the pump are slow to fall
By Robert Manor, Tribune staff reporter. Bloomberg News contributed to this report
Published September 8, 2005
Does it seem that gasoline prices rise just as quickly as petroleum prices, but fall much more slowly when oil prices go down?
The answer is yes, and economists who have studied the issue can explain why.
Lynne Kiesling, senior lecturer of economics at Northwestern University, said the phenomenon of quickly rising but slowly falling gasoline prices at the pump is known as "rockets and feathers." The price rises like a rocket, but falls like a feather.
"We all need to remember that the primary role of prices is to transmit information about scarcity," Kiesling said.
Service station operators, particularly those owned by major oil companies, have nearly instant knowledge about the fluctuating price of wholesale gasoline and are able to raise prices almost in real time.
Kiesling said there is a natural desire not to lower prices too quickly--you make more money that way.
"Profit maximization is the motive of every individual in life," she said. "It's part of human nature."
Stephen Brown, director of energy economics at the Federal Reserve Bank of Dallas, has studied retail gasoline pricing.
"Gas prices do tend to rise more quickly when oil prices are rising than they fall when oil prices are falling," Brown said.
He said that while prices can shoot up rapidly, it on average takes eight weeks for the decline in price to equal the rise.
Retail gasoline prices rise with wholesale prices more quickly now than in the past.
"It is almost simultaneous," Brown said. "The market has sped up."
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The mystery is solved. It's all about profit.
I NEEDED AN ARTICLE BY EXPERTS TO UNRAVEL THIS COMPLEX MYSTERY. 
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KrazyHorse
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Macedonia
May 2001
time: 00:35
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While the short-term pain is drawing to a close, economists are pretty much telling us that the days of 30$ oil aren't coming back. Get used to 2.70$ gas, because it's not going away.
http://www.cbc.ca/cp/business/050908/b090848.html
quote:
CIBC World Markets predicts oil at US$84 a barrel in 2006, on way to $100
11:12 AM EDT Sep 08
TORONTO (CP) - Oil will likely climb to $84 US a barrel next year, eventually rising to $100 US per barrel by the end of 2007, CIBC World Markets predicted Thursday.
The average West Texas Intermediate oil prices will be affected by both supply and demand factors over the next few years, the study by chief economist Jeff Rubin said.
The study, which predicts oil will average $93 US per barrel in 2007, said prices are "expected to reach or exceed $100 US per barrel by the fourth quarter of that year."
"The devastation to both oilfields and oil industry infrastructure from hurricane Katrina will not only impact current oil production but future production as well," CIBC World Markets said in a release.
"The study expects that planned expansion of production in the Gulf of Mexico over the next two years is likely to be halved; cutting off nearly 300,000 barrels per day of potential future supply. The setbacks to planned expansion of Gulf of Mexico capacity comes on the heels of stagnant production in Russia and tapped out capacity in OPEC."
The study noted that world oil demand is less price sensitive than was thought, "requiring larger than originally anticipated price increases to rein in future demand growth." It linked a declining sensitivity in world oil demand to price and to the growing importance of energy consumption in China.
"While the full economic impact of expected oil price increases is difficult to gauge, at a minimum, the economic drag from higher energy prices should quickly cap rising short-term interest rates in both Canada and the Untied States," Rubin said.
"Apart from possibly one more rate hike on either side of the border, we are likely at a cyclical peak in short-term interest rates thanks to soaring oil prices."
CIBC World Markets is the wholesale banking arm of CIBC (TSX:CM) providing credit and capital markets products, investment banking and merchant banking. |
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08-09-2005 02:11
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