Re: Questions on gas prices and crude oil prices

Brablo wrote:
I would have thought that there is perfect correlation between the
crude oil prices and the price of gas, but this is far from the case.

1. What other factors affect the price of gas?

Prices are mostly driven by wholesale price of gasoline stocks,
cross the estimation of what retailers think traffic will bear.

2. When the price of gas was very high during Hurricane Katrina's
wake, Exxon made record profits. Why don't they continue with this
strategy, such as make the prices continue to be that high?


They probably couldn't get the hurricane machine working again.

*Exxon* did nothing. Whoever operates that retail establishment
made that decision. That could be Exxon corporate, or just the
operator.

Prices go up on pseudorandom inputs. Somebody leads with a raise in
price ( usually at a critical location ), then other retailers
follow suit. After a while, they get nervous and somebody tries to
attract more traffic by dropping price. The rest of the herd
soon follows.

This is a more-or-less prisoners dillema, with defeciton guaranteed.
The defector is the guy who flinches first.

Retailers make next to nothing on gasoline. Gasoline sales
are bait - jerky/cigarette/beer sales are the payload. And
lottery tickets are probably mothers' milk.

--
Les Cargill
.

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