# Gas prices always changing **URL:** \ **Category:** Factual Questions\ **Created:** [February 20, 2004, 5:22pm UTC](https://boards.straightdope.com/t/gas-prices-always-changing/230226 "2004-02-20T17:22:50Z")\ **Posts on this page:** 9\ **Page:** 2
**Author:** ![uhluhtcdaerd](https://avatars.discourse-cdn.com/v4/letter/u/48db29/32.png) [@uhluhtcdaerd](https://boards.straightdope.com/u/uhluhtcdaerd)\ **Post date:** [February 21, 2004, 3:25am UTC](https://boards.straightdope.com/t/gas-prices-always-changing/230226/21 "2004-02-21T03:25:04Z")
> [@CheekyMonkey613](#): > > Ya know … if this was my post, I’d put it in the Pit… > > Just so happens that the price goes up on Thursday when most people get paid? Just so happens that the price goes up before a big holiday? Supply and demand my ass. I think not, my friends. Until the gas is sold to you, it’s on consignment. It was “in the ground” at your gas station way before Thursday and way before Easter. Those two situations were gas prices go up ARE caused by supply and demand. If people have more money(like after a payday) they are likely to demand more gasoline. Similarly, when a holiday comes around, and people want to fill up their cars to go visit relatives, their demand for gasoline goes up. In both cases, the supply of gasoline at the station remains constant. And if demand increases while supply remains the same, basic Econ101 says price will go up. That’s just how it works. Gas prices(or the price of anything, for that matter) have little to do with the actual cost of the product at the consumer level; wholesale prices only provide a minimum level at which the retailer is willing to sell a product. ---
**Author:** ![Ringo](https://avatars.discourse-cdn.com/v4/letter/r/779978/32.png) [@Ringo](https://boards.straightdope.com/u/Ringo)\ **Post date:** [February 21, 2004, 3:45am UTC](https://boards.straightdope.com/t/gas-prices-always-changing/230226/22 "2004-02-21T03:45:11Z")
> [@](#): > > No business on the planet has as its primary goal to balance supply and demand. Their #1 goal is always to _make more money._ To make more money they may need to raise prices, lower prices, increase supply, decrease supply, whatever. Mistakes are made all the time. Your goal is to make fewer mistakes then the other folks. (Maybe there’s supply and demand for mistakes???) > > And deciding what to do to make more money has stumped most of them. > > Little day to day variations at your local gas station is just the owner’s way of trying to make more money. Some of it has to do with how much the wholesaler is charging. Some has to do with how much the guy on the other corner is charging. There’s amortization of costs, whether the Big Game jackpot is big enough to draw in a lot of customers, and on and on. Many are willing to take short term losses for long term benefits. Gas high today? Well, he’s gotta make back those short term losses. Seems he goofed up last month on how many people were going to fill up on premium. And so it goes. Was there a point in there? This is an interesting statement: > [@](#): > > No business on the planet has as its primary goal to balance supply and demand. What on earth does _that_ mean? Yes, businesses operate to make a profit. No, most businesses do not operate with the goal of making sure that everybody gets a cookie. And they _do_ operate on a supply and demand basis. You’ve lost me, **ftg**. ---
**Author:** ![Xema](https://avatars.discourse-cdn.com/v4/letter/x/9de053/32.png) [@Xema](https://boards.straightdope.com/u/Xema)\ **Post date:** [February 21, 2004, 1:42pm UTC](https://boards.straightdope.com/t/gas-prices-always-changing/230226/23 "2004-02-21T13:42:55Z")
> [@ftg](#): > > No business on the planet has as its primary goal to balance supply and demand. Their #1 goal is always to _make more money_. To make more money they may need to raise prices, lower prices, increase supply, decrease supply, whatever. I think we are in agreement here. To paraphrase: in order to make the most money you generally have to pay careful attention to supply, demand and price. If you don’t, the market will do it for you. Set your (US) gas price at 4/gal and see what happens to demand. Set your price to .50/gal and see how long your supply lasts. ---
**Author:** ![drachillix](https://avatars.discourse-cdn.com/v4/letter/d/48db29/32.png) [@drachillix](https://boards.straightdope.com/u/drachillix)\ **Post date:** [February 21, 2004, 7:22pm UTC](https://boards.straightdope.com/t/gas-prices-always-changing/230226/24 "2004-02-21T19:22:37Z")
> [@Xema](#): > > I think we are in agreement here. To paraphrase: in order to make the most money you generally have to pay careful attention to supply, demand and price. > > If you don’t, the market will do it for you. Set your (US) gas price at 4/gal and see what happens to demand. Set your price to .50/gal and see how long your supply lasts. Gasoline is IIRC my econ properly an inelastic good. Its demand varies little from the price above the scale of a few days in a given neighborhood. Actually gas prices are pretty much held in check by masive competition. Trying to make your gas $4 a gallon will not change total demand. If every gas station in the world decided to increase gas prices by $1 a gal tomorrow and stay that way, demand would change very little. Over time it would drop a bit as mass transit becomes a more affordable option and less efficent vehicles fall from favor. ---
**Author:** ![SanibelMan](https://avatars.discourse-cdn.com/v4/letter/s/a88e4f/32.png) [@SanibelMan](https://boards.straightdope.com/u/SanibelMan)\ **Post date:** [February 21, 2004, 9:33pm UTC](https://boards.straightdope.com/t/gas-prices-always-changing/230226/25 "2004-02-21T21:33:27Z")
I am curious as to how all of the gasoline companies seem to raise prices simultaneously, at least around here. [See this graph.](http://www.stlouisgasprices.com/retail_price_chart.asp) My question is, if there are two gas stations a couple of blocks away, why would they both raise their prices at the same time? Why wouldn’t one keep the lower price in order to attract more consumers? It’s as if every gas station in St. Louis gets a call in the middle of the night and coordinates their pricing. Shouldn’t it be more competitive? By what mechanism to they coordinate these prices? ---
**Author:** ![jacksen9](https://avatars.discourse-cdn.com/v4/letter/j/ce73a5/32.png) [@jacksen9](https://boards.straightdope.com/u/jacksen9)\ **Post date:** [February 21, 2004, 10:03pm UTC](https://boards.straightdope.com/t/gas-prices-always-changing/230226/26 "2004-02-21T22:03:24Z")
> [@SanibelMan](#): > > I am curious as to how all of the gasoline companies seem to raise prices simultaneously, at least around here. [See this graph.](http://www.stlouisgasprices.com/retail_price_chart.asp) My question is, if there are two gas stations a couple of blocks away, why would they both raise their prices at the same time? Why wouldn’t one keep the lower price in order to attract more consumers? It’s as if every gas station in St. Louis gets a call in the middle of the night and coordinates their pricing. Shouldn’t it be more competitive? By what mechanism to they coordinate these prices? The station that raises its price first, hopes the competition will do the same. If the competitor raises prices in lock-step, they both enjoy higher profits. It benefits both. ---
**Author:** ![Wumpus](https://avatars.discourse-cdn.com/v4/letter/w/8c91f0/32.png) [@Wumpus](https://boards.straightdope.com/u/Wumpus)\ **Post date:** [February 21, 2004, 10:09pm UTC](https://boards.straightdope.com/t/gas-prices-always-changing/230226/27 "2004-02-21T22:09:25Z")
I’m not sure what your graph is supposed to show, SanibelMan, since it’s a graph of _average_ gas prices. So whatever price variation there is between companies in a given city by definition isn’t going to show up in it. Odd that everyone is so shocked that the price of gas changes frequently when the prices of other commodities like gold, copper, lumber etc. do as well. Not to mention food staples like milk, eggs, and meat. ---
**Author:** ![Gorsnak](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/gorsnak/32/7587_2.png) [@Gorsnak](https://boards.straightdope.com/u/Gorsnak)\ **Post date:** [February 21, 2004, 10:15pm UTC](https://boards.straightdope.com/t/gas-prices-always-changing/230226/28 "2004-02-21T22:15:22Z")
Well, I’ve seen very little here that answers the fluctuation question. Here in Saskatoon, for the past year the price of diesel has been, with the exception of one week, 65.9/litre. Gas, during the same time period, has fluctuated over a range of over 20 cents/litre, up one week and down the next. I would think that the demand for diesel would be slightly more constant than the demand for gas, but not so much as to explain this discrepancy. I presume that the fluctuations are an artifact of maximizing profits in an economic oligopoly, but I don’t understand why it’s advantageous to be moving the price around all the time. ---
**Author:** ![SanibelMan](https://avatars.discourse-cdn.com/v4/letter/s/a88e4f/32.png) [@SanibelMan](https://boards.straightdope.com/u/SanibelMan)\ **Post date:** [February 22, 2004, 1:13am UTC](https://boards.straightdope.com/t/gas-prices-always-changing/230226/29 "2004-02-22T01:13:39Z")
> [@Wumpus](#): > > I’m not sure what your graph is supposed to show, SanibelMan, since it’s a graph of _average_ gas prices. So whatever price variation there is between companies in a given city by definition isn’t going to show up in it. > > Odd that everyone is so shocked that the price of gas changes frequently when the prices of other commodities like gold, copper, lumber etc. do as well. Not to mention food staples like milk, eggs, and meat. I guess it just surprises me that it jumps on a regular basis like that. It rarely spikes and drops like that in Florida, at least as I remember it. Why not keep a steady price of, say, $1.58, instead of spiking to $1.75 and then dropping slowly to $1.49 or something like that? (I didn’t calculate the averages, but you get the idea.) And why does it spike in some areas of the country and not in others? [Previous page](https://boards.straightdope.com/t/gas-prices-always-changing/230226.md?page=1)