Boutique gas and high prices

Since we're not going to make much of a dent in demand for a while, it would seem to me that a good thing for Congress to do would be to do something to rationalize the supply side, and thus lower prices (that would be allow more refineries). Environmental results have been bought at a price - a price that we're really beginning to see in action.

It's a shame that we've allowed our rail infrastructure to be destroyed over much of the country, and passenger rail service (Amtrak) is a joke.

"But their reasoning here is pretty persuasive. In a truly national gasoline market, refiners would be under far more price pressure from competitors than they are under the current setup."

sheer nonsense. If price fixing and/or collusion were not going on, different gasoline companies would be focussing on different markets, and there would be wide disparity in pricing because some refiners would have lots of product for some markets -- and would be selling it at far lower prices than its competition in those markets.

Don't blame "boutique gas" for the price gouging going on, Justin. It doesn't stand up to basic "supply and demand" analysis.

There IS wide disparity in pricing between different markets, much more than existed before the 1990s.

"Since we're not going to make much of a dent in demand for a while, it would seem to me that a good thing for Congress to do would be to do something to rationalize the supply side..."

sorry john, but the price at the pump has nothing to do with infrastructure, etc.

Philadelphia has its own MASSIVE Sunoco refinery. There are also an other Sunoco refinery fairly close by in Marcus Hook PA. And practically no Exxon-Mobil refineries nearby. So you would expect Sunoco gas to be significantly cheaper than what you get at an Exxon station.

But its not. Sunoco is, at best, a few cents cheaper than Exxon when you have these two stations in close proximity.

Its pretty obvious what is happening here. Gasoline prices are now determined in a way that is antithetical to the whole "benefits of competition" capitalist theories. If an Exxon station has to charge $3.09 for gas, the Sunoco station across the street will put up a sign saying $3.07, REGARDLESS of how much less it costs for Sunoco to provide gas for its stations.

and, of course, Sunoco will still sell more gas, because people see the slightly lower price and go for it, even though they are only "saving" 60 cents on when the spend $75 filling up their SUV tanks. Sunoco can make obscene profits because Exxon won't accept a lower profit margin in order to remain competitive. Prices are "fixed" based on who has to sell gas at the highest price to maintain their targeted profit margins, and competition be damned.

"There IS wide disparity in pricing between different markets, much more than existed before the 1990s."

Justin, the issue here isn't what is going on in different markets, its what occurs in the same market.

BTW, is it my imagination, or are the gasoline companies spending far less on marketing now? When I was growing up, it seemed like every second TV commercial was for a gasoline company. Now, such commercials seem relatively rare. (Why bother to spend money on marketing, when price fixing in each market means you achieve your profit targets anyway?)

I heard Dennis Miller joke (paraphrasing), "I'm driving an SUV and using as much gasoline as possible. Because I figure the quicker we run out of the stuff, the sooner we'll get on to the next thing. I'm the environmentalist."

The free markets are coming to the rescue. We don't need CAFE standards. What we're seeing is consumer demand for hybrid cars. The technology exists now and it is affordable. Companies are responding to the demand by building more hybrids. Not too long ago, there was up to a 6 month wait for a Toyota Prius! Now, other hybrid cars are available and consumers are snapping them up.

"Give the people what they want." (Not paraphrasing Miller there!)

As folks exchange their current cars for hybrids, the national fleet will get higher MPG.

I don't believe that consumers are being gouged on fuel prices. I don't believe the conspiracy stuff. I think we go through a period every year where refineries are switching over to the summer blends. We haven't built a new refinery for 30 years, and the ones we have are running almost 24x7. We should create one fuel standard for the entire US to optimize the refining capacity that we do have. And we should also increase our refining capacity by building new refineries.

Oh, and on ethanol... I hope you read the ALARMING news that in Germany, fields of barley are being torn out and replaced with plants that can create biodiesel. The cost of barley has gone up 40%. Think about it.

DO YOU KNOW WHAT THAT IS DOING TO THE PRICE OF BEER?

Even the atheists are crying out, "Lord, no!"

How could anyone deny the fact that virtually every Thursday, the price rises just in time for everyone to receive their paycheck? And this last Memorial Day? Refineries shut down for maintenance schedules, prices go up, then, the day after memorial Day, they start up again?

Come on! The former observation alone is enough to convince me that gouging is alive and kicking on Thursdays. And the latter observation confirms that every holiday weekend, refineries shut down, prices go up, then a restart.

One more thing: Considering the record profits the oil companies have made over the years is clearly an indicator that they can afford the regulation AND research and development. The idea of diverting funds from one pursuit to satisfy the demands of regulation in light of their profit records does not cut the mustard. Economies of scale call for government regulation, proportional to the industry in question. In this case, oil companies are to monpolistic to not be regulated.