Gasoline vs. Other Commodities
I'm not complaining about gas prices, per se, but Scott Baker's letter in the Eureka Reporter this morning brings up something I've always wondered about: Why do gas prices change so quickly?
Actually, I think at least some gas distributors change their prices even quicker than Scott might think. I know a friend told me about filling up at a Renner Petroleum card lock station in Eureka one time.
His truck had two tanks. He filled one, then filled the other. He noticed when he got his bill the next month that the same gas that went into the two tanks were different prices.
He called Renner Petroleum and asked about it. He was told something along the line that the current price was based on the market price at the time and that price changes throughout the day. In his case the price changed between the time he filled his two tanks.
I gathered from that that if the average price for gasoline ( or crude oil?) at the commodities exchanges goes up or down, Renner adjusts their prices accordingly, although I'm not sure how frequently.
Scott Baker makes a point in wondering why we pay more for something a company might have paid less for. But I'll take the question a bit further: They say the prices go up and down a lot because gas is a commodity like corn or sugar.
I don't see five pounds of sugar selling for five cents more or less throughout the day, at least in any stores I've been to. Same with whole wheat flour or corn. They buy at a certain price and sell at a certain price. Why is gasoline different?
In a sense I guess this is all a moot point when you think about it. If distributors did as Scott suggests, and sold the lower priced gas for the same price until they put the higher priced gas in their tanks, the price would still change. The price changes would just take effect later rather than right away and, on average, you'd see little difference at the pump than what you see now.