Stupid question- Why would gas prices go down if supply increased?

Question

If you had plenty more of something to sell wouldn't you lower the price to attract more customers.

So why do people keep asking this obviously stupid question.

Answer 1

http://beatthegas.com/

Answer 2

If there is not a lot of oil, the prices will go up because of the scarcity of oil...so when the supply of oil goes up, it will be safe to make the gas prices go down.

If you are a smart businessperson, however, you could just leave the price as is becasue everyone needs gas and they probably care about the cost but not so much that they will not buy the gas (THEY NEED IT!!) so, no matter what the supply is, the price probably would not change unless the supply goes down, which means the price will increase.

Answer 3

I don't think the oil companies need to attract more customers and are certainly not afraid that they are going to lose customers due to our oil dependency.  Therefore, they would not have any reason to lower the prices, as that would take money out of their pockets for the sake of the consumer...  Something they are obviously not interested in doing.

Answer 4

gas is a essential one in these days { in fact it is like diamond or gold}

the increase in the price of gas is same as the gold { it's supply has nothing to do with the price}

{in fact it will make profit if there is more stock}

Answer 5

Price will go down if demand stay constant, but if Supply increases and demand also increases prices will continue to go up

Answer 6

OPEC is a cartel so unless there is a increase in supply much larger than the the increase in demand  they may cut production to cancel out the effect and demand is increasing because of the new riches  in China  The amount of increase in supply is limited  so the lowering of the price is far from sure.

Edit: Oil is a non renewable resource so Hotelling rule should apply to supply so producers would not  necessarily cut prices to sell more. That is  only the discovery of new reserves wold increase production and lower prices, not more drilling.

http://en.wikipedia.org/wiki/Hotelling%2...

Answer 7

If the supply of oil increased, all other things equal,  price would decline.  But, it is very seldom that all the variables going into to determining market price can be identified.  Theory can take us  only so far.  Most people just can't grasp the fact that other factors and their magnitudes determine market equilibriums.

Answer 8

the truth of the matter is that they wont. some in the middle east are saying that they are having to work harder to produce the same amount of oil but, the reall problem with fuel prices is that people on wallstreet have set the prices for the oil futures so high and it doesnt help that we have almost no refineries in america. if you go to the bigest oil producing companies in the middle east you will see oil refineries for miles, so what we have to do with our oil is sale it to others to be refined and ten buy it back in the refined state at a premium. america is i think the third largest in oil reserves in the world but is considerably futher down the list on oil production.