WHO DETERMINES THE PRICE OF GASOLiNE?

Question

Does the government have something to do with it? What can we do (boycott oil or something ) to keep gas prices down. I don't drive, but I realize that gas prices have an effect in everything.

Answer 1

Nuts with full pockets.............

Answer 2

the people do. the more people who want to buy cars in china and india the more gas is needed. the more gas is needed the higher the price gets.

Answer 3

consumers determine the price of gasoline, high gas prices are not so bad after all, it will force conservation.

Answer 4

THE MARKET determines the price...

If I said, I'll give you $1.00 for your car, you'd laugh at me. If I said I'd give you $1,000,000, I'm sure you'd say, "sold".

Somewhere in the middle is the value of your vehicle. And its that value you and everybody else would buy and sell their vehicle for.

The same is true for oil... Somewhere in the trading of this commodity is the value for that barrel of oil. And its that price the Saudi's accept for payment and you agree to pay.

Answer 5

we do ... we being the people that pay for gas at the pump...

you may not drive.. but sit on  a busy road and count how many suv's/trucks and minivans there are for every economical car...

when the ratio is reversed... when people STOP driving large uneconomical cars and start seriously conserving gas... the price will drop hard and fast!

Answer 6

Some b******e who is loaded and can afford it to be $10/gal.

Answer 7

Obviously not me.

Answer 8

The government doesn't really influence the price much and they can do almost nothing in the short term to alter the price.

The price is expensive because the marginal buyer is willing to pay more.

You are the person who controls the price or really the "marginal you." Oil is a commodity, no producer has pricing power because no producer can differentiate their product. Imagine you had two barrels of oil, one produced by A and the other produced by B. They are identical in all respects, for purposes of our argument. Which is more valuable? Neither of course, so this is a case where producers must accept the given price and can do nothing to influence the price without losing profits to competitors.

So it is only the buyers who decide the price, every time you pump gas you are in an auction, a giant distributed global auction. If it isn't worth it to you, you will choose an alternative such as walking or something like that. If you cannot choose an alternative, then you have no say in the price. You must pay any price and so you have no voice in the price.

The person who has alternatives sets the price. This person can choose to buy or not to buy. They may walk, ride a horse, alter their travel patterns or ride a bike, but they can make changes. The person who is right on the edge, right on the margin is the only person with pricing power. If it is too expensive for them, the price will fall for everyone, if it is too cheap for them, the price will rise for everyone. It is only when the marginal people, the most flexible people with a choice alter their behavior that prices for a commodity change.

Right now, the people who are on the edge have shown a willingness to pay higher prices. As people fall off the edge, the price increase will begin to slow down. The saying, "the cure for high oil prices is high oil prices," means that when the flexible people stop participating, the price becomes inflexible and collapses.

One thing to remember, that is making this time a little different, is that the marginal people are probably not Americans anymore, they are probably Chinese and Indian. A nation addicted to oil will pay any price and isn't a marginal decision maker anymore. The nations that are just starting to become addicted are the ones deciding how worth it to them that oil be used instead of biking, public transportation or alternatives like coal.

Answer 9

Read up on price elasticity.

My link will help answer your question.

Answer 10

In  America we are supply and demand. The oil companies will charge as much as the market can bare. In short if we all start riding together we will drop the p[rice of fuel but being we all like riding alone its no wonder gas is so much

Answer 11

Well the actual gas station gets told by the corporate office what to sell it for.  They have the manager go to the surrounding gas stations and email the competitors prices at least twice a day then within 30 minutes you get an email back telling you what to set it at.  So the corporate office goes by competition, not sell it for what they can

Answer 12

You want to understand who determines the price of gasoline, read my A to this other related Q:  http://answers.yahoo.com/question/index;...

Pls read it, indicate you read it and then I will post another Q which I answered before that one. Don't believe the people who post absolute nonsense!  Many who post here have no knowledge of what happens between the wellheads and the retail pump handle!. Also some participants make a living working for the oilco's and they certainly don't want to spoil a good thing.

Something really really bad happened to the whole world when long term energy contracts came to an end and everyone went to spot pricing aka "just in time" purchasing with spot prices! It all started back in 1974 w/the formation of the oil cartel composed of OPEC and the oilco's who still had substantial oil production in the US, North Sea and some other places even though their properties and oil-producing assets were coniscated within the OPEC countries!

I sent the following Q to one of the smart participants here: This is the fully-worded Q which didn't fit the Q-box: Will the oil &/or economic experts here posting A's on the topic please explain WHY everyone is spot & long-term contracts for all commodities are a thing of the past? And please tell us how exactly you know this? Was it from an economic textbook ,a business school case you studied or was/is it real world job experience refining or trading oil with OPEC?

Then I compressed it and posted it in case others want a shot at my Q!

BTW, did you hear that the only Asian member of OPEC, the nation of Indonesia has decided today 05282008 to drop out of the cartel! (Google "OPEC minus 1" Why are they leaving OPEC? TWO because they want to be nice guys? No!,  because A)they are about to become net oil importers from other greedy OPEC members. B)they need the oilco's they kicked out long ago to come back in and find new oil fields or rework the old oilfields whose production has declined for normal reasons like depletion but also bec of their incompetence! It means also that the 600 million Indonesians are also like China and India now joining the economic development parade and they need the oil they produce for themselves. Nobody wants to depend on greedy suppliers including them since they as members of the cartel know how the other members think! BY the way your Gov't also knows--that is why they created anf have filled the SPR(Strategic Petroleum Reserve) in Texas and Louisiana!

As to Bush43 and Cheney, their refusal to use the SPR is an indication of how they as members of the oil patch can't seem to do something that they are empowered to do to help lower the pressure on prices. Remember they were close friend's of Ken Lay, the CEO of Enron which tried to milk the electricity crisis in California. Ken Lay died after he was convicted before he was sentenced so his conviction was vacated and his wife got to keep what was left of his estate from the sale of Enron stock while he lied to the stockholders,the employees and the public! At least that was what I remember reading. Enron knew the crunch was coming and so did other oilco's and they were planning to take advantage of it in oil, fresh water and broadband services. There's the connection you seek! use google to follow the trail!

Answer 13

the gas station

Answer 14

Ultimately we do. The price is based on what is expected to sell.  People drive more in the summer and the price goes up.  People drive less in the winter and the price goes down

Answer 15

A guy in a suit with a white cat on his lap.