Interesting reading.
from Foy: "
Fungible commodities also share the characteristic of being bought and sold on markets all over the globe with supply and demand setting the prices, not the producers themselves."
from Mighty Dodge Ram: "Pump prices fluctuate due to many factors, not just pure supply & demand. Oil futures, stock market anticipation/fears, etc."
I am not an economist - I only roomed with one in my last year of college. I am trying to recall what she had to say back then when gas prices rose to $1.50/gal but it seems to me
the prices of commodities are a factor of perception AND demand.
I haven't a clue how to do the math myself to confirm (sorry, Foy - can't show my work
) but I have been told that IF gas prices had kept up with inflation we would be paying $8/gal or more.
I have also been told that development of new domestic oil was slowed due to low prices (source - someone I know who worked in the exploratory side of the industry) and I hope I am not getting too political by saying that I have become more than a little frustrated with some people declaring that "environmentalists" are responsible for the current price of gas because they stopped the sale of new leases.
It is my understanding that prices are higher in California because of higher taxes but I still have trouble understanding why my little town has a price of $6.39/gal and 30 - 60 miles down the road (Bridgeport and Lee Vining) they are asking for blood and then you may only have to give up your first born child if you can make it to Bishop. < THIS is what has the scent of opportunism (perception, charge what the market will bear, captive audience) UNLESS somehow the cost of driving the delivery truck 30 more miles raises the price that much?
(edit to add: I suspect gas arrives in Bridgeport from the south but I still can't figure out the huge price increase in the tourist towns unless it is simple opportunism)
Another edit to mention that the prices in Gardnerville, NV are generally less than $5.50/gal so the CA taxes at about $.55/gal fail to explain why gas in the SF bay area is as high as it is unless it is local demand? what the market will bear? additional local taxes?
I am sticking with my post from a few pages back - this is capitalism at work.