Read the following about an explanation of gas prices? What are some of the causes? Was the author's explanation sufficient? Did anything surprise you? What could bring prices back down?
11 Comments
Ireri Bernal
3/9/2011 01:53:02 pm
The gas price article was extremely informative and caused a sense of aggravation. It clearly disassociated Libya's problems which were said to cause the gas price spike. From the article i understood that the real cause behind increasing gas prices was more so a money game , and an attempt at increasing profit from gas revenues. The fact that gas is a commodity , makes it possible for gas profiteer's to spike up prices so drastically without loosing customers. Gas prices are not only based on production and replacement cost, they are now highly dependent on competitor pricing. I was surprised to hear that even though the actual price of oil went down$1 a barrel, the prices of gas went up , it makes no sense to me.I am worried that gas prices will keep climbing, when will they stop and at what price. The sellers aspect, was the most surprising part of the article. I never expected gas station owners to only make two or three pennies per gallon , and that most of there profit came from what they sell in there gas station. I was also surprised when i learned that competitors stalk each others prices so drastically.I think the price of gas will begin to decrease as soon as competitors want it to ,it will once again become a domino effect much like what is happening now except instead of increasing it will decrease. Overall, the author was trying to persuade us into seeing that the price increase was more of a money game , but failed to explain why this money game was being played and why.
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Dakota Rose
3/9/2011 02:39:44 pm
Gas prices are some of the most flexible and adapting prices out there. The price of gasoline is constantly changing to fit the market and to meet the needs of the companies, rather than the norm of meeting the needs of the consumer. Gas is such an inelastic commodity that people will continue to buy gas no matter the price. The main cause of the huge change in the price of gas is oil. And the cost of oil changes because of: "geopolitics, the value of the dollar, extreme weather or Chinese demand." This leads to a change in gas prices because of: "oil prices, refinery problems or even weather that might keep drivers at home." However, the author does not provide the best examples of why these prices change. One of the greatest factors is the NY Stock Exchange. The trades that go on here and within other stock markets greatly affect the prices of gas and oil around the world. And honestly, none of the information that the author provided was surprising. Its all to be expected at this time. With all the strange political proceedings and uprisings, especially in the Middle East, it can be expected that gas prices will go up. But the bigger question remains: will the prices go down anytime soon? I believe that the quick answer is no. All the turmoil in the Middle East has given the oil companies reason to raise their prices worldwide, and no reason whatsoever to drop them back to normal. Unless pressured by many world powers, I fear that OPEC will not lower their prices dramatically for some time. Mr. L, as you said today, prices easily rise, but slowly and laboriously fall. That is likely to be the fate of the gas prices for some time.
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Liam Van Keuren
3/10/2011 03:31:55 am
The price of oil is going up because of the inelasicity of it. The gas companies realize that and can and are taking full advantage. The gas prices are suppose to rise even more due to the switch of a more expensive blend of gas made for the summer months. It almost seems that the gas companies will just keep raising the price, but when will the price start to go down and what will cause it.
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Kiera Louttit
3/10/2011 11:39:35 am
Before reading this article I assumed that the rising gas prices were solely based on the turmoil in Libya, however I now see there are many different factors that contribute to the high gas prices. It seems that Libya is just an excuse for New York Mercantile Exchange and other trading hubs to jack up the price of gas. They realize that gas is inelastic and people will continue to buy it. I was shocked to find out that that gas station owner receive only two to three pennies per gallon they sell. I thought that they would be happy to see the price of gas going up but it seem that they will not benefit very much from the price increase.
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Rubi Pelayo
3/10/2011 11:51:52 am
The causes for the rise in gas prices aren't only due to the unrest in Libya but many other factors such as competition, oil prices, and the NY stock exchange. Since gas in inelastic, people will keep paying the price for it because it has become a great necessity in our lives. It's suprising that gas station owners don't make much of a profit when gas prices are this high, it just doesn't make sense that if something is really expensive one isn't making a lot of money off of it. Also, it's strange how gas prices rise even if the price of oil decreases; however, in a way it does because station owners need to regain some of the money they have lost. In addition, this article talks about how competition has caused station owners to change their gas prices in order to draw customers to purchase food or drinks from their stations in order to make up for their loss of profit with the gas. The author gave the obvious reasons for increased gas prices; however, he didn't explain how this whole situation is just a money game. I don't think that anything will bring gas prices down soon because warmer weather is approaching and oil companies must invest more money in the production gas to protect it from evaportation during summer months. I believe that the reason why nothing can be done about gas prices is that the NY stock exchange and the sellers have complete control over prices; therefore, the consumers don't have a say when we really should as we are the ones who are paying at the pump and being severely impacted by these prices.
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Luke Myers
3/10/2011 12:18:35 pm
If you think about it, gas consumers are lucky that gas station owners collectively agree to only make a couple cents off of a gallon. Turns out gas station owners and refineries have more control over gas prices than most believe might believe. This doesn't mean we can blame them for all the sudden spiked prices, though. There are still a lot of external factors affecting oil and gas that are beyond local control. The crisis in Libya doesn't help, but nearly all prices have dropped only out of the fear of losing business. The problem is, as this article points out, prices rise a lot easier than they fall, and we can't really say when or how prices will go down to a reasonable rate.
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Diane Meyer
3/10/2011 03:25:59 pm
The price of gas is constantly changing. It is in constant demand, and no matter how much people complain about the affordability of gas, they have to continue to purchase it in order to travel. Gas prices are influenced by a number of factors, including the the changing stock market and foreign affairs. However, gas prices typically rise, and when they do drop it is only a slight amount. The author of this article blames the ever changing market on the high prices, yet I feel that it more of a test to see how much people are willing to spend without losing too much business. Obviously, it is expected that prices will rise as oil becomes less and less available and foreign producers are threatening to cease trade. However, prices were still extremely high without the crisis in Libya. They had dropped slightly since the gas crisis a couple of years ago, however oil producers recognized that even though people complained about prices they were still willingly to spend their money on gas. If people had elected to not buy gas, rather than deciding to spend less on food in order to pay for gas, then oil producers would have more incentive to lower prices.
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Claire Lee
3/11/2011 04:31:42 am
This article taught me that gas prices aren't entirely subject to the goings on in other countries. Though owners of gas stations do agree to only receive a few cents per gallon sold, they still have a moderate amount of control over gas prices (i.e. the price of oil going down while the price of gas remained the same). The cost of gas is entirely reliant on profit (maintaining it), the author of the article relating it entirely to a "money game." Though this argument appears sound, there wasn't enough sufficient information within the work to support it. I was suprised to learn that competitors "stalk" each others prices to such a great extent. I am of the opinion that gas prices will continue to rise for some time. Due to the fact that gas is inelastic, US citizens will continue to pay for it regardless of price, so long as it appears "reasonable" to people in regards to oil and its current events (so long as there appear to be problems elsewhere involving its price). Prices will only go down when the turmoil decreases slightly and competitors see fit.
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3/12/2011 06:00:49 am
Through this article I discovered that gas prices are influenced by many variables within the environment and the market. Gas prices depend greatly upon geopolitics, the value of the dollar, extreme weather, and especially upon the price of oil. Since all of these factors are somewhat volatile, gas continually changes. In a way these factors are interrelated, meaning that one may have direct or indirect influence over another ultimately leading to the rise and fall of gas prices. Take for instance, the conflict and turmoil that is occurring within the middle east. The conflict within countries such as Libya and Saudi Arabia have caused a fear premium on oil. Because conflict usually sparks instability, the US economy along with many oil companies such as BP are worried about the supply of oil. Because of this uncertainty in oil supply, oil companies begin to raise prices due to their skepticism regarding future market reaction. As a result, the cost of producing and selling gas also rises. Therefore when oil prices go up, gas stations must increase the price of gas they sell. However, when wholesale gas prices rise, filling station prices cannot rise as fast due to the limiting aspects of competition. In addition, if gas prices lower, filling station owners become hesitant about lowering their prices significantly because they must make up for the amount they lost when prices when up.
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da
3/18/2011 12:37:03 am
Gas prices are very very high right now and they are only going to get worse. With the earthquake in japan we are going to have to send our oil and gas to them so that they can get things going again and start cleaning up. when they send gas and all that over to them we are just going to be hit even harder cause we are having trouble with getting gas and oil and now we are just giving it away
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david whalin
3/18/2011 12:37:58 am
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