[Healeys] Oligopoly & gas prices

[Dan Stromquist]

I believe they refer to the oil industry as an oligopoly.  It is quite
amazing how 10 cent incremental jumps seem to be the norm for low to medium
to high octane.  In Minneapolis/St Paul we see the mid octane and low octane
sell for the same price at some stations but that premium is always 10 cents
higher there as well. 

It is great reading about the trip.  Hope no ones getting hot feet!
Dan

-----Original Message-----
From: healeys-bounces+dan=warner-associates.com at autox.team.net
[mailto:healeys-bounces+dan=warner-associates.com at autox.team.net] On Behalf
Of Alan Seigrist
Sent: Monday, June 23, 2008 11:25 PM
To: James Shope
Cc: healeys
Subject: Re: [Healeys] gas prices

James -

The difference is driven by market economics, you will make less money
if the difference is too big.

If you are attempting to make money by differentiating your product,
there's not much value in it for oil because basically it is a
monopoly industry.  Because of this, they employ monopoly pricing,
which means the price differential between grades is very narrow.  If
the differential was too big, everyone would just buy the cheaper
stuff and the oil companies would make less money because of that.

In a nutshell, they have us over a barrel so there's no need to cut
anyone any deals.

Alan

'52 A90
'53 BN1
'64 BJ8


On Tue, Jun 24, 2008 at 12:09 PM, James  Shope
<healeymanjim at hansencc.net> wrote:
> does anyone know why even with the drastic rise in gas prices, the
> differential between regular, mid-grade and premium remains the same,
i.e., 10
> cents for midgrade and 20 cents for premium.  are the additives not made
from
> petroleum or have the refinerys just eating the price rise?
healeymanjim
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