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Not sure if this is legal by a Regulation Point of view, but by a Win/Win trade between friends there is nothing wrong with it.

Here it is:

The price of Oil on the market doesn't reach the pump for 30 to 40 days. So here is what you do. Buy a storage tank or tanks for Gasoline, their are appropriate approved containers for sale.

Now lets subsidize yourself in Gasoline use.

When Oil goes up on the Spot Market a couple bucks, run to the gas pump and buy as much as you can.

Then wait, until the rise in price at the local market.

Cash in buy selling your gas to your friends cheaper than the open market but more expensive than you bought it.


This idea came from a Mom/Pop Gas station. They are bound by contract to follow the rules of selling and the price at which to sell. But a third party person will buy their supply at the contracted rules, and hold it until the price raises. They then will buy it back from the third party guy for a little more than what they sold it for.  It is a Win/Win.  The can no compete with the big boys, make more of a profit, and still offer the cheapest gas in town.

If they can do it on a larger scale, why can't we do it on a smaller scale?

I almost did this with crude oil a few months ago, before all the Libya stuff.  Tanks are expensive though, and cost scales as the cube root of volume.  That's the reason it doesn't happen on a small scale.

I know you can store diesel for extended periods but what about petrol? I think it has a much shorter shelf life.
I know your talking about short term trading but what if I want to store it for a few months and make a killing  ;D

That and you will blow yourself up trying to store and transfer large volumes of petroleum.

I would think safety is a big consideration with above ground storage.

Home heating oil is the same as diesel but, at least where I live, you don't pay as much tax for it as you do at the gas station. However, home heating oil has a dye in it. If an authority discovers fuel with that dye in your vehicle's tank, you're in trouble.

The third party I mentioned uses a Petrol truck. Gasoline above and or below storage has the same principles, the LEL, and static. Fill the tank from the bottom up, and a full tank is better than an empty tank.

I think the better / simpler option would be to convince the owner of the pump nearest to you to sell you gas but keep it till you need it. You could go all fancy and arrange for a 'fidelity card' approach so your friends *cough*clients*cough* could go to the pump and just use some of your pre paid fuel.

It wouldn't scale too high, as it would obviously raise suspicions to the fuel provider but it would solve the issue with storage... Say you give a little extra "on the side" to the pump owner and he allows you to keep an inverted tab, and you SMS him "Today the car with such license plate will come in for x gallons".

Of course the POS system they use will probably make this impossible, but maybe there's still a manually operated pump close to you?

Of all the times I have been pulled over in my life, about 6. Police never checked my fuel tank. However, I do know that check points for the big diesel trucks have the tanks checked on a random basis.

Another good method is if you live by the Ocean. Becomes friends with a shrimper. Oh, and have diesel truck or car.  The shrimper can by diesel tax free, and are know to sell it.

Shrimpers are actually a little market place, you can buy diesel, tax free cigarettes, tax free liquor, if they picked up and bails, even some MJ. OH yea, of course they sell shrimp too.  ;D

Of course, they're the biggest fish.

Neato.

What makes you think this is true?

Simple research that anyone can do.  Chart the Spot Oil, and the avg. Gas price and overlay.

Basically it is called Time to Market(TTM).  You buy something at a $1 for a future delivery. So when you get the delivery you must charge at least $1.

Unlike electricity, the Oil that we buy has to be shipped to us, refined, and shipped to gas stations. That takes about 30-40 days depending on schedules and delays.

Now you can't take advantage of that fact on a stock exchange because of instantaneous communications (electricity, ie internet) but you can take of advantage of it through the physical product delivery.

And with the shelf life of Non-Ethonal gas at 180 days, and ethanol gas at 90 days. You can even wait for a peak or set margin before you sell.

Currently I am looking into it. I found a 400 Gallon approved container cheep. at 3.63 X 400 = 1448  now a little birdy I know tells me his next purchase is 8 cents more. But a bigger birdy tells me that gas will hit at least a 4.00 average within 60 days. That would be $1600 dollars or a $152 profit. 

But I don't want to make money, I just want to Hedge the gas by buy low, and mitigating the costs while it rises by using my own fuel I purchase when it was lower. Not to mention, I get a built in emergency supply.

You are assuming that gas stations price their gas based on what they paid for it, rather than what the expect to pay for their next shipment.  They have the same information as you.

In the U.S. the contracts that Gas Station owners get from the suppliers, limit the mark up. Basically they are told what they will make off of each gallon sold. And it is small, as the contract has a NDA attached. Most owners bitch about the paltry amount they get from the supplier.  Unless your a big station, you don't make much off of gas. Better hope they come into your store. If you noticed, they sometime use the trick of not putting paper in the pump, so you must walk into the store to get it.

And over and above the contract, the government has strict rules on gas pricing. Although this came about from price gouging after disasters.  Personally I don't think the needed the laws, as the owners that tried it after Katrina became pariahs afterwards. They still get called names.

So why haven't any gas station owners decided to just stop selling gas (hoard it until they can charge more), and make all this money?  Are they all stupid?

I have no idea where you are getting this information that suppliers force them to sell it under a certain price.  Competition generally does that.  If what you are saying is actually true, how come I can drive past one station the next day, yet the prices rises $.15/gallon sometimes (even when a new tanker hasn't arrived)?  Prices fluctuate daily on gas stations, and it certainly isn't because they are getting new shipments.

So your theory is that there are suppliers that control the retail price (but it still changes daily), and the government limits the price increase (but it changes daily)?  Do you have any facts or is this all speculation?

OK, I know you have no idea !!!  Agreed.

Where do these gas stations get their gas from, BP Stations from BP, Shell from Shell, etc...  Most of these have franchise contracts, these contracts, control pricing.  Sorry just the way it is. 

Now, lets assume you want to go it alone and be none franchisee, and buy gas.  Where do you get it from? Well you don't have to many options, BP, Shell, Chevron, Citgo, ExxonMobile, etc...  You will not get the Franchise rate, you will pay a premium.  But then you can set the Profit Margin yourself, but to what end. Your price by design will be higher than everyone else.

Here is an excerpt about Divorcement Law:

Independent retailers often have difficulty surviving in industries marked by a high degree of vertical integration. In the petroleum industry, for example, many gas stations are owned and operated by oil refineries. These companies are able to control the wholesale price of gasoline sold to locally owned franchise stations. They also set the going rate at the pump through company-operated stations. By narrowing the difference between the wholesale and retail prices, oil refiners can squeeze independent and franchise gas stations out of the market.

But don't believe me, go ask a locally owned operator. He will tell you.


However, if you happen to have a oil well in your back yard, own a refinery, and a gas station. Your set, charge what you want.

Having a franchise contract doesn't mean you can't set your own prices.  Obviously they won't sell gas to franchises super cheap.  But that doesn't mean that they can't charge more because of whatever reason they want.  It's just competition keeps them from setting them too high.

Do you have any evidence of this?  Or is it your own made up conspiracy theory?  Because I have seen gas prices skyrocket overnight due to the oil futures market going up huge.  I've seen it drop huge overnight as well.

You are telling me that every independent gas station owner and franchisee, who already has huge tanks, couldn't just stop selling gas for a week to make this extra profit?  They already have 10-20,000 gallon tanks.  If the price goes up by 10 cents, they could make an extra $1-2000 by just holding the gas.  So why don't they do this?  You are the only genius, and people who already have the infrastructure in place are all idiots?

It's funny, most people have the opposite complaint you do.  "Gas went up 20 cents last night, but they still have the same gas in the tank they paid for last night!  That's gouging!  They bought it cheap, the should sell it cheap!"  This is the exact thing you are claiming they cannot do.

The reason they do this, of course, is because 1) they can, and 2) sometimes the price goes down, and they need to sell current inventory.  They are much more likely to sell gas at the price they expect to refill their tanks at than whatever they paid for the last tank.

Go to any gold coin dealer, same thing.  If you sell them a coin for $1400, and then gold drops to $1350 next week, your coin is not going to still be for sale for $1425.  It will be for sale at $1375 (or whatever premium exists).  Same thing if you sell it to them when its $1400/oz, and it goes up to $1500/oz.  That coin won't be sold for $1500 anymore.  By your logic, you could buy lots of gold coins when the price rises, since by the time the gold dealer restocks his inventory, the price will go up! But he changes his prices often according to the futures market.

OK, First I am assuming we are talking in the U.S.  If so, yes I have proof.  For one, one of my friends owns a station. But I know that won't suffice so I will endeavor to source it.

Futures are Futures, not the spot market. The laws in the U.S. is that the price in stations is based of the current supply in the tank at the price for which they paid for it plus mark up.  For example: if you bought gas for your station at $3, held onto it until $4 and then sold the gas, you would get arrested and fined. But that would make no sense for a Gas Station to do (depending on traffic). <-- That is covered by anti-gouging laws. Google them.

So lets source it for you:

Earlier this week, Kehler's wholesale price jumped by 4 cents a gallon. The price is set by Sunoco Inc., from whom he leases his gas station and is contractually obligated to buy.

Shipments arrive overnight, whenever a remote sensor tells Sunoco that Kehler's tanks are low. The wholesale increase means Kehler will have to raise his pump prices soon -- if he wants a shot at breaking even on gas sales.
http://www.usatoday.com/news/nation/2008-05-23-1070321808_x.htm



Proposed law would allow gas stations to set fuel prices
http://www.virginiagasprices.com/News_Page.aspx?msg_pg=2&id=35700&master=1&category=1357&topic=437086&page_no=1&ign=1



Just like independent owners, he records nearby competitors' prices, the manager said. But rather than adjusting his, he reports his survey results to his company - to what Beachler called the chain's "pricing office." From there, he's told what prices to post for the day, or at least until he's told to survey again.
"Believe me, that guy in his (pricing office) cubicle knows what's going on" with the competition around his company's stations, Beachler said.
Chain station pricing offices and independents also check on the wholesale prices that major gas suppliers set late each day for gas to be bought the next morning from terminals where the suppliers send it from refineries, usually by pipeline.
http://www.pjstar.com/business/x61381715/Who-sets-the-gas-prices-Thats-not-an-easy-answer

And each State has Gasoline Pricing Laws. New Jersey will even prosecute you if you raise the price twice in a day. You can google the laws yourself.

As far as the Franchise contracts for the stations, I won't disclose my friends. But he is told by a Pricing Office what the price will be for the day.

If however, you are connected to the fuel via a pipeline to the station, the price will and can actually change hourly if the state allows it.

Do you not understand the difference between wholesale and retail prices?  Is that where the source of confusion is coming from?  Yes, the owners do take advantage of using a bigger companies surveying power to assess competitors prices.  Is that the same as "we can't raise prices because of the futures market?"  So even if the man owning the franchise is not making his decision (it comes from above), what makes you think that decision from above is not influenced hugely by oil futures prices?

Sure, some states will only let you raise it once a day.  So it may be possible to get a good deal 1 day to the next. 

Yes, I do.  Your right, go along with it. Keep the bubble intact.

I am just Delusional,  ;D   I do like playing chess however. There is no price fixing by mandatory mark ups of 7-11 cents. It just doesn't exist.

Tell you what, go find the most remote gas station in America, call it for its Gas Prices. It should be the most expensive gas in the country. You can subtract all the taxes from everywhere to get the baseline. 

BTW: the biggest reason in differences in prices it the TAXES, the FED, State, and Localities charge.

IF the most remotest gas station in America has the highest or even a high gas price, I will concede.  But it won't.

Why would the remote gas station having the highest prices disprove your point?  You are also forgetting that not all gas is the same.  There are a ton of different blends, etc..., some more costly than others.

I already have disproved your point (that it takes 30-60 days for prices to hit the pumps).  Look at gas prices over time.  Look at a graph of oil futures over time.  The lag is not 30-60 days.  For example, war breaks out in Libya, oil prices rise.  Gas prices will have gone up within a week, maybe even within a day.  You can look at the correlation of the prices, and shift it by different amounts, and see where the greatest correlation occurs.  Use a huge backtest of data to account for seasonal adjustments, refineries coming on and offline, etc...  This is super easy to prove if it were true.  So go ahead and do it, rather than rely on your gut instinct.  With that much money on the line, I can't believe you are so clever that you are the only person to ever figure this out.

Mandatory markups are a completely different issue.

If it was that easy to make money, there is no reason why a gas station owner wouldn't employ this strategy (or just raise his prices immediately ... oh wait, you believe in a vast conspiracy that forces gas stations to lose money), and just close his doors (or close all but 1 pump, or slow down their pumps) during the cheap times, save the gas for later, then sell it then.

http://maps.google.com/maps?q=gasoline near 45.45955%2C-101.91356 (http://maps.google.com/maps?q=gasoline near 45.45955%2C-101.91356)

This is the farthest point from a McDonalds in the US, and all of the gas stations nearby.  But it won't tell you much since prices are determined by supply and demand, and the supply in sparsely-populated areas is usually higher than the supply in big cities.

I thought prices were determined by the vast oil conspiracy?

Examine that, you must buy it. There is little competition. You can easily charge a lot more for it.

When supply is low and demand high, the price should go up.  So at the most remote gas station, the price should be high. We know the demand is there, if there are not a lot of others selling the same product, the price should be high.  But why isn't it?  I have been trying to tell you.

How about this one, in Lake Charles, LA ( the whole town is a Refinery), there is a Circle K gas station sitting in the middle of the refinery right next to the interstate. Supply and Demand should dictate that it should be the lowest.  Nope, one of highest prices in the whole state.

Now, you don't have to go to far to show, "conspiracies" in Louisiana.  Other than Alaska, it should have the lowest gas prices. Alaska has high gas prices too but they pay their citizens royalties of around $2000 a year to offset the prices. Imagine that, you make money just for being a citizen in Alaska.

But if you have asked around at your gas stations, (managers), you will start to see the picture. Prices are dictated to them. When it comes to gas, it is not truly a supply/demand model.

I found the problem.  You have absolutely no understanding of economics.

Nearest refinery is 170 miles away:


http://www.tsocorp.com/TSOCorp/SocialResponsibility/Environment/MANDANREFINERYENVIRONMENTS

Someone should go ahead and call those gas stations and find out what effect the vast international oil conspiracy has on their prices.

Me too, You think there is no such thing as collusion, in economic models through use of the Government, Laws, and Competitive communication.

Are you a Keynesian? 

If they were price fixing, why are they price fixing the price too low?  You have all these different ideas and theories, all in conflict with each other.  There is not a consistent train of thought.

And no, I'm not a Keynesian.  But do you listen to Alex Jones?

Collusion can happen, but it's very hard to enforce without governments.  There is too great an incentive to cheat.

That is the genius behind their system. They lock in the profits to them by preventing others from raising and in some cases lowering the price.

For example, there are truck stops that should have very low gas prices, because they can take profits from their other businesses in the truck stop and self subsidize the gas price to get greater traffic. ( The Casino Model - most loose money on food and beverage but make it up in increased traffic due to the Great Food and prices )

Show me one example of this in the United States, and I will concede to you.  Imagine: a truck stop that could self subsidizes the Gas buy a $1 a gallon. They would make a fortune on Mechanical Services, Restaurant Services, Parts, Gadgets, etc.... because of the increase traffic. The margins on the other sales greatly out weigh the margins on Gas.  So why isn't this occurring?  Because they are not allowed to do it.

The Casino Business Model in just one Gas Franchise would become the number one gas station in the U.S.

This is called a loss-leader.  Not really that uncommon.  Grocery stores do this all the time.  And no, selling gas at a $200 loss per semi-truck would not lead to an increase of $200 in business per customer.

They aren't allowed to do it?  More like they aren't idiots.

Ok, I will just take my town. The $1 example was extreme just to make the point. In reality just a 5¢ difference would work, a 10¢ difference would be fantastic. Lets say a Convenient store sells 1000 gallons a day at a 1.10 / gallon. The average they get to keep is 7¢ per gallon. So they take in $1100 dollars and get to keep $77 dollars for the mark up. Remember Gas is the lowest mark up at any gas station. The average mark up is at minimum 100% for retail merchandise. So just by selling a few extra candy bars will quickly make up for the Gas.

Lets say they sell 100 candy bars at 1$ at the 1.10 gas price. They make $50 dollars profit off of the Candy Bars alone. Now if they sold the gas at a loss at $1, they have a net loss of 3¢. They give up the 7¢ mark up and take a loss of 3¢.

Now because of their lower prices, their gas sales go up to say $2000 dollars a day at a loss of $60 per day.  So they need to make up at least $60 dollars to break even.

Now traffic doubled, it stands that their in store purchases doubled. But the prices in the store have at least a 100% mark up. But anyone that shops at a convenient store know the mark up is higher than that.

Let me ask, do you thing the store will make more money by taking a 3¢ per gallon hit on the gas and taking a 50% increase on their other items that are marked up at least 100%.

But it gets better, if they make money on that model, and they invest the increase into an interest bearing account on a percentage basis to further subsidize the fuel. It would be funny to buy 10 year T-Notes at 4%, and use the Government to help. (kind of a Gotchya). They will have a model of being able to out compete competitors and put downward pressure on price of others.

Not on a grand Oil Industry Model, but on a Individual Basis with in the Oil Industry Model. So how does the Oil Industry prevent this from happening. Well with Contracts, and Laws that they have lobbied for.  Or like other industries, just buy them out. Actually in other industries their is a model to compete to get bought out. Especially in the electronics industry and internet. Buy your competitors before they can harm your bottom line.

But certain industries have prevented the competition to avoid it.  Banking, Oil, etc...

But as an individual, we can bypass all those things. If many do it on a small scale, they can't stop it.

If only with 20 Gallon gas containers. Not saying I do it: But if I was selling to my neighbors from portable Boat Gasoline Tanks, they save about 5¢, I make about 5¢ per gallon. (TAX free). Pulling it of has a lot to do with Trust. Do your friends and neighbors Trust you.

If they can get increased business that offsets having a loss-leader in gas, they will do this.  There are some independent owners out there.  Why are they not selling a ton cheaper, crushing competition, and having the other stations get no business?

Good thing Microsoft bought out Google and Ebay before they got too big.

Buying out companies at a premium just for another to show up like wack-a-mole is a very expensive proposition.  Try to think through your nutjob theories before publishing them on the internet, though.  If you have thought through them, try thinking harder.

But I do wish you luck on buying your underground bomb to save $5.

Wal-Mart offers gas as a loss-leader, at something like a 3-5 cent discount.

Regardless, what do you suppose the transport costs are on margins of 5 cents?  Not to mention the labor costs or health costs...

I am sure they would like to, but they have to pay a premium for their gas. Unlike, their Franchisees. The independents don't get it for the same price. Rather them just having to cover a 3¢ loss they have to cover a 9¢ loss. Still possible, but much harder.

But when one does, a larger company will buy them out. And it doesn't cost them money. Remember business look out five years.

If one independent station (A) is making a profit of say $1 Million a year. X 5 years = $5 Million  They are competing with their Franchised station that makes the same $1 Million a year X 5 = $5 Million.

What would you pay for Station (A). They really don't look much at the real Assets but it plays a little role.

They would probably offer Station (A) about $15 Million plus Assets value.






Completely different models. Microsoft is in the Operating system, they did own Apple stock when it was a PPC system. But they sold it off, then Apple went Intel. Ooppss.. Didn't count on that one.

But we don't need to argue about this, the vast majority of people know it happens. And I don't think there is anything wrong in buying your competition or co-opting it for your own reasons. The owners don't have to sell, but a lot do for a quick take it and run.

You know why Ebay bought Skype?  Because people were using it to bypass their profit model. They would use Ebay to find each other then Skype each other for the purchase to avoid the fees.

Wal-Mart is in its own category, but they aren't doing it at a loss, just a discount. Big Companies, actually own wells. I developed a field for a company called IP, now I wrongly assumed it was something like International Petroleum or something like that. But it actually turned out to be, International Paper. They bought the lease to offset the cost of fuel. That is just International Paper.

Wal-Mart is big enough to not even to have to buy a well, they can hedge like no tomorrow, just like Airlines.

I like them though, they are truly competing. But look at what it takes to do it. Be the biggest company in America, with enough power to not be pushed around.

And it works, the lines at Sam's are huge with just 5¢ discount. I just want independents to be able to do what Wal-Mart can by eliminating some clauses in Franchise contracts. That anyone who knows about them, can't talk about them. They built in the NDA.

Your entire premise is that you can buy it "cheap" now, and then it takes 30-60 days to go up.  So which is it, are they restricted from making it too cheap, or are they restricted from making it fairly priced and forced to sell it too cheap?  Make up your mind which conspiracy theory you want to subscribe to.

Franchised stations can not by contract under sell it, they are also told what their profit will be from the gas by restricting the maximum price. Do they have to listen? No, but then they don't get to buy it from their supplier and don't get any "support" from them either, and must remove the name.

Individuals, however, you and me. Have no such contracts. We can buy it and do what we wish. And I really don't care about the conspiracy, because as individuals we can bypass the process. We limit our profitability by not being a "business",  but we can maximize our margins. If enough individuals did this, "they" would be force to change.

I look at the futures and the spot price, correlate the TTM (time to market) and suck out the difference.  Gas is one of the few commodities that this can be done with on a individual basis because of access to the end product is abundant and easy  to acquire and re-sell. Technically you could do it with others like corn but it would be much harder because of all the factors (weather, disease, shelf life,  TTM is to long, etc...) And people don't have to buy Corn, but they do have to buy Gas, at least for now.

I still am trying to understand your theory.

1)  Gas station buys a ton of gasoline from supplier for $X.
2)  Oil futures go up by 50% due to some crisis.
3)  Gas station owner would like to raise prices since his next shipment will be more expensive, but cannot due to contract with supplier.  Supplier dictates every price change, which happens daily, even though he may only get his tankers delivering every week.
4)  Eventually he runs out of his gas, buys more from his supplier (30-60 days later), and is now allowed to set his prices higher.

Is there any part of this that I missed?

For going the individual method.

I will give you a for example:

In the U.S.:

If a gas station fills his underground tank with 10,000 gallons of gas that he bought at $1 a gallon.

Now assume he sells no gas for a month.

Then Gas goes up to $2 a gallon from his supplier.

The Gas that he has in his tank that he bought at $1 a gallon, can not be sold at the $2 price point.

He will have to sell his gas at the $1 rate plus agreed upon mark up until he sells 10,000 gallons. Then he can raise prices. There is an averaging that is allowed, if he receives a delivery before he sells the 10,000 gallons. This is kind of allowing the mixing of fiduciary funds in an insurance account. Most avoid it in case someone complains of gouging.

You can usually see this in work if your town has a lot of gas stations, especially recently with big changes happening fast.

You should have seen one station with several cents difference, some high, some low.  Why does this happen? If it worked as you said, the prices among stations should always be close to each other.

How come gas stations change prices daily?  I know they aren't getting tankers delivering daily.

Gas stations near each other almost always have similar prices where I live.  Occasionally one might be slow to change, and a better "brand" is going to be at a small premium.

If the gas station is changing prices hourly or daily, one of two things is happening:

They are supplied by a pipeline from a central supplier (usually the hourly change), or they are averaging their gas based on delivery)

For example:

In his 10,000 gallon tank, he bought 2,000 at one point, 2,000 at another, etc... So when he hits each point bought he can raise the price.

It is easy for inspectors to check also, buy purchase receipts and sales receipts.

Now, what some nefarious stations do, is to tweak their pumps to hit those points faster. But that is risky if they decide to "stick" the tank. But there is alway a difference due to water condensation. But it is pretty much down to a science.

A less risky method in "old" tanks is to add water to the Tank. New tanks have electronics to detect it.(but they do break).

New Jersey is very strict on enforcement. They have a Weights and Measure Office that inspect all of it. But New Jersey being New Jersey, those inspectors usually drive Mercedes, if you get my meaning.

The Leegin case may be interesting to some of you.  The Supreme Court recently upheld contract clauses between manufacturers and retailers that mandated minimum prices:

http://blogs.wsj.com/law/2008/08/18/the-legacy-of-leegin-price-fixing-the-comeback-kid-of-antitrust-law/

Good find, that is what they do.

It is still illegal for them to get together and determine minimum prices. BP, Exxon, Shell, etc.. can't together determine the minimum price for their franchisees.  But that doesn't stop them.  Technically the one producing more should have a lessor price but they don't.

What they do is sort of follow the law. They can't ask each other what their minimums are, but if they overhear it by a non-executive, or get it from a survey, that is perfectly legal.  Guess what gets surveyed every day at almost every gas station in America. Yep the price of Gas and they share that survey with everyone. But that isn't the real problem, the real problem is the agreed upon mark ups for stations.

Which between stations is almost identical.  Exxon-Mobile should let their franchisee's have a bigger mark up but they don't. By adding the NDA to the agreements they even keep stations from confirming.

So every once in a while there will be a Conference where industry professionals will "over hear" the others mark-up agreements. Technically perfectly legal, and very hard to prove collusion.

Why do you keep bringing up minimums?  You are talking about taking advantage of them having maximum prices.

Why would someone producing more of something charge less?  Another economics assumption you are making?

Ok, this shouldn't come as a surprise to many. But if one is in a better position, financially, you can run your competition out of business by taking a loss over time. It is done all the time. Without collusion, it is simplistic and effective. Once you run out the competition you recoup your losses. By agreeing to minimums, they try to prevent this from happening.

With collusion, it can be devastating.

Station A subsidizes Station B to undercut Station C.  Station C being independent, can't compete. When Station C goes out of business, Station B reimburses Station A.

And then when you raise your prices back up, competition sweeps in and you get crushed again.  It's a terrible way to run a business unless you have artificial barriers to entry.  Who cares if they drive prices low?

Again, this goes back to your claim that it takes 30-60 days for increases in the price of oil to hit the pump.  What does this have to do with minimum prices or artificially low prices?

Alright, let just prove it with a few days.

Prices have dropped in the futures market, but prices will continue to go up at the pump for about another 20 days, before they start to fall again.

It is the TTM, that you can take advantage of.


As for the other, dude, businesses run like that for a long time. And once a competitor is run out, there are barriers for re-entry. Especially for independents. They just saw what happen to the previous guy. If you don't come with moola, your toast.



The whole point is that you can take advantage of the TTM in the Gasoline.  There is a corelation between Futures, Spot, TTM, and local gas prices.

Of course you only do it when you see the Futures going up, not down. But the lag in TTM is enough to solidify your position.

http://66.70.86.64/ChartServer/ch.gaschart?Country=Canada&Crude=t&Period=72&Areas=USA%20Average,,&Unit=US%20$/G

Or you could just backtest your theory and realize it fails miserably.  Oil tends to be more extreme in its movements (people cut back on driving which keeps the gas price from going up too much).  Peaks and valleys happen nearly simultaneously.

But good luck on your underground bomb.

Nice try, but you forgot Oil Futures. Just a sec, I will post the link to the overlay. Between Gas and Futures.

No, that is futures.

Just a sec let me use Gasbuddy to confirm it isn't Spot.

Here is some reading : http://www.oilwatchdog.org/2009/01/why-gas-rises-while-oil-drops/

I am also signing into TD ameritrade to generate the back test.

I have got to do some research. I don't know what they used. Their site doesn't post it but I can't find a comparison yet. I am assuming they used WTI or CL (Light Sweet Crude) or maybe averaged all together. I usually deal with Bar Charts and Trend lines, not the simple graphics.

I will do a good overlay with the offset trend lines for Avg. Gas Regular, Diesel, Futures, Spot, Strategic Reserves, and Private Reserves.

I haven't needed to generate it for awhile but I will set it up. Most of it is almost routine, now.

Ever since we hit Peak Oil, it is just going off of the numbers, baring any future reserve discovery. The lag gives enough time to correct.

The math predicts the ups and downs as a upward inclining plateau until the final down trend, which everyone will know when that happens. It falls like a rock.

Love Oil, an un-renewable resource, in demand, and declining supply, with EI:EO ratio increasing to greater than 1.  So simple a caveman can do it.  ;D


I will post it tomorrow.