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View Poll Results: Do you think gasoline/diesel price-fixing is a common thing?
Probably 21 87.50%
Unlikely 2 8.33%
Free the markets! End government bureaucratic interference now! 1 4.17%
Voters: 24. You may not vote on this poll

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Old 03-22-2012, 07:27 PM   #21 (permalink)
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When i go on a trek across Wisconsin, i check gasbuddy. Not too long ago when everyone else was jacking up prices, one town was lowering its prices and the fuel i purchased was $0.70 a gallon cheaper mid trip and thats where I filled. It always amazes me that fuel can consistantly vary 10% or so every 30 or 40 miles and sometimes as much as 30%.

Quote:
Originally Posted by California98Civic View Post
Good point about the futures speculators. But though it suggests the limits of OPEC power on the final price, it does not disprove the presence of an oligopoly. I also don't think it follows that removing the middlemen would create a "real market" because removing speculators would only increase the oligopoly's relative pricing power. Prices would move differently, but not freely.
I agree to a point, however removing the middlemen would definitely improve the price at the pump. As more restrictions are removed on their speculative activity the price of "insert your favorite item here" goes up, see Enron for a good example of how our energy markets still function. The only job of the middlemen is to increase the price, given fewer than 1% are there or even capable of a short it shows you they are only interested in increasing the value AkA cost of their commodity and will do so in any way.

Fuel is not a commodity that belongs in with corn, wheat, etc because it simply does not behave in remotely the same way. The amount of corruption in that system is large enough that there are almost daily instances of police and court involvement.

Also we use the term speculators, but the truth is large interests control vast spanses of the market, there are really only a handfull of players. Pre-bailout Morgan Stanley owned over 70% of the eastern fuel oil market on both sides of the aisel and benefited from artificially altering the cost of that commodity.

During the meltdown much of this manipulation was put on hold because it wasn't sustainable as companies went bankrupt, fuel prices stabilized but after the bailout, what do you know, here we go again with artificially elevated prices and large interests cornering again.

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