Quote:
Originally Posted by rmay635703
In my hometown Weston, WI. The station owners used to set down each day bright and early and decide on price at a local restaurant, I got to sit nearby as they discussed the fuel price for the day when I was up early to go to a craft show.
I have no doubt that they still do that, it is worth noting that my hometown is almost always 5 cents to as much as 20 cents per gallon more than other nearby areas. I can't remember them ever being cheaper.
This isn't exactly true, of coarse I am talking a national level still but Opec has many times wanted to lower prices in recent years but was not able due to the market price not being dictated by the price out of the ground but instead the price the middlemen in the commodities market set, which is run like a stock market and has much less to do with any real price stimulous and everything to do with feelings and manipulation.
Cut out the middleman and the prices might stablize around the real market price. Right now there is huge anti-market activity going on within the commdities trade making it so demand and price no longer coorelate.
You can thank Reagan for the oil commodities market having no real controls set on it.
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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. Efforts by OPEC to artificially lower prices such as you cite are often either geopolitical or market manipulative in nature, not responses to competition or demand. One reason they have wanted to keep prices down is to dampen the relative appeal of alternative fuel development. IIRC, in the recent past OPEC announced they were pricing into oil the cost to their revenues of ethanol/gasoline mixtures. Such efforts are consistent with a market structured as an oligopoly. If speculators step in and run the price up that's a separate problem. But I agree the speculators are a complicating element and an important one.