Topic: Get Free Gas by simple correlation on prices. (Read 5694 times)

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. 


I will post it tomorrow.

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.

No, that is futures.

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

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.

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.

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?

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.

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?

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.

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/

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.

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).

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.

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.

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?

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.

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.

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.

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.