Gasoline prices

[8gv]

Originally Posted by noreast

Also, I'm sure they don't go thru it that fast so there price is based on what they paid.

I see this as a factor when the prices are dropping. Maybe someone in the business can chime in to correct me. How I think it works:

A station pays a back door price at time of delivery.

When a competing station gets a delivery with a lower back door price their retail price is lower.

The consumer chooses the lower price station thus expediting the liquidation of its inventory.

The higher priced station sells its inventory more slowly.

When the lower priced station gets another, cheaper, delivery the price difference is made even greater.

Now the higher priced station is really stuck and may have to capitulate to selling at a loss to keep the cash coming in and more importantly, get access to cheaper product coming into the back door.