[Noporscheform]

This has been discussed a number of times. Worldwide Refinery capacity, worldwide crude oil supply and global economic activity, all contribute to the balance between demand and supply of gasoline and diesel. The price moves as different traders (both oil company traders and speculators) interpret all the data to determine at what price supply and demand are in balance.

A refinery upset, a change from winter to summer blends, an economic slowdown - all impact a traders view of the supply/ demand balance and the price level. Even within the US, regional prices move independently based on regional supply/ demand factors as minor as a pipeline shutdown or a terminal mishap.

In the retail (gas station) business, the big players spend tremendous resources on tracking street level prices of competitors and adjust store by store prices to stay competitive and keep volume moving. At the wholesale level the terminal price changes quickly as refiners move prices in response to competition at the wholesale level. Independent retail companies re-direct tank trucks minuite by minute to acquire product at the lowest price.

In the industry a common rule of thumb is that as raw material prices go up, i.e. crude oil prices, the retail margin gets squeezed, prices cannot move up fast enough to cover the higher replacement cost, and as crude prices come down, retail margins expand, as prices do not fall as fast.

I have seen street margins in the typical range of $.07-$.09 per gallon range. At any point in time they can go from negative to $.20+ per gallon. It is a very volatile business.