The truth is there's no gas price algorithm. There are some data inputs and local gas stations compete based on their nearby competition prices, but broadly there's a group of men in a room who set the prices to whatever they want.

When costs go up, they immediately increase prices. When costs go down, they wait and see what their competitors do.

So you can see why a few companies owning all the gas stations creates inelastic sticky prices that don't go down for weeks. If you take away the gas tax, well, are Shell and Crappy Tire dropping prices? Not yet, so we won't either. Easy decision.

Gas companies used to pay to have people drive around and report gas prices from their competitors back to corporate. Now they pay gas buddy for bulk API access to the numbers users report to Gas Buddy in the app for free.

I am definitely not recommending you do this, but if many people were to constantly report lower gas prices at gas stations in the app, that would feed into the sole data they use to set their prices and lower gas prices in the area.

If in theory Gas Buddy data became unreliable for some reason it would take a long time for these companies to decide to spend money and start hiring gas price checkers again.

[–] yogthos@lemmy.ml 17 points 6 hours ago

You are describing a natural monopoly and why private ownership of it sucks. That is the whole point.

Gas stations are a natural monopoly. You cannot have twenty competing pipelines running to the same neighborhood. You cannot have fifteen different refinery complexes in every city. The infrastructure is too expensive and too duplicative. So what happens is a handful of companies end up owning everything and they just coordinate as a cartel instead of competing.

PetroCanada used to be a crown corporation. It existed precisely because we recognized that fuel distribution is too important to leave to private profit extraction. It kept prices honest because there was a public option that could undercut the private cartels. Then we privatized it and pretended the market would fix everything. Surprise surprise it did not.

The core problem is not algorithms or Gas Buddy or tax holidays. The core problem is that we allowed a natural monopoly to operate as a for profit business. When one company owns twelve thousand gas stations and the other three companies own similar numbers there is no competition. Market based pricing really means that a group of executives in a boardroom decide what number makes them the most money and then they all charge that number.

This is exactly why socialists argue for public ownership of critical infrastructure. Fuel distribution is a natural monopoly. Either the state owns it and sets prices at cost plus a reasonable margin or a cartel owns it and extracts every cent they can get away with. There is no third option where competition magically appears.

[–] UnderpantsWeevil@lemmy.world 8 points 7 hours ago* (last edited 3 hours ago) (2 children)

Prices are based on what the market will pay, not the cost of materials.

I heard a take on this, which suggests price is more a measure of the value of labor rather than the cost of materials. Under more historical economic models, you were limited by your immediate regional supply of a good or service. And we would talk about shortages, droughts, and famines when the local supply was exhausted. The local labor force couldn't produce more commodities with the tools/conditions at hand, causing consumption to outpace available surplus.

Under a more modern market system, we no longer talk about "running out" of a given commodity. Instead, we talk about the price going beyond what we have available to pay. You'll walk into the grocery store and see a $10 banana. And it'll sit on the shelf till it rots, because nobody has $10 to spend on a banana. But it's only there because nobody can pay that price. The fact that there's no second banana in the stock room is obscured by the astronomically high price on display.

However, you do eventually get to the point where people need the commodity more than they need the currency. That is, in effect, the cause of inflation. And then the banana gets sold, there's no second banana, and we reveal the real cost of materials in their absence. There's no supply chain bringing in more bananas because we've experienced a structural failure in the economy. The cost of maintaining infrastructure eclipsed what the owners/administrators were willing to front. We obscured it with a price signal until the bitter end.

And the empty shelves ultimately reveal what national administrators believe to be the value of the local population. It is not a question of commodity markets any longer, but of labor markets. You (the local public) aren't worth sending new supplies to, because we (the capitalist economic administrators) no longer consider you productive laborers.

[–] Mavvik@lemmy.ca 1 points 2 hours ago (1 children)

This is an interesting perspective I haven't heard before. Are there historical examples of this happening?

[–] UnderpantsWeevil@lemmy.world 1 points 2 hours ago* (last edited 2 hours ago)

I would say the classic example is the American Ghost Town. Typically townships that sprang up during the Frontier Era to serve some transitory economic function (mining colony, overland shipping stop, cattle depot) that were rendered obsolete with the railroads and subsequently abandoned.

https://www.geotab.com/ghost-towns/

Named by German prospectors who came looking for gold, Berlin was a company mining town. Established in the 1880s, the town was largely abandoned by the 1910s after the mine closed in response to strike action. The well-preserved structures are now part of Berlin-Ichthyosaur State Park, known for fossil discoveries of a prehistoric marine mammal.

Kennicott was established as a mining town in 1903 to take advantage of the area’s copper deposits (the emergence of electric power having increased copper’s value considerably). The mines were depleted by 1938 and the town largely abandoned. Since the 1970s, the town has become an increasingly popular tourist destination.

More of a ghost fortress than a ghost town, Fort Jefferson’s construction began in 1846 as part of Florida’s defenses against piracy. It also served as a prison during the Civil War, then became a quarantine station and a navy refuelling point before it was abandoned in 1906 due to hurricane damage. Fort Jefferson has been a National Monument since 1935 and is open to tourists. It continues to be the largest brick structure in the U.S.

Incidentally, a lot of the "town was abandoned in..." correspond with the Great Depression, when interstate commerce had all but collapsed due to failures of major financial, communication, and transport companies of the era.

[–] Tiresia@slrpnk.net 2 points 3 hours ago

For any liberals reading this; this is basic supply and demand in a situation with surplus labor.