This is how it works according to a guy I know who worked in the Gulf and a spokesman for the Ashland Oil refinery.

Yes this is how it works

This scenario works when prices are going down. When the replacement cost is going up it can bankrupt a ma and pa business. Example, 10,000 gallons bought at $1/gal (easy math). The profit margin on fuels for these types of operation is 3-4% Gas stations make their money by selling Monster Drinks, pizza and cigarettes. Sell 10,000 gallons, at 4%, the gross is $10,400. When the cost of gas goes up to $1.25, the replacement inventory costs $12,500. Where does the $2100 come from?
There are replacement cost formulas to keep ma and pa solvent, but when the swings are wilder, as we saw with the recent Iran panic, ma and pa often don't survive.
Crude market "panic swings" are all driven by speculators. Refineries operate on long term supply contracts and fill shortfalls in production due to increased demand by purchasing on spot markets. Speculators never touch a drop of oil, they just shuffle paper and the consumer pays.

And what that would do is make gas hard to come by and then they couldn't sell as much & their profits would drop. What that would do is keep them from gouging people.

Gouging is a product of the speculators in Brooks Brothers suits, not your local gas station. Why would anyone sell the gas in their tanks at less than they paid for it? That's not gouging, that's just business. When the higher cost inventory is sold, the price is adjusted to reflect the lower cost inventory. When you can see that replacement cost for your current inventory is going to be higher than what your current pricing will generate, you raise your prices ahead of the next order to try to cover that higher replacement cost. The price remains higher to cover costs of inventory until that inventory is sold, not to increase profits by "gouging."

When the folks with the gas, charge the Mom and Pops gas stations for gas, they sure as hell aren't doing for a penny per gallon. No they are making bank. Lots of it.

The Mom and Pops folks have to keep up with that model or go under. The Corporate Gas Stations don't give a crap what it is, it's all profit to them to make the corp look good.

Not a businessman, eh?

No I am not lol

Those pricks raise the pump $ on just the THREAT of a gulf hurricane
And places like Chicago raise it every Friday because they know their buyers get paid
(used to be the 3rd of the month til DJT got em employed)

Yuuuuup it's all a scheme where the top 1 percent benefit & everyone else figures out how to take the ripples of those folks decisions.

So if the fair market price is abnormally high when filling the tanks, and the price goes down afterwards, the price at the pump should remain abnormally high?

And by the same token, when the gas comes in and it has dropped to the bottom of price per barrel & then the price of oil goes up... It should remain dropped until it's refilled.

Close. . .oh so close . . .but no cigar.

The price of gas should be treated like any other thing that can be bought a capitalist/free-market society and that is strictly applying the Laws of Supply and Demand.

And here's the thing - nowadays Low Supply of gasoline is a rarity in the US. In gas stations there is a computer type device called a Veeder Root that tracks the amount of gas in the reserve tanks. An annoying alarm goes off when the tanks get low. So does that mean it's time to raise the gas price to preserve what's left in the tanks before it all runs out?

No, it's time to make a couple of phone calls(duty of the store manager) so the the fuel tanker can show up, usually same day, to refill the reserves. Even if reserves get low and the alarm goes off and the tanker doesn't appear same day there's no reason to panic. That's because there's still plenty of fuel in the reserves for at least a couple of days until the tanker shows up.

Even in the worst case scenario of the tanker taking way too long, most cities, even small towns, still have another gas station or two.

Overall the problem is oil speculators messing with the prices on the global scale. That needs to be stopped in some way. Make that type of speculation illegal in the US. The other problem is government raising gas taxes or as Milton put it - "Inflation is taxation without representation."

You're correct about how things swing in prices so much, it's because speculators want to make a lot of money during a crisis situation. If the way gas was sold was changed - it would tank (get it, like a fuel tank) the way their speculations manipulate the market to bring prices up and down.

They don't just make $$ trading barrels of oil on the commodities market - they also make $$ being invested into the various Gasoline brands and their Stock Ticker. The Gasoline Companies make their money most - when the price per barrel is high.

So they manipulate the commodity market for the commodity - then manipulate the Gas Station prices to make even more money off of it.

People need to watch Trading Places and pay real close attention to why the antagonists got arrested at the end - insider trading and market manipulation.

What a great movie too - out of nowhere, "Frozen Concentrate Orange Juice"

I didn't appreciate it as a kid when I saw it, but the whole downfall & big NY Stock Exchange stuff... Let's make it about frozen OJ... Hilarious 😂😂