Quote:
Originally posted by Mmmm, Burger (C.J.)
Because there's competition. They no longer have to pay 20c to the government for every gallon sold. Taxes drive a wedge between price paid and revenue obtained. Oil cos. are producing all they can for revenue of market price less gas tax. So, presumably they're satisfied receiving that amount for their level of production. Put differently, if they could raise prices without a tax, they could raise prices with a tax. Yet they aren't, because of competition and consumer demand.
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Let's just set aside imports of refined gas for these purposes, artificial as that is. Under that constraint, with refining capacity maxed out, the price for gas is established by the point at which consumers stop buying. If you reduce the producers' costs by 20c/gallon, there's no reason for them not to leave prices exactly where they are, since they're unable to produce more to capture more of the demand at a lower price.
Obviously, there must be some price at which imports of refined gas are material, but I have no idea what it is. I also suspect it depends on where in the country you are, given the limitations on moving the stuff around.
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