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Joined 11 months ago
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Cake day: October 28th, 2023

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  • Definitely a lot of factors that will come in to play:

    1. Less demand for gas puts downward pressure on price.

    2. Gas stations have fewer customers. That means many will close. The ones that are open will need to charge a higher profit margin per gallon to stay in business (and will get it due to less competition). Fewer gas stations means that per gallon distribution costs will increase as it’s more expensive (per gallon) to distribute to 2 stations in a region then 10.

    3. There are a lot of fixed costs and economies of scale in refining crude oil. With less gas being made, fixed cost per gallon will increase.

    4. In long run, producers will reduce crude supply which will also keep price up.

    My view is the net will be significant cost increase for a gallon of gas. Of the price paid, a higher percentage will go to the gas station, refinery; distributor; etc all due to higher relative costs per gallon.