Nice problem to have, I guess.
Usually with limited production products that come from the tip of a process
(like butterfat from milk) the price winds up being relatively constant
because if the base product steadily increases there is always more of the
limited production product than can be consumed. As US consumption of oil
tops 20 million barrels per day, the components of race fuel are probably
not rare. The problem likely is cost to distribute, not cost to produce.
Babcock & Jenkins
From: email@example.com [mailto:firstname.lastname@example.org] On Behalf
Of tom strange
Sent: Monday, April 04, 2005 7:43 PM
To: Larry Young; email@example.com
Subject: Re: buying gasoline
Being such a limited production item, would market share have anything to
do with the price? I always thought the increased expense due to the
limited volume overshadowed everything else..
Larry Young <firstname.lastname@example.org> wrote:
I was involved more with production than refining, but I'd guess there could
be one or two factors at work. Either the mark up on race fuel is huge and
they've absorbed some of the increased cost or the cost to make it is so
large that the raw material cost is not so significant.
> With your background, perhaps you can answer a question for me
> regarding the refining process as it relates to lower and higher
> octane gasoline. Over the past year, while we have seen normal pump
> gas escalate in price, I have noticed that 110 race gas from Union 76
> and Sunoco has hardly changed. Is this due to the demand for race gas
> being fairly constant so refiners can forecast their production and
> costs more accurately which keeps the cost to us relatively level?
> At our race last weekend at Infineon, I bought 110 race gas at $4.50
> per gallon which is the LEAST I have paid for this type of gas in a
> couple of years. Is this just an anomaly? Will we begin to see ever
> increasing prices associated with race gas in the near future? Thanks.
#4 white spitfire