e85 prices?

[Larrygto]

Why are they going up at the same rate as gas if there only 15% gas?

[FoxStang]

Because of inflation, Bernanke doesn't want to tell you but the Dollar is only getting weaker. Gas is only marginally more expensive, the reality is your dollar is buying less.

[Larrygto]

If thats the case why isn't milk going up 10 cent a day?

[FoxStang]

If thats the case why isn't milk going up 10 cent a day?

Inflation is the expansion of money in its simplistic definition. More dollars means less buying power compared to other currencies, your not buying your milk from overseas. Oil, however, is a different story. Corn is a commodity, and thus will track increases in oil to a degree.

[88Nightmare]

but milk is also a commodity. The milk we drink and the corn we eat our put in our gas tanks all come from America. There are e85 refineries in America too...

[99Z2FAST]

It's probably just greed. Someone needs more profit.

[FoxStang]

but milk is also a commodity. The milk we drink and the corn we eat our put in our gas tanks all come from America. There are e85 refineries in America too...

But the prices of commodities have gone up, not to the degree of oil, but they're still up. And the prices are to see higher gains this summer (article (http://www.usatoday.com/money/economy/2011-05-01-rising-prices_n.htm)). Most of the commodities your buying today were locked in prices on futures and options months ago, so depending on what past expectations were will mean that prices will go up or down at different rates. Your commodities aren't pegged to each other, its unrealistic to expect them to fluctuate at the same rate.


It's probably just greed. Someone needs more profit.
I hope you don't mean that its just the oil companies that are making all the profits. What the politicians don't want to tell you is that you pay more taxes on a gallon of gas than you do into profits for the companies themselves, when they say that they plan to do something about the price they're full of it.
Better question is what is the government doing with all that money? Oh yeah, spending it on things we don't need.

[Prince Valiant]

Why is the price for e85 going up when there is so little gas in it? Simple really...two big reasons:

1. Though they are not the same product, they compete against each other.

2. Gas in this case is a scarce resource that has alternative uses.

In the first case, look at it like this: People have vehicles that can run varies mixtures of gas and ethanol...ie, flex fuel. If the price of e85 was more expensive, then it looked less attractive, people more frequently chose the gas alternative. Now that e85 is more competitively priced (and in fact, cheaper), more people are now choosing to purchase e85...ie, demand has gone up relative to the supply.

In the second, gas is still an ingredient of e85. If bidding for gasoline has become aggressive enough to drive the price of gas up, this means that those bidding on gasoline to mix into e85 also have to bid more aggressively...-OR- choose to buy less (also known as the buyer economizing). Which has occurred? I don't know...but the end result is either: You end up with higher cost, or with less supply...either which would put pressure on the price upward.

The biggest reason for the upward drive in my opinion is number 1....no doubt more people are buying more e85 if their vehicle is equipped to deal with it. You'd have to look to see if there has been a supply drop in e85 to show if number 2 is going on...

[FoxStang]

Why is the price for e85 going up when there is so little gas in it? Simple really...two big reasons:

1. Though they are not the same product, they compete against each other.

2. Gas in this case is a scarce resource that has alternative uses.

In the first case, look at it like this: People have vehicles that can run varies mixtures of gas and ethanol...ie, flex fuel. If the price of e85 was more expensive, then it looked less attractive, people more frequently chose the gas alternative. Now that e85 is more competitively priced (and in fact, cheaper), more people are now choosing to purchase e85...ie, demand has gone up relative to the supply.

In the second, gas is still an ingredient of e85. If bidding for gasoline has become aggressive enough to drive the price of gas up, this means that those bidding on gasoline to mix into e85 also have to bid more aggressively...-OR- choose to buy less (also known as the buyer economizing). Which has occurred? I don't know...but the end result is either: You end up with higher cost, or with less supply...either which would put pressure on the price upward.

The biggest reason for the upward drive in my opinion is number 1....no doubt more people are buying more e85 if their vehicle is equipped to deal with it. You'd have to look to see if there has been a supply drop in e85 to show if number 2 is going on...
It'd be interesting to see the cross price elasticities of demand for both e85 and gasoline for owners of flex fuel vehicles. I'd venture to say that those that really understand the performance they'll get out of e85 compared to gas wouldn't equate them as such close substitutes.

[Prince Valiant]

but milk is also a commodity. The milk we drink and the corn we eat our put in our gas tanks all come from America. There are e85 refineries in America too...It doesn't matter...in the case of inflation, you are still talking about more dollars available to bid on finite goods. So if more dollars are in circulation relative to X number of goods, higher prices can be bid. This is inflation. It doesn't matter whether the dollars are competing for foreign or domestic goods really.

IF the number of goods goes up relative to the number of dollars in circulation, prices actually go down...since there are more goods competing for fewer dollars and is of course deflation. Though it might seem odd at first, deflation is actually more problematic than inflation, and was not uncommon back in the day when we were on the "gold standard" since money supply could only be expanded when new gold supply was found or aquirred. But if you look at the latter 1800's, deflation was a major headache...and some would argue the real cause of the great depression later on.

[Prince Valiant]

I'd venture to say that those that really understand the performance they'll get out of e85 compared to gas wouldn't equate them as such close substitutes.Agreed....absolutely.

[FoxStang]

It doesn't matter whether the dollars are competing for foreign or domestic goods really.

On the basis of inflation being inflation it doesn't, but when considering the the amount you'll pay it does. Inflation will be more obvious with foreign goods especially if there's an unfavorable exchange rate, you'll have less buying power. Another words, inflation is more "visible" on a foreign good than that of a domestic good. This is why someone might come to the conclusion that expansion of the monetary base isn't occurring, they don't see a proportional increase and thus dismiss the prospect. Which is the point I was trying to make before.