how does Exxon do its groceries?
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So lets think about how we do our groceries. I buy my groceries every sunday for the coming week. Say, I spend some 100 bucks on it. Now, lets assume the cost of general food products sky rocket on monday because....well...now every farmer is after corn and other "fuel-friendly" crops. anyway i digress. I panic. My cost of groceries is going to go high too. I start looking for a night job. "will code for food" u guys. But on thursday of that week i read the papers and the story reads, the food crisis is now over as scientist have found a way to cultivate in Alaska. and that too in a organic way. oh my.
so humble readers of my blog can you tell what was my actual cost of groceries for the week of this mayhem. I am no math wiz but my answer came to 100 bucks. and I tried it out on a calculator. now adding some economic (?) analysis to it, I come to a conclusion that if I buy something in advance and that this is going to last me for X number of days, no matter how the much the prices fluctuate during this X days, my cost of the the item is not going to change. It will increase when I buy it the next time but can never mathematically and accountingly( i like coining new words, someday somebody may use it) increase for the stuff I have already paid for.
Standing on the fact that my above theory stands true, what I dont understand is why does the price at the gas station next to my house changes on daily basis in proportion to the price per barrel for that day. Its more real time than the nasdaq ticker at times square. I am sure there are so many intermediary companies in between this gas station and the OPEC people. I am also sure, of these companies almost all of them should be importing oil in advance and in bulk. Doesn't that mean that any changes in the prices up there should at least take some reasonable amount of time (weeks ?) to affect prices at my local gas station. right? Either I am terrible at math, accounting, economics and how the world around me works or there is something terribly wrong with the system (I like using phrases like "wrong with the system"). can someone smart help me explain whats going on here?
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