Contenu
Gas prices can vary and change at a rapid pace, even between different gas stations in the same town. One of the reasons the price changes so much is due to the fuel rack price.
Definition
Rack price is the price at which refineries sell gasoline to their various clients. These clients can include wholesale gasoline sellers or even gas stations themselves. The type of gasoline they sell includes branded or unbranded types.
Spot Pricing
The gasoline spot price is the price that gasoline is worth as dictated by the market. For example, gasoline spot price may be dictated at 25 cents a barrel by the market, a price which does not vary for any refinery.
Calculating
Rack pricing can be calculated by adding the costs of transportation, overhead and profit to the gasoline spot price. This is why rack pricing may vary for different places. For example, an isolated station far from its refinery pays a higher rack pricing than one that is closer to the refinery.
