Price Inversion

A term sometimes used by independent petroleum marketers to describe a situation in which wholesale prices are higher than competitive retail prices available in the same market.

A hypothetical example would include a scenerio where an independent oil marketer seeks to buy a tanker-truck load of gasoline at the loading rack of a terminal, owned by an integrated oil company, but discovers that the per-gallon wholesale price, at which he can purchase the gasoline, is actually higher than the retail price posted in the same territory at branded stations supplied or operated by the oil company.

This differential would be referred to by the marketer as a price inversion.



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