Price Gougeing

If a gas station owner has a 4000 gal under ground fuel tank, and fills it
for lets say a $1 a gal, to make this simple his price to the public is
$1.00 per gal.

A few days later he figures that there is only 1000 gals left in the 4000
gal tank so he orders 3000 gals @$2.00 a gal.

Here's where there fucking us, instead of selling that remaining 1000 gals,
left over from the initial 4000gal purchase @ a $1.00 a gal, they raise
there price to $2 a gallon, for everything in the under ground tank. They
just made 100% profit, on that 1000 gals. Then they lie to us saying they
only make penny's on the gal profit,bullshit!

And thats what they are doing ........most are just raising the price
because the guy next door did.

Tom

 

dude, the retailer /is/ making pennies. but the /refinery/ has stepped
up it's margin to 20%. at $70 per barrel, you do the math.

oh, and don't forget that [unnecessary] oxygenates reduce mpg's so you
have to buy more of the stuff. and don't forget that we subsidize
[oxygenate] ethanol production to the tune of billions of dollars each
year. and don't forget that we're also being asked to pay a premium for
oxygenated fuel. can you say triple whammy? are we getting gouged?
sure! but it ain't the retailer.

 

It ain't the oil companies either. They don't set the prices, the markets
do. Cartels have some influence on prices by way of production control, but
the primary movers of oil pricing are political and emotional, and are out
of oil company control.

Oil companies benefit from a run-up in prices, but do not cause these run-
ups. Exxon saw its net profit margin increase from 8% in 2003 to 9% in 2004
on account of more expensive oil. It's probably up to nearly 10% now.

 

I have never heard of a business purchasing a product for a certain price
and then selling it for the same price. That business would not stay in
business for long. People are in business to make a living or profit.

Brian

 

but the oil cartels didn't decide to raise refinery margins from 5% to
20%. the oil cartels didn't lobby with the, er, "benefits" of
oxygenated fuels whose only real benefit is reducing calorific content,
thereby increasing sales volume. the oil cartels are not the ones
deciding to use our taxes to subsidize an additive that costs us three
ways. i know a little bit about corporate finance. there's more than
one way to manage your reported figures, especially for multinationals.

 

No, the commodities markets did that. Just look at the current market
frenzy surrounding Hurricane Katrina. Up went the price!

Oil company costs did not go up, just the price of what they sell (except
for repair costs, much of which will be borne by the insurance companies).
Oil companies are not complaining, but they know the jackpot could end at
any time, depending on future events, so they're banking evey penny they
get.

Thank the EPA for that. Tetraethyl lead was the cheapest additive around,
which is why it was adopted way back. Refineries stuck to that until they
were legislated into using something else (which just happened to be more
expensive and less efficient).

Any legislated alteration or regional segmentation of finshed gas raises
costs to the oil companies. Believe me, they resist all such
"environmental" alterations until forced to carry them by law. This is due
to the costs involved, and the low margins that gas carries.

There is no point in being the only oil company to suffer due to those
enviro costs. Better to wait until everybody is forced to do it, that way
nobody has a costing advantage over anyone else.

For that one, you can thank the farm lobby. Nothing like a bit (lot) of
pork in your home district to drum up a few sales. Note that the strongest
political proponents or ethanol are those with rural districts.

Also, the environuts are irrationally convinced that ethanol is somehow
"enviro friendly", so they add their efforts to the farm lobby.

And my sister is a corporate accountant. she's told me many of those ways.
and there are a LOT. Many times the board gets the report they want to see,
rather thanone that truly reflects the state of the corporatoin, something
it's possible for nobody to actually know...

 

too bad it doesn't work that way.
My brother worked at a gas staion, and they were told what to sell the gas
for. At the end of the month, the suppiler said ok, we told you to sell it
at this price, then this price then this price. So you sold x galons at
this price and x galons at this price, so you own us x amount, leaving 3
cents per galon for yourself as profit. If they choose to sell it for lower
prices, they would lose money...

But who cares, the Honda civic gets 57MGP, only 1 less then the smart
car...as long as your not a dumbass in an SUV or truck, gas is still dirt
cheap!

 

<snip>

<snip>



Interesting graph out of the paper a few days ago:
http://www.tegger.com/hondafaq/misc/oilprice.jpg

 

I was just talking to my friend who has an independent Honda-Acura
repair shop. His price for the next 55 gallon drum of 5W30 is going to
be more. He will be charging the higher price on the half barrel that is
now in his shop. He will need the extra money to pay for the NEXT barrel.
That's the way it has always worked. If you think you can do it better,
open your own store and try it your way.
There's an old joke that goes like this; Two brothers from Ohio drive
to Kentucky and fill their truck with watermelons for a dollar apiece.
They drive back to Ohio and sell them for a dollar each. When they sold
the last one, they figure out what they just did. One brother says to
the other "We need to get a bigger truck." bob

 

Hear Hear. I'm a brit, so i'm used to paying $50 to fill up a
civic-sized car. Was only $27 to do it yesterday. Admittedly, thats as
much as it cost to fill my Caravan in Jan, but still, its CHEAP.

 

Brian , you are right my point is this, the gas stations say they only make
pennys of profit per gal, I think they are making 100% profit, on a certain
amount of the gasoline in there tanks, if you read my first post.

Tom

 

Markup is entirely different than profit. Profit is what's left over
after ALL expenses, not JUST the cost of goods.

Economics 101.

 

Yeah, sort of like your own household finances. If you take home $60,000
per year, and you spent $54,600 during that year, your profit is $5,400.
(That's about the same percentages as Exxon had last year, by the way.)

With this profit, you can pay off some of the mortgage, buy a new TV, go on
a vacation, get your kid braces, fix the roof, build a fence, all sorts of
stuff. That's what profit is for.

 

the commodities markets don't set what's called the "crack split".
that's refinery mark up. only the oil companies do that.

see above.

end? how can it end? refineries were busily being taken out of
production for "unsceduled maintenence" long before katrina came along.
unless there's more capacity and independent competition, gas prices
are a one-way street.

no, thank oil company lobbying of the epa for that.

lead was essential to reduce knock. it was around long before the
calorific content game was being played.

no, the epa went to look for cleaner burning fuels. these can be
achieved by lower aromatic content, closer molecular weight bands, low
sulfur, etc. but some genius cleverly managed to side-track epa
emphasis into the search for clean burning fuels via "oxygenation" and
hence the opportunity for the consumption of what had hitherto been a
by-product, mtbe. once mtbe was in the mix, the calorific content game
became crystal clear to the oilcos, and the game was on.

so they say, but the fact remains that in california, mtbe was mandated
by a govenor whose wife just happened to be a director of a certain
large oilco, who also just so happened to have refineries whose unique
chemistry just so happened to be able to create large quantities of
mtbe. just coincidence you understand. but the real rub came when the
other oilcos, whose refinery processes did /not/ produce mtbe, found
themselves compelled to get gouged for, sorry, /purchase/ a filthy
by-product from a competitor. they complained about /that/ for sure.

see above.

tell that to the california legislature! we have specially formulated
gas, specially formulated milk..., the special interest lobbying list
goes on and on and on. it's the wild west out here. whoever gets to be
sherrif gets to make the rules!

they're not fools - they know pork when they see it. but i still don't
see why the rest of us have to pay tax to subsidize that pork, then
premium prices, /then/ get inferior product.

this one amazes me. just like the biodiesel freaks. you need to grow
tons of crop to harvest a few pounds of oil. the /smart/ route would be
to use the whole biomass to produce a liquid hydrocarbon product, but
that apparently is too much of a conceptual leap. not that the
established fuel industry is in any hurry to point that out - they'd far
rather pay lip service to biodiesel because they know the concept to be
fundamentally flawed and therefore not long term viable.

 

I was quite pleasantly surprised yesterday (after getting over the shock of
how much everyone was raising prices) by the behavior of my towns local
Mobil station.

Yesterday afternoon, the Gulf on the corner raised it's prices to $2.999. I
was in the Cumberland Farms a few doors down getting a few items when I
noticed the line, 20 cars long for the Mobil station. When I asked the
clerk of the store I was in what was going on, he told me the owner of the
Mobil station stated he was not going to change his price ($2.699) until his
tanks ran dry, then raise his price to match what his next refill cost him.
I thought that was admirable. Today he has cones up blocking his pumps as
he is empty.

So I continued on my way, and a half mile down the road I passed the local
Stewart's Shop. They are usually one of the cheapest places around. Their
price was already bumped up to $3.299.

On my way home later that night, the above mentioned Gulf station was up to
$3.19.

Today, while heading to Home Depot and my buddies bagel shop up in
Poughkeepsie, I saw EVERY Mobil station on Rt 9 with their price at $2.899.
On my way home as I passed the same Stewart's Shop their price was $3.499.
What the hell makes their gas worth $.60 more than Mobil???

So I called my buddy who owned the bagel shop and asked him what prices he
saw for gas on his way home (he lives in New Paltz). Of the 3 Mobil
stations, 2 were at $2.999 (including the one right off the exit for the NYS
Thruway which is usually a little higher than everybody else due to it's
location) but this 1 Mobil station (on Rt 9W just north of Highland) they
also had their price cranked up to $3.499.

Some serious disparity to prices within a small distance of each other.

 

Since there is no advantage in being more expensive than a nearby competitor
for a commodity (and having to advertise the price so prominently to get any
customers at all), I'd expect it means the wholesaler's price already went
up and their truck has already delivered the expensive stuff. All the
overpriced stations can realistically do is to wait until the others sell
out or have to restock at the higher price.

Mike

 

I agree with you there Tom. We used to have regulation on gas prices here
years ago. When the world price changed it took ninety days for that
increase to be seen at the pumps (that was the time 'they' said it took for
the old stock to be depleted). Then when the new stock entered the system,
the price rose to reflect that fact. Now-a-days if someone sneezes or blinks
the price changes (rises) immediately. It's not right at all.

Then again, 'they' say that they have to charge the increased price to be
able to pay the increased price when their present stock is depleted, which
makes sense. BUT, the only price that changes immediately when the world
price of oil changes is when the price goes UP! When the world price drops
the price at the pump does NOT reflect that price change immediately, or
even in the weeks that follow the drop. In fact for an increase in the world
price of a dollar a barrel, the price at the pumps here rises six to eight
cents a litre. When the price drops a couple of dollars a barrel the price
at the pumps drop a penny a litre.

I wish I owned stock in an oil company or two!

Brian

 

LOL! That's a fact! {;^0

 

Trudeau copied Nixon's wage and price controls in 1975. It was such a
horrific mistake it was repealed later that year. Trudeau was such a dolt.
He obviously did not learn anything from Nixon's own mistake two years
before.

If Nova Scotia had its own price regulation, I'll bet your prices were far
higher than provinces that did not.

I notice even now, you're paying about 25¢ more per liter than we are in
Ontario. Your taxes must be higher (snicker).

Why not? Can you explain?

<snip>

You can easily do that through mutual funds. Oil companies are making
pretty good money now (~10% net), but that could change in an instant,
which is exactly what has happened in the past, and then they'll be down to
7% margins again.

An interesting chart:
http://www.tegger.com/hondafaq/misc/oilprice.jpg

Oil is still WAY cheaper than it was during Nixon's price controls. Reagan
deregulated oil prices in 1982. See that price drop immediately thereafter?

 

Correct. If one cannot beat 'em, then join 'em. It's part of my financial
strategy lately, hypocritcal as some of its aspects are. I rationalize that,
as I drive my 40 mpg Honda Civic around town, while others drive incredibly
wasteful trucks and SUVs, I may as well profit from their stupidity.

I don't understand the outrage here, myself. Dealers charge way more than
independent shops. Medical fees vary just as much from one hospital or
doctor to another. Etc.

There are important laws on price gouging, but I don't think they kick in at
this point. These gasoline sales businesses are doing what the free market
allows.