dodgeguy71

I was reading in our local paper yesterday, something I rarely do and there was an article about our "gas shortage" in Nashville and surrounding areas. Yes, gas shortage...it took us about 40 minutes to find a station(cosco-sister is member) on friday to get gas. All others had no prices or all pumps covered up. Luckily I was in the truck...diesel seemed to be the only thing they had. Kinda laughed to myself as people drove by and I'm the lone vehicle in the lot, ok cruel humor.

So the article babbled on about why there is a gas shortage, you know ike in the gulf and so on. Seems like our surrounding states have gas though, odd??
The writer then says something like the reason they raise the prices of gas so quickly, even though they did not pay that much for the gas in the tank is because they have to build up the money for the next fill up on the tank at the higher prices.

So is it just me, this is my querry. I do steel work, so when my steel guy tells me he thinks there will be a .05 cent per pound price hike in November does this mean that I can raise the price on the steel I have to buy now to the "speculated" increased price and sell that to my customers?? Can I say, oh, well I have to build capitol to pay for the "speculated" price hike in the future? I know what the customer would tell me and cannot put it here, so why am I supposed to buy that line of ca-ca?? As a business owner should'nt you have your money lined up for your next fill up? I mean I can usually by my materials unless it's a larger job because I have money in the biz account for just that purpose.

Like I said, maybe it's just me not knowing the exact inner workings of the gas station market, but it just seems odd to here an excuse like that. I guess anybody who sells anything can legally raise the price because it was speculated that there may be an increase from the supplier even though what you have was not bought at the possible future forecasted speculated price..????

Desert Dually

you make a good point! I am curious about this as well.

P.J

I made this point a few years ago regarding fuel, most people seemed to think it was a normal business practice.

Your question should be: If they get the word that their next load will be "x" amount LESS, do they then run out to the sign and drop the price accordingly? (seeing as they will be paying less)?

Simple as this, IT IS WHAT BUSINESS IS ALL ABOUT!

I read something where people were afraid big business wouldn't be able to access lines of credit to make payroll. What the? If you are financing your payroll something is fundamentally wrong with your business structure.

rock mafia

I hate high gas/fuel prices as much as the next guy.

That said, it's a free market economy here. Gas stations are in business to make money. If they know you are gonna pay whatever price they charge, then why in the hell would they lower the price? It's simple, if you don't like the price, don't buy it. I'm getting tired of hearing people ***** about "price gouging" and how the price goes up faster than it goes down.

P.J

Interesting take.

How about when one station is $4.09 a gallon and the other is $3.70? (current situation in my area, less than 1 mile from each other.
Now then, which way do you propose it's happening? Either one station is LOSING 40 cents a gallon or the other is raping people!

rock mafia

What does it matter how much the station is making? Why is making a profit "raping people"? Do you ask what any other business pays for their product, and what their markup is before you buy it? The % markup on gas for the station is (usually) not that much. Many products have 100% or more markup, are they raping people?

If people are to stupid to drive down the street where it's cheaper, that's their fault.

P.J

Fuel is different, we need it to survive. If we were talking about ice cream cones it would be another story.

Making a profit isn't the rape part, it's taking total advantage of people above and beyond making a reasonable profit that I'm talking about.

Since you so much in the "know" about gas station pricing, why don't you tell us what the mark ups are? Considering the pump thousands of gallons a day, would you expect the margin to be tighter on high volume stations vs. smaller ones?

DBLR

P.J.

It could be one has older higher priced fuel and the other bought fuel that cost less. I've also heard of gas sold at one price and the tanker drop off gas and another for 10 cents more per gallon. All of the gas /diesel in my town come from the same tank farm yet the prices can differ by up to 12 cents per gallon. As far back as 1990 it was normal to raise prices if your got a call saying that your wholesale cost for gas was going up.

P.J

That I would understand, but this has been going on for months now.

tx_2500

EEEEXACTLY!! I dont care what someone charges for apples, or a pair of shoes because those offer some REAL choices for the most part. You can get a $5 pair of shoes, or a $500 pair, big difference in choice there. You are pretty gona pay + or - $1.00 difference per "unit" of gas depending on where you live. The fact is our society runs on petro fuels, not apples and shoes. You dont buy shoes 20 and 30 at a time, every week. If someone wants to make apples so rediclously high that only the ultra rich can afford them, I doubt it would affect society much, matter of fact it wouldnt even make a blip on the radar screen. We have to have fuel, and they know it. They exploid that wheather they openly admit it or not. Even computers that we use throughout our daily lives can be had for as cheaply as $400 or $40,000.

Shoes, yes, free market works. Gas, not quite so well. Even with anti trust laws, they all might as well be the same company anyways, its always within a few cents difference. Im sure not asking big brother to step in, but this "oh well big oil is only doing what everyone else in a free market does" stuff is baloney! When your making record breaking profits every quarter, your having a hard time convincing me that you cant help the prices. And dont tell me that consumption at $4/gal has increased to give you that record profit. Every study has shown a dramatic decline in consumption, yet their still turning a billion dollars PROFIT a quarter.

gs1000

Wonder what their tax bill was?

I love how people hate "big oil" They are publicly traded companies from my understanding. Sure the numbers are huge but so is the number of shareholders. Its like people think that some dude in a fancy suit with a big cigar is collecting every penny. And what do you think they do with that profit? sit it in a bank and forget about it? H*** no! they are spending it like crazy trying to make more money, its a great thing.
I love big oil, thank you for making diesel so i can drive my truck. my life is better with it than without it.
and to all those who say that we need it to survive, who made it that way? It is not big oils fault that we decided to build our society around their products. If you hate big oil so much move to a place where fuel is not necessary. Your quality of life will suck though.

I just can't get over how many people hate the company that is producing the product they absolutely love. It is like they think they have some magical right to cheep fuel.

And as far as stations raising the price of gas despite having paid less for what is already in there tanks. Every person in america does the exact same thing. If you own a house that you bought for a 100K and suddenly your area experiances great growth and there is a housing shortage and the market dictates your house is worth 200K what will you do. I would argue that housing is more needed for survival than fuel. I will keep my kids in a house before i fill up my tank every time. so If you decide to sell your house for 200K you are then a dirty rotten gouger who is making an obscene profit. you would be such a jerk.

MikeyB

Could be a long term contract to supply an x number of gallons for x number of dollars. Hedging that the fuel prices will go up and increases the station or wholesalers profit. If prices are dropping they will go short to minimize the dollar impact with the inventory.

MikeyB

ytodd

I need water to survive, not fuel. Ironically, bottled water is much more expensive than fuel.

toptech72

Ok so now my two cents. I use to have a gas station and yes when i got the call that prices were going up i raised my prices. I was lucky to make .03 a gallon. I was locked into a contract to buy x amount of gallons over x amount of years. My distributor didnt care what type of profit i made. But at only .03 markup i was still .10 a gallon more than my local Royal farms. They sold fuel for less than i could buy it. The market for fuel is all supply and demand and always will be. Alot of little independent stations that sell fuel and do service work will never be able to compete with the convience store/gas stations. And the convience stores of the world dont have to make much prifit from the foel they sell. They can afford to make .01 a gallon on fuel and sell you a soda and chips while your in there. The mark up on the soda and chips is what makes thier profits not the fuel sales. And prices are different rom station to station because of the profits thier suppliers want to make. I had a talk with a manager of a local gas station that ran out of fuel after ike. And she tod me that the supplier could still get them fuel it would just cost them 6.oo a gallon for regular. So they just decided to run dry and wait for the crazyness to end. And a week later it did. Dont blame the stations blame the suppliers. Hell ive talked to owners of Exxon stations that tell me they pay upwards of 10 grand a month in rent and franchise fees. The station owners ARE NOT getting rich off of the prices THE OIL COMPANIES ARE. And remember when the suppliers call and say prices on fuel are going up yes the stations going to raise the cost to cover the next load. Most station have over 40,000 gallons o gas sitting in the ground so that .02 or .03 or what ever increase it is has to be covered. I myself have a bigger complaint about the mark up the convience station is making off the soda they are selling me than the mark up off the fuel. But thats probably because i know what the end profits the station is making off the fuel.

P.J

I can pump 10gpm all day long from a 420ft. well right in my front yard.

No need for me to buy bottled water. Now then, if I could also pump gas out there we wouldn't be having this conversation.