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The thing I want to try and understand is simple, but I have yet to see an explanation as to how it works.
With oil companies always purchasing crude from whatever the source, I can underzstnad the law of supply and demand and sometimes they must purchase crude at a higher price. But now, here is the rub that someone needs to "splain..."

Let's say I am a dealer and I get a 10,000 gallon delivery for which I paid $2.50 per gallon. Then the next day after the tanker leaves, I raise my prices to $3.00 per gallon due to a calmity that has happened somewhere else in the country.

However, remember, the price of the gas I have in the tank was at $2.50 per gallon. Am I now to be accussed of price gouging? I would say yes, and that once I buy a new load at the higher price, then I should be allowed to fairly raise my price, but not before!

Sort of like picking up the can of comet at the grocery store and seeing that one price has been "stickered" over the old one (sorry, dating myself as this was before the days of bar code scanning...). Do you think it is fair for the merchant to raise the price on an item that he purchased months before at a much lower price?

That my fellow Freepers is what the government needs to investigate, not the big oil companies and what they have to pay for a barrel....(Believe me, my dad is in the oil business and we've been discussing this same thing for two days now...)

Just food for thought, but has anyone else ever wondered about this...

"Let's say I am a dealer and I get a 10,000 gallon delivery for which I paid $2.50 per gallon. Then the next day after the tanker leaves, I raise my prices to $3.00 per gallon due to a calmity that has happened somewhere else in the country."

The answer to your question is YES! In your example, you imply that supply must not be high enough to meet demand because of the tragedy (or the company would not be ABLE to raise the price of what it bought earlier). If the supply is lower than the demand, it does not matter when it was bought or how much was paid for it. The price must go up because supply is lower than demand. As I noted, the higher price plays a vital role by making people buy less of the product so more will have some of it, the higher price attracts more supply, etc., etc. It is how any economy works.

The oil company gets to keep the windfall or higher profit because it took a great risk in buying oil that could have gone down in value. I know your gut reaction is to be mad at the oil companies for making a windfall (really it is just their return for the risk they took, so it is not a windfall), but you are overlooking the way a market functions. If we try to regulate prices, we have a mess (people buy too much of the scarce product, less production to make up the shortage in supply, etc.). I see the same kind of arguments that you make by liberals because they really don't understand economics or they don't believe in economics (or maybe they think they can change the laws of economics).

If the gas station owner doesn't raise his price, where's he going to get the money to buy the next shipment of 10,000 gallons at $3.00 a gallon?

In business, you set your prices based on what it will cost to REPLACE your current inventory, not recoup what you already paid on it.

You are making the common mistake of confusing prices with costs. The moment the gas shortage hit, the dealer's COSTS went up. He HAS to raise prices to meet those costs.

If there is a huge run on gas, and there is the prospect of not getting more for a while, he has to raise his prices significantly during the run to make sure he has enough money to survive the dry spell AND replace his inventory when the gas does become available, since it will likely be very expensive at that time.

The only reason this is an argument today is because of 50 years of communist indoctrination in our public school systems that business is evil, greedy and corrupt and preys upon the helpless proletariat.

However, remember, the price of the gas I have in the tank was at $2.50 per gallon. Am I now to be accussed of price gouging? I would say yes, and that once I buy a new load at the higher price, then I should be allowed to fairly raise my price, but not before!

Where does the money come from to but that next tank-full of gas? It comes from the gas your are selling now.

If the first load was $2.50 per gallon, but the next will be $3.00, selling the first load at $2.50 will not refill your underground tank. Obviously, my description leaves out a lot of variables, but to say that a gas station owner must sell his gas at the level that he has already paid - and not to anticipate the likely cost of his next delivery - is a recipe to close the gas station, unless the price of gasoline is in a steady downward trend.

Say I bought a house in San Jose 5 years ago for $500,000. The market price is now $1 million. Is it "gouging" if I sell my house for $1 million if I don't intend to buy another house in that area?