Posted on 09/09/2005 10:38:44 AM PDT by SmithL
If I sell 10,000 gallons of fuel every week and the wholesale price is $2 per gallon, then the price I charge my customers may be $2.25 per gallon. If I already know that next week's delivery is going to cost me $3 per gallon, then it would be grossly irresponsible for me to charge that same $2.25 per gallon for the fuel I already have in the ground -- because doing so would leave me short $7,500 when I have to pay for the next delivery.
I think the boutique fuel thing is merely another way industry has used government to build an economic environment where it can escape competition. It's an "environmental" rule like the freon issue, where rules were made that gave a few large companies a competitive advantage over others.
The greenies don't know it, but they're useful idiots for large corporations (I don't want to hear from the Koolaid drinkers about that statement - I just want GENUINE captalisim with genuine competition, not faux competition rigged by corrupt government).
The oil industry has a long history of price collusion. Going back to T.R.'s days. I think it's time again to look at anti trust issues, and look at how governments have been brought into into the action.
Current wholesale price of refined gasoline is just below $2.00. I'm paying $3.10 in Phoenix. Gas didn't even cost a dollar in many places 5-8 years ago, and now the difference between wholesale and retail is more than that.
There can't be THAT much increase in retail expenses and taxes.
Do you have a source for that?
My understanding is that in the last quarter Exxon/Mobil had the largest profit margin among the major oil companies, but it was still only around 9% of their gross sales.
You're exactly right, there are no Federal gouging laws. Some states prohibit cost increases of more than a certain percent and if companies violated their laws then they should be prosecuted under state law. To define gouging has been left up to 23 states and all of them vary in definition but some including Mississippi actually freezes prices upon the declaration of a State of Emergency and that's why some stations jacked up prices right before the declaration. My definition is very simple, one who corners a market then manipulates price during a State of Emergency. To merely maximize profits with market competition available during times with no State of Emergency is not gouging, it's capitalism. I will not come to the oil giants defense if they broke the law regardless what they feel the law should be and as I said before, if they are acting as good competitive, corporate citizens that are merely maximizing profits based on supply and demand then everyone should drop it.
Good point.
Right now, Californians pay $.504 in fed and state gas taxes. The U.S. average (including California, of course) is $.42.
A couple days ago, wholesale regular was $2.45.
Does that suggest how little profits are?
Thanks!
I do but try.. ;-)
Do you practice the same thing when price goes down?
My bet is ... not.
Hey, charge what you can get. Go for it. But I'm going to start fighting back by trying to educate people on prices so they can shop better.
That's the way it works. You charge what you can get. And we shop for the lowest price. I didn't used to pay attention to prices. But I sure as .... am now.
Exxon made $7 billion last quarter in gross profits but gave a measly 29 cent a share dividend. Consumers don't know half about how ticked off investors were at that time.
If the price of gas is what the market will bear, then that has everything to do with Classical Economics, since that is what Classical Economics says that the price should be.
That law of economics only applies in the absence of collusion. If the difference in price per gallon between the most expensive state and the least expensive state before the hurricane was 60 cents, and after the hurricane is 15 cents, doesn't that present some evidence that the market is not being allowed to work?
There is the Sherman Act and the Clayton Act. Extended price gouging is not possible without collusion. There are approximately one billion barrels of oil in reserve between the strategic reserve and the refinery inventories. The supply hit from the storm was about 1.8 million barrels per day and is temporary. Yet this produced a 30% spike in prices. Not likely if the market was allowed to set prices. There is something going on here.
It really depends on the circumstances. It wasn't all that long ago (1999?) that gas stations in some metropolitan areas were involved in some ridiculous price wars. I distinctly remember a news story from New Jersey about gas stations charging as little as 65 cents per gallon at the time (when most retail prices were in the 80s).
"Exxon Mobil Corp., the world's largest publicly traded oil company, said yesterday that second-quarter profit rose 32 percent, to $7.64 billion....The quarterly profit was the third-highest in the company's history....Exxon's refining and marketing profit (gasoline) rose 34 percent, to $2.02 billion
http://www.washingtonpost.com/wp-dyn/content/article/2005/07/28/AR2005072802085.html
The point is that those refineries being down had no immediate impact on our gas supplies, since our gas doesn't come from the gulf states. So the jump in prices was not a result of any actual shortage, but simply due to either a perceived fear of a shortage, or just due to gas suppliers wanting to get in on a good thing (higher prices).
The report also targets the complicated US government regulations which differ across most states and include more than a dozen formulas to fight air pollution.
With California being the second biggest petrol market in the world - equal to Japan - and second only to the rest of the United States, it has the highest and most volatile prices in the country due to the top four refiners controlling 80 per cent of its capacity and the top six refiners operating 85 per cent of its retail outlets.
"In addition, California is an island in the petrol world, consuming a unique cleaner-burning petrol since 1996 which was produced by few refineries outside the state," the report said.
"The California refineries, running at full production, are barely able to satisfy its own one-million-barrel-per-day appetite and frequently relies on expensive imports. Any slight supply disruption has been enough to send prices soaring," it said.
The US imports 10% of its gas now with a large part of that going to CA. Gas imports are going to continue to increase because refineries are being built elsewhere.
Cheaper and easier to build in other countries.
Even my Congressman Joe Barton, the author of the flying pig energy bill, claims there is some serious market crap that went on. Since Florida doesn't contribute to our energy supply then I can understand why their prices went up but I don't understand the 60 cent jump here in Texas? I'm not sure if collusion actually is going on but the congress needs to find out and prosecute or drop it but it needs to be answered.
Don't you know that $3.00/gallon is unconstitooshinal?
Don't you know that the Declaration states that "we hold these truths to be self-evident ... that all men are endowed by their Creator with certain unalienable rights and that among these are life, liberty, and cheap gasoline"?
You ought to get the ZOT treatment for calling patriots "situational socialists"! They are Americans, and it's an insult to call them anything else!
3:09 Weekly rig count rises by 1.6%
3:10 Crude futures lose over 5% for the week
3:06 Oct unleaded gas drops 3.7% to close at $1.9597/gal
3:06 Oct unleaded gas down 10.3% for the week
3:06 Oct crude closes at $64.08/brl, down 41c
If I knew as much about gasoline prices as the situational socialists thinks they know, I could make a fortune trading energy futures. I've been in the industry for 32 years, and credit the frss brigade about as much as I do the DU for insight in the energy business.
My understanding is that in the last quarter Exxon/Mobil had the largest profit margin among the major oil companies, but it was still only around 9% of their gross sales.
Actualy, no American oil Co. was in the top 5 oil companies in the world for profit.
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