Posted on 09/09/2005 10:38:44 AM PDT by SmithL
If I make $40 million in profit on sales of $1 billion, my profit is 4% of gross sales. If my profit goes from $40 million to $60 million, then it has increased by 50% but is still only 6% of my gross sales.
I know the owner personally.
I see -- thanks. I stand corrected!
I suppose, however, that there are a bunch of folks here who are either too young to have experienced gas shortages in the 1970's or too old to remember them.
Gouging is pricing gasoline at a price higher than I want to pay.
Let's say a CA conservative owned a house in California for several years during which real estate prices rose rapidly, so rapidly that some called it a "bubble". The CA conservative then decides to move and puts his house on the market. Is it moral for him to sell his house at a price that exceeds his cost?
"I really don't mean to sound ignorant, BUT...How can there be a lack of refineries if there's no lack of gas? If we lacked gas we'd see closed gas stations. No? What is the state tax on a gallon of gas in CA?
This is not a flame, but a true question."
That is a very good question. If domestic refining capacity is inadequate, which it is, there are only two other sources of gasoline. First, inventory drawdowns. Motor gasoline inventories have been declining for months. Second, imports. Motor gasoline imports to the US have been increasing for years.
Don't take my word on it, though. Check out eia.doe.gov, which has complete statistical information on petroleum products capacities, supply, demand, and inventories.
I understand about the replacment cost explanation, but under that theory, if the retailer bought gas at $3.00/gallon, but knows his next shipment will only cost him $2.00/ gallon, he should immediately lower his price on the gas he has already purchased, right?
The only point I am making is that the companies that sell gas raise their prices sharply any time there is any blip in the market, and they take forever to lower them again, in order to maximize their profits. In general, there is nothing illegal or immoral about that, it's just annoying. Where it can cross the line into immorality is if you use a national or even a local disaster as justification for profiteering.
I don't think that WW II style rationing is what most folks have in mind. I can't imagine anything short of thermonuclear war that would lead politicians to legislate the rationing of gasoline. I think that the feds even destroyed the gas rationing coupons that they printed up back in 1979.
A wee bit of an explanation for you. Read the whole thing and you'll find out why almost all Oil Companies are seeing record profits. Even for the vertically integrated ones like Conoco, the vast majority make money on wells, not selling gasoline. It's prices, not gouging.
http://www.freerepublic.com/focus/f-news/1480411/posts
No. Reducing prices under those circumstances only ensures that he'll lose money on his last shipment. Just take the 10,000-gallon example that I provided and look at two specific examples (wholesale prices rising from $2 to $3, and wholesale prices falling from $3 to $2). If you carry through the computations both ways, you'll see that the prices are far more flexible on the "up" side than on the "down" side -- which explains why prices of commodity-based products rise much faster than they fall.
Regardless of whether the wholesale price rises from $2 to $3 or falls from $3 to $2, in my example the retailer is spending $50,000 over a two-week period for 20,000 gallons of fuel -- an average wholesale cost of $2.50 per gallon. Charging $2.25 per gallon in either case is a losing proposition -- regardless of which "delivery" you're talking about.
Where does supply and demand come in when the supply is artificially controlled in order to affect price. IE, do they really think Americans are that stupid...
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