today I have reached a new level of anger

[18rabbit]

Re: today I have reached a new level of anger

if u was sellin widgets for $1.00 and your cost was $.50ea and for some reason, the cost went up to $.75ea, u would raise sales price to cover actual stock replacement costs right?

MY – that’s how gas stations work. But they don’t realize a fixed profit, i.e. 50-cents per widget; they have a “profit margin” or a percentage of profit they realize.<br /><br />If they are making a fair net income on a 20% profit margin when gas is at $1/gal, they are dropping 20-cents in their pocket for every gallon of gas they sell. When the cost of crude increase and the wholesale price of gas increase, they pocket more profits. They still realize their 20% margin, but now at $2/gal…they are now dropping 40-cents in their pocket for every gallon of gas they sell. 100% increase in profit without having to incur any additional risk or capital outlay.<br /><br />For the gas station to make the same fair profit, without a windfall benefit from increasing crude oil prices, they would be selling their product at $1.80/gal, not $2.00/gal.<br /><br />When this practice is related to a product that is a necessity (you can argue whether or not gas is a necessity) it is called “price gouging.” This is why certain markets are government regulated, to stabilize a fair profit regardless of fluctuations in raw materials/supplies. While it does affect “free enterprise” it also guarantees solvency of the business…kind of a trade off between the lesser of evils.

 

[Skinnywater]

Re: today I have reached a new level of anger

Forever the excuse was that US oil was more expensive to pump and produce. That was why the wells were capped and we bought and used the cheaper imported crude.<br /><br />Now that the imported oil is expensive the domestic wells remain capped??<br />Kinda like the coffee and sugar crops being ruined by killer frosts. Yet most of the coffee and sugar is grown real close to the equator.<br /><br />BTW, Mexico, an OPEC producer. We support the entire economy, forgive massive banking debts to prop up the peso and export good manufacturing jobs. All for the pleasure to pay $40 a barrel.<br /><br />Funny, profits and gouging have become synominous.

 

[SlowlySinking]

Re: today I have reached a new level of anger

Gas price jumps!! Yesterday I stopped at a gas station convenience store for coffee, between the time I arrived, drank the coffee and was leaving the pump prices were changed twice. NEXT time I'll gas up when I arrive, har-de-ha-ha.

 

[Pascal]

Re: today I have reached a new level of anger

yabut that'll be when the prices are dropping

 

[kd6nem]

Re: today I have reached a new level of anger

Rabbit, Know anyone with a gas station? Your "for example" made a good point, though from what I understand from a friend who is a local independent distributor the markup is nowhere near the normal retail 20% there. (He thought maybe 3 or 4 cents per gallon) They make a lot more in their mini marts than they ever would by selling gas, so says he. Hard to explain how some remote towns have cheaper gas than some near the plant. Some towns ten mile apart have major price differences. I see the same level of competition, same economy base, same volume of traffic- nothing I can figure explains it. Seems to be no rhyme or reason. Is there a bunch of backroom dealing or is it that some executive decides with a dartboard? What I want to know is what markup do the refiners take?! My imagination tells me that OPEC may not be the only ones "gouging". Not everyone making a profit is gouging. Much above 20% and it is though, IMO. Especially when there is no competition because it was monopolized out of existence or back room arraingements have been made between corporations. I have no proof, though, darn it. Maybe it really is just that there are so many hands in the supply chain that it costs that much to pay everyone.... Nah, sombody must be getting richer than they deserve! I have no idea, but I'd sure like to find out. Oil companies don't seem to be too free in explaining the dynamics of how this works.

 

[mellowyellow]

Re: today I have reached a new level of anger

rabbit said: <br />"If they are making a fair net income on a 20% profit margin when gas is at $1/gal, they are dropping 20-cents in their pocket for every gallon of gas they sell. When the cost of crude increase and the wholesale price of gas increase, they pocket more profits. They still realize their 20% margin, but now at $2/gal…they are now dropping 40-cents in their pocket for every gallon of gas they sell. 100% increase in profit without having to incur any additional risk or capital outlay."<br /><br />it's the cost to replace that gallon of gas that<br />causes them to raise the price. if the opposite<br />happens and crude goes down, they lower their<br />price even if the cost of gas they already have<br />cost them more. 3-4 cents a gallon is about right<br />for actual profit I believe.

 

[kd6nem]

Re: today I have reached a new level of anger

Doesn't it seem like the prices go up a lot quicker than they fall whenever there is a chance in the price of crude?

 

[PW2]

Re: today I have reached a new level of anger

Milo,<br /><br />A few years back, when I was for a short while working in Gravenhurst, just north of you, in vacationland for the Toronto area, they'd raise gas prices some 15 cents a litre on Thursday afternoon, and lower it again come Monday afternoon. Every week.<br /><br />I do get a kick out of some of the strange economic theories floated around election time, on both sides. Like releasing the strategic petroleum reserves will somehow lower the price of gas, or imposing tariffs on various commodities like steel or lumber or the like will save jobs.<br /><br />Everyone wants simple answers to complex problems, and unfortunately, they don't exist.<br /><br />And to examine the plywood example, I have been trading commodity plywood for several decades, and I will assure you that the cost of production of plywood has almost nothing to do with the price it is sold at. The only time that changes is when the price goes down so low, or the costs go up so high, that it costs less money to shut down a plant than it does to operate it. Other than that, you produce it for as little as possible, and you sell it for as much as the market will bear. It is called supply and demand.<br />And you hope, at the end of the day, you sold it for more than it cost you to make it.<br /><br />Any commodity works in precisely the same way, except when the government steps in a subsidises a market.<br /><br />It reminds me of a project by a company in Canada that wanted to take billions of gallons of water out of Lake Superior and bottle it and sell it, and when informed there was an international treaty with the US for uses of the water, the Canadian company, along with some well known politicians on the Canadian side, argued that the treaty should not apply, since all the water was being taken off the Canadian side of the lake.<br /><br />I guess the theory was that the water would respect the border, and the water on the American side would not migrate over to the Canadian side to fill the void.<br /><br />Their plan was scrapped, BTW.

 

[POINTER94]

Re: today I have reached a new level of anger

PW2,<br /><br />Good insights. I don't exactly know why gas is going up at the rate it is but I would agree that supply and demand has a large impact on it. With the emergance of increased demand in third world countries, supply is adversely impacted and must be having an impact on the price of this world wide commodity...

 

[Bondo]

Re: today I have reached a new level of anger

Originally posted by Boomyal:<br />

Originally posted by rogerwa:<br /> Boomyal, Keery actually voted to fix our woes before he voted against fixing them..

<br /><br />Yeah, I know, or at least something like that. He wanted to bleed our strategic oil reserves to bring the price down.

Yep.......<br />Kerry wants to use up the strategic oil reserves to bring the price down...........<br />But,<br />He Doesn't want to Repeal the Federal Taxes on it.........<br />That Alone would Cut the Price in Almost HALF ........................<br /><br />Let's talk about the Real Price of Gas........<br />It's the TAXES on it.............<br />Federal......<br />State.........<br />Local...........<br /><br />1/2 of what You're Paying is TAXES................ <br /><br />Does Anybody Remember the "Wind-Fall Profits Tax", signed by another Liberal, Jimmy Carter....................<br />It's Still There.....<br />And, <br />You're Still Paying It................

 

[PW2]

Re: today I have reached a new level of anger

You are correct about third world countries, especially China.<br /><br />China's economy is booming, and energy use there is going to grow exponentially.<br /><br />And decreasing the tax on fuel is at best a short-term band-aid approach to what is clearly a long-term problem.<br /><br />What really should be done, IMO, is that they should raise the taxes on fuels, and dedicate the revenues to accelerate development of an alternate energy source (such as hydrogen) and dramatically improve the public transportation infrastructure at whatever it costs to make public transportation usable, cost effective, and efficient.<br /><br />Then forget all the CAFE standards, and let people buy whatever vehicle they want, at whatever mileage it gets, and when you watch a Hummer go by, you can rest easy knowing that they are helping fund that new train system that many can and will take advantage of, and which will ultimately lower our energy usage.<br /><br />This will go a long way to decreasing use non-renewable fossil fuels, and offer some semblance of a plan for the future.<br /><br />I know this plan would be political suicide, and no one, on either side, would publically endorse it, but it is the only one that makes any sense in the long run.<br /><br />All of the other plans require the discovery of more and more oil reserves in order to maintain our current lifestyle, and at some point in time, that is simply not realistic.

 

[miloman]

Re: today I have reached a new level of anger

after reading all of these comments it seems that I was correct in being mad.

 

[18rabbit]

Re: today I have reached a new level of anger

I get a kick out the *****-wetting liberals that chant their “Cheney & big oil money” mantras. Clinton authorized the sell off of the strategic oil reserves as no longer being necessary. The company awarded the contract to buy the oil at a price significantly reduced from the rate it was trading globally had the Gore family as a principal investor at that time. The oil was resold at huge profit for the investors (Gore family), and a huge loss to the citizens. Last I heard, Bush had initiated efforts to restock the strategic oil reserve.<br /><br />Last year I heard someone say if all the taxes (state & federal) were removed from gasoline, the cost would be below 50-cents/gal. There is certainly room to pull back the tax on gasoline, but with Bush’s request for a $25-billion anti-terrorist slush fund, you can forget it ever happening.<br /><br />Note: the above ***** references a article of common underclothing and is not an offensive word.