Posted on 12/12/2014 2:26:30 PM PST by Olog-hai
So you think you are finally getting one over on the gas stations as you pay well under $3 a gallon for the first time in four years? Guess again.
Gas stations love low prices too—and not just because customers are nicer when they are paying less.
“We’re in the same shoes as the consumer, the cost of fuel is less for us,” says Kevin Beyer, who owns Performance Fuels, a filling station and convenience store in Smithtown, NY.
That means profits for Beyer and the nation’s 127,000 filling stations are rising.
Before they sell gas to you, station owners buy gas on the wholesale market. When the wholesale price of gasoline falls quickly the difference between the cost of wholesale gasoline (including taxes) and the price at the pump gets wider, boosting profits for stations. The steeper the drop, the better. …
(Excerpt) Read more at hosted.ap.org ...
Leftists are SEETHING over the lowering cost of gas.
People will use more! Dammit!
falling gas price is good but one wonders if they are trying to collapse some countries economically....
Gas prices at the pump go up the day supply prices are posted to rise.
Gas prices at the pump take awhile to drop to reflect lower supply prices.
Removing Russia’s monetary power is a good thing,
but not something that BHO would do on purpose.
And AP has just discovered this fact of life. They’re so smart I should get all my news from them!
As long as they keep falling and he can maintain his margins to amortize the price of older, more expensive gasoline still in the tanks, falling prices will be of benefit to station owers. Thanks Olog-hai.
Leftists’ next step in the ongoing war against all of us will probably take the form of getting tobacco sales banned at gas stations.
Reducing Russia’s monetary power is not even something Zero would have even thought of.
>> “Reducing Russia’s monetary power is not even something Zero would have even thought of.” <<
.
But he is working 25 hours a day to reduce ours!
.
wait a minute.....some lo fo idiots really thought the GAS STATION OWNER was making out like a bandit on the high price?
Really?
Ignorance of economics has not limits in this country.
bump
I wonder how many idiots thought gas stations made more money with higher prices... lol
Cheaper gas. Just to frost local eco-nuts, I’m going out to rev my car for a while. Vroom...Vroom!
Well, apart from watching ESPN all morning that is. But the rest of the day, it’s on for owebama!
2.51 now in Ramsey NJ.........Sweeet
Service stations actually make more money on selling snacks, sodas etc.. If the customer doesn’t have to fork over $50 for a fill up they would have money left over for snacks.
Gas prices at the pump take awhile to drop to reflect lower supply prices.
I'll explain this as other folks (I'm sure) have noticed this as well......thinking it a devious scheme to corral more profit by station owners.
Most gas stations purchase gasoline (wholesale) more than once a week. An average station (like mine) will purchase a tanker load about three to four times a week. Each tanker holds 9000 gallons.
Gasoline is a commodity. Definition: Something that cannot be stored indefinitely and must be sold quickly after refining as storing extremely large quantities (in one location) could be very dangerous. The same principle applies to commodities like perishable crops. They must be sold retail at market before they spoil after the harvest.
Many stations hold 35/50 thousand gallons in their underground tanks....some more....some less. Since refined gasoline must have a quick turnaround (3 or 4 days from refining....down the freeway in the tanker to your station....and into the customer's car) the retail price will fluctuate rapidly (up or down) depending on many external conditions. It's traded daily on the commodities market and is subjected heavily to supply and demand.
Commodities are bought on fear and sold when the market calms down again. This is why the price of lettuce, wheat, oil, cattle, etc. skyrocket on bad news....and then drift down again when the markets digest it all. Typical commodity behavior. Unleaded gasoline is no different.
Recently (within the last few months) a load of gasoline (9000 gallons) cost me wholesale about $40,000.00. Its lower now because of the greater supply. I make anywhere from 10 to 15 cents a gallon (gross) depending on the nearby competition and other daily factors. This is my markup no matter what the wholesale cost may be. I make the same amount of money per gallon no matter what I sell it for retail.
When the market goes crazy..... for whatever reason, the wholesale price to me can escalate 5 to 10 cents a gallon every day and the customer will readily see this escalation on the price signs outdoors. If I don't increase my retail price daily in an escalating market I won't make any profit because the profit I do make on the 9000 gallons will be used to pay for the next load tomorrow or a day later.
Example: One tanker load of gasoline purchased on Monday at wholesale $3.33 = $30,000.00. If gasoline goes up .05 cents a day (it does quite often) then my Wednesday load will cost me .10 cents a gallon more. .10 x 9000 = $900.00 so I must pay the refinery $30,900.00 for that Wednesday load. If I had not increased my price daily as the markets reflected then I would not have the cash with which to buy that Wednesday load, i.e. I sell my Monday gasoline at $3.43 (.10 cent markup) which earns me (9000 x 3.43) = $30,870.00. I now have my $30000.00 initial investment back plus $870.00 profit. Of course you can now see the problem. I must pay $30,900.00 for my Wednesday load as wholesale unleaded gasoline has gone up .10 cents a gallon in two days. Thus......my profit is used up (plus $30.00 more) buying the next load. Too many days like this and you won't have any money at all to buy more gasoline because you've been busy paying salaries, insurance, rent, fees, taxes, maintenance and utilities.
This is why the price goes up quickly and I'm sure you can figure out why it comes down much slower. If you're selling the same gasoline at $3.23 a gallon that you paid $3.33 the day before.....you also lose money. You must recoup your investment on the way down....slow as it may seem to the uninitiated. The best regulator of the fair price will always be the competition down the street.
Station owners will make more money when the wholesale/retail prices are low....and stable..... because the volume will be much higher.....and business much more steady.
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