Posted on 12/03/2004 8:59:04 AM PST by Ernest_at_the_Beach
OK, I'm not going to chase this around in circles, but here goes: No-one will sell BELOW the price of replacement, because if he would, he is better off simply not selling. I should have been clearer: the MINIMUM is the price of replacement.
OTOH, No-one's in a hurry to take a loss on buying gas high and selling low. THey'll wait to see that the price of gas doesn't bounce right back. No-one is going to be saying, "Woo-Hoo! I sold all my gas!" when they sold it for less than their costs, and then they have to refill for more than their sale price again.
If you were running a retail operation, would you agree to mark up your products by that small percentage?
And if your cost then rose by 3 cents per gallon overnight, what would you do?
Go back read and think about the original question then get back to me if you would like. You may also want to look at the discussion w/ Dangus.
Thanks - makes sense, but it does follow that they are making increased profits by being cautious in their pricing (at our expense) - but then that's business eh?
You have not made your case. This is a matter of a station trying to make a profit. As everyone who has ever been in a position of bottom-line responsibility knows, you do what you can to make your profit projections.
I am not saying, however, that you'll never see a case of price gouging at the station level. We had one right here in my town on September 12, 2001. I haven't done business with that station since.
Sheesh, I wasn't making a case, I had a suspicion and was asking a question. I think this was obvious in the interchange dangus and I had (Thanks d). Please read more carefully, and if you want to pick a fight go to an evo thread.
Sure, whatever you say.
How DARE you question authority! :^P
hehehe. :^D
By the way, I love this line:
"if you want to pick a fight go to an evo thread."
I might also suggest trying,
"101 reasons why Catholics are idolators" or
"No one is saved by faith alone."
Cheers!
But to be clear... they don't profit from price fluctuations, the greater lag after a price drops probably roughly covers the cost of the driver burning off his tank rather than tapping it off while the price is still high.
Thanks SbG, for being an example of how I should have behaved.
What I was seeing didn't make cents to me (took it, actually) that's all. Most of the issues you raised were wrapped into the ongoing discussion. I know the profit margin for stations on gas sales is very slim (except for those taxing it, of course) and I was not begrudging station owners their profit.
Dangus - I still don't buy the rationale - based on our prior exchanges the pump price either follows replacement cost or price paid (+profit) or combines the two. If the station follows replacement cost on the upside and price paid on the down they increase profit. If they reverse them they loose out. If they follow one or the other exclusively the profit per gallon is steady, but income will fluctuate depending on shifting demand. The comment that people will hold off as the price drops doesn’t wash to me. Would not those same people be filling up fast on the increase side? That would be when Joe Citgo is getting replacement cost delta for the profit margin. Back over on the down side, if Joe is still getting actual+profit he is not losing when Scott skinflint finally fills up. I can see profits dropping when people avoid discretionary driving and use less gas, and the roller coaster we’ve been kickin’ around may offset that, but I don’t think it goes beyond that. Even so, the need to cover fixed costs helps me put the “get ya coming and going” aspect of it into perspective. I plan no protests in front of any gas stations in the near future.
lol...this economy can't win for losing. When oil prices were high it was a sign that things sucked. When oil prices go lower, it's a sign that things really suck. It's a GOOD thing that oil prices are low. That makes everything that depends on oil in our economy (which of course is everything) cheaper which should fuel even more growth.
$1.76 today in west Michigan when I filled up...lowest I've seen in quite a while.
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