How to spot the gas crook

[JPatrick]

As of 1020 CST today the Lundberg survey of gas stations accross the country show almost no change in the price of gas at the retail or wholesale level.  However, the surge is bound to come perhaps by this afternoon.
Sooo,,strong possibllity that if your station woke up this AM and popped the price he/she is likely to be in the minority of those who did and perhaps not your friend.
If they say the cost went up the chances of that being true are slim.   Reading the tea leaves sure, actual fact, nay.

Either way sooner or later the spike is coming.

 

[MasterBlaster]

I'm not sure what your point is/was ?

If you think that because gas has been cheap that you are entitled to fill up your SUV and not break that $20 then I'm afraid you are just wrong.

Why should the gas staion sell something to you for less than the going rate ?

Lets change this around. I think you should sell your house for exactly what you paid for it 25 years ago. Otherwise you are a crook !

 

[Telly]

I haven't been out to see what today's overnight gas price profiteering looks like.  I don't think I'll make a special trip just to do that, it would be sort of counter-productive 

Wait a minute, wouldn't the overnight raising of gas prices by 10 cents a gallon on gas in the underground tanks be the real "counter productive"?  Just depends which side of the counter you are on 

 

[SteveR]

It has always amazed me how tolerant most people are of immediate price changes on some items like gas and gold jewelry for example. The gas at the gas station and in the delivery truck from the storage facility and in the tanks there and in the refinery distribution system etc. were all "bought" at difference prices depending on the day the actual oil was purchased. Same goes for gold. How did we go from a retail system of paying the cost of an item (when purchased by the actuall final seller plus profit margin) to a system of "commodities" trading at the pump? Immediate price increases for gas already purchased by the gas company at a lower price seem to me to be price gouging. The fact that all the gas stations raise their prices together seems to be price fixing. We don't have much choice but to pay up so we do and they snicker all the way to the bank. No real message here other than just blowing off some steam.

 

[JPatrick]

I'm not sure what your point is/was ?

If you think that because gas has been cheap that you are entitled to fill up your SUV and not break that $20 then I'm afraid you are just wrong.

Why should the gas staion sell something to you for less than the going rate ?

Lets change this around. I think you should sell your house for exactly what you paid for it 25 years ago. Otherwise you are a crook !

Here's my guess
You are.....
a. A gas station owner
b. The typical naive American consumer
PS. I don't drive a SUV and I have read "The Millionaire Next Door"

OK, that response was a little harsh
Your question was....What's my point
The really short version is, that if a gas station woke up at first light today and ran out and raised the price of gas cause a hurricane was about to hit....well this guy is probably gouging you. Why you ask?
Well because the decision to raise prices at that time was likely not based on anything but greed because no data was available at that time.  As the hurricane is assessed today you shoulfd THEN expect a price increase.  I called a major chain in our area and that is exactly what they said.

 

[brewer12345]

The really short version is, that if a gas station woke up at first light today and ran out and raised the price of gas cause a hurricane was about to hit....well this guy is probably gouging you. Why you ask?
Well because the decision to raise prices at that time was likely not based on anything but greed because no data was available at that time.  As the hurricane is assessed today you shoulfd THEN expect a price increase.  I called a major chain in our area and that is exactly what they said.

Even before the hurricane hit, gasoline, natural gas and crude all shot up 5 to 20% in the overnight futures markets. Retail prices are a function of wholesale prices (as seen via the futures) plus taxes plus whatever spread the distribution chain and retailers charge. The time between futures market changes and retail market changes may fluctuate, but the magic of competition tends to keep retailers honest.

People in Florida, etc. might as well just park their cars now. Ain't gonna be an easy way to replace all of the capacity the storm knocked out.

 

[retire@40]

Here's my guess
You are.....
a. A gas station owner
b. The typical naive American consumer

OK, that response was a little harsh
Your question was....What's my point
The really short version is, that if a gas station woke up at first light today and ran out and raised the price of gas cause a hurricane was about to hit....well this guy is probably gouging you.

Well, I'm neither a nor b, but if I feel a gas station is trying to gouge me with their prices, I would simply not buy there and go to the next gas station across the street.

Gas stations should be able to charge whatever they want.  If they overcharge, they will lose customers.  I've seen it happen a few times in my area, especially when a new owner takes over and thinks they can simply raise the gas price a few more cents to eek out a little more profit.

One guy I know that sells gas always keeps his prices a penny or two below his competitors because he realized that volume will more than make up for a smaller margin.

 

[JPatrick]

Bless you retire@40!!

 

[nfs]

The really short version is, that if a gas station woke up at first light today and ran out and raised the price of gas cause a hurricane was about to hit....well this guy is probably gouging you. Why you ask?
Well because the decision to raise prices at that time was likely not based on anything but greed because no data was available at that time.

Who cares? Should people be able to charge what the market will bear or not? If not, then what gives you the right to ask for a raise?

As the hurricane is assessed today you shoulfd THEN expect a price increase. I called a major chain in our area and that is exactly what they said.

I have news for you. The person you talked was a p/r flack and p/r flacks won't say anything politically incorrect.

CNN this morning carried the news that Louisiana's attorney general had already received complaints about price gouging. It's all being investigated thoroughly because that's the politically correct thing to do. What the attorney general's office should have used as a script is, "When things get destroyed, the price of items needed to fix the problems should go up. Plywood, glass, shingles, the average plumber's hourly rate, lots of stuff. Anyone who doesn't understand that is stupid. Now go suck an egg."

That holds for you and the price of gasoline too. If 1/4 of domestic oil production and 1/3 of domestic refining capacity has to be shut because of a storm - and that had already been done in an attempt to mitigate damage - then the price of gas to you should rise. If there is no serious damage, then prices will fall back. You sound like a person pissed because you didn't have the sense to fill your tank three days ago. Get over it.

 

[JPatrick]

You sound like you would thrive in a few third world countries I could name.
But my goodness---That "go suck an egg" comment is a little over the top--
Last time someone said that to me was the time I took a wrong turn and stumbled into a male lingerie party.  Hmmm, you don't suppose.

OK, board members I've gotten the collective message- - -
*Gas is cheap
*This oil stuff is all above board
*Business is business

You win---no more oil posts from me--I'm off to buy a gas station.

 

[Telly]

OK, board members I've gotten the collective message- - -
*Gas is cheap
*This oil stuff is all above board
*Business is business

You win---no more oil posts from me--I'm off to buy a gas station.   

No, no, no.  You buy up lots of bottled water and take it into the devastated area.  Then you sell it to the unfortunate residents for $5 per half-liter bottle.
The residents will be overjoyed.  They will understand, after all, it is just the law of supply and demand.  Just business. 
Might want to tack on a extra $1 a bottle for a Medical Plan, to cover broken spine, fractured pelvis, severe head injuries, etc.  But what the hey, business can get down and dirty sometimes! 

 

[JPatrick]

No, no, no.  You buy up lots of bottled water and take it into the devastated area.  Then you sell it to the unfortunate residents for $5 per half-liter bottle.
The residents will be overjoyed.  They will understand, after all, it is just the law of supply and demand.  Just business. 
Might want to tack on a extra $1 a bottle for a Medical Plan, to cover broken spine, fractured pelvis, severe head injuries, etc.  But what the hey, business can get down and dirty sometimes! 

I'd say you're on the right track Telly.  But you'd best hurry, I'd bet that "nfs" already has a dozen bottled water and egg suckin stands in operation.
I'm with you on your business plan- - -screw um over good. They deserve it. Afterall it's not our fault they live in a hurricane zone.  The downtrodden are just so damned annoying.

 

[retire@40]

...I'm off to buy a gas station.

I wouldn't do that if I were you.  All you will hear is people bitchin at how expensive gas is as you're pumping making 11 cents a gallon gross profit.

 

[justin]

I wouldn't do that if I were you. All you will hear is people bitchin at how expensive gas is as you're pumping making 11 cents a gallon gross profit.

That is true. The station owners have a tiny gross margin on gasoline sales. The place they make their money is the convenience items - milk, diapers, snacks, cigarettes, etc. That bottle of water you bought for $1.19? 300% gross margin.

$0.89 for a candy bar? 200% gross margin.

 

[JPatrick]

That is true.  The station owners have a tiny gross margin on gasoline sales.  The place they make their money is the convenience items - milk, diapers, snacks, cigarettes, etc.  That bottle of water you bought for $1.19?  300% gross margin.

$0.89 for a candy bar?  200% gross margin.

Well this will rile a few folks up, but if you ever want to spank the "O" companies just convince everyone to stop buying the crap inside the store.  That may actually push a few more folks towards FIRE. 8)

 

[HFWR]

Stop buying gas if you want to get big oil... Stop buying the other stuff if you want to hurt a small business and it's employees.

They don't call 'em "convenience stores" for nothing...

 

[justin]

Well this will rile a few folks up, but if you ever want to spank the "O" companies just convince everyone to stop buying the crap inside the store. That may actually push a few more folks towards FIRE. 8)

No way! I want people to keep buying high gross margin crap at the convenience store. These consumers are helping the gas stations keep gas prices "low" (low gross margin). If gas stations couldn't make their money off of convenience items, they'd have to make their money off of gas.

 

[haha]

What's my point
The really short version is, that if a gas station woke up at first light today and ran out and raised the price of gas cause a hurricane was about to hit....well this guy is probably gouging you. Why you ask?
Well because the decision to raise prices at that time was likely not based on anything but greed because no data was available at that time.  As the hurricane is assessed today you shoulfd THEN expect a price increase.  I called a major chain in our area and that is exactly what they said.

Whatever your point may have been, the effect of your post is to demonstrate that you don't understand the pricing of a product in a free market.

You don't base prices on what you paid; you base them on what you can get. If that isn't enough to cover costs and profit over time, you shut down. If the profit is huge, you hang on to some of it, because competition will arrive to make it much less huge.

Haha

 

[JPatrick]

Whatever your point may have been, the effect of your post is to demonstrate that you don't understand the pricing of a product in a free market.

You don't base prices on what you paid; you base them on what you can get. If that isn't enough to cover costs and profit over time, you shut down. If the profit is huge, you hang on to some of it, because competition will arrive to make it much less huge.

Haha

This post is to make two points.
First, while retail/marketing/economics has never been in the same universe as rocket science, there does exist a level somewhat above the Dick and Jane understanding that you have demonstrated with your post.
Second, I have violated my former assertion that I would post no more regarding the subject of oil stocks, markets, etc.  I shall try to do better commencing now.

 

[haha]

This post is to make two points.
First, while retail/marketing/economics has never been in the same universe as rocket science, there does exist a level somewhat above the Dick and Jane understanding that you have demonstrated with your post.
Second, I have violated my former assertion that I would post no more regarding the subject of oil stocks, markets, etc.  I shall try to do better commencing now.

Well, I say!

Ha

 

[nfs]

Last time someone said that to me was the time I took a wrong turn and stumbled into a male lingerie party. Hmmm, you don't suppose.

Extra, extra, read all about it.

Millennia of economic behavior and centuries of economic theory conclusively refuted by an allusion to cross-dressing. No facts, no arguments, no debating skills required.

 

[MooreBonds]

No, no, no. You buy up lots of bottled water and take it into the devastated area. Then you sell it to the unfortunate residents for $5 per half-liter bottle.
The residents will be overjoyed. They will understand, after all, it is just the law of supply and demand. Just business.
Might want to tack on a extra $1 a bottle for a Medical Plan, to cover broken spine, fractured pelvis, severe head injuries, etc. But what the hey, business can get down and dirty sometimes!

Funny how when you go to a ballgame and pay $6 for a can of beer or $4 for a bottle of water, no one calls their attorney general to complain of gouging...

 

[bogart]

Why the assumption that there is a free market for gasoline at the supplier level?  I think I'll go slug it out with Exxon/Mobile.  Silly, isn't it?  Essential commodity, near-zero elasticity of demand with respect to price, and an oligopoly -- calls for some intervention in a sane society.  Not the same conditions at all for beer and bottled water.

 

[kayelem]

Hmmm....not sure I agree with your example.  For example, counting all brands Anheuser Busch has a 50% beer market share (if Wikipedia is correct).  Looking at ExxonMobil's annual report and the API web site it looks like they have about 34% of US refining capacity (not the largest), and sell about 14% of all the petroleum products in the US.

And you do know that all those bottled water brands like Poland Springs, Deer Park, Ozarka, Calistoga, Zephyr Hills, Arrowhead, Ice Mountain, etc are one company (Nestle).  Then you have Dasani (Coke) and Aquafina(Pepsi).

 

[bogart]

Hi, Kay -- oligopoly is only one aspect of the situation.  Maybe the beer market is an oligopoly, too.  Let's suppose so.  However, others aspects of the situation mentioned in my post include "essential commodity" and "near-zero elasticity of demand wrt price."  Let me propose a thought experiment:  case (1) -- all gasoline is cut off in the USA for one year, vs (2) all beer is cut off for one year.  Case (1) probably results in significant breakdown of the society, whereas case (2) is an inconvenience for some people.  Beer drinkers switch to bourbon, or stop drinking, or brew their own beer (I've done it myself -- low barrier to entry in the beer market).  Same kind of thing with bottled water.  Use municipal water or well water instead (I've done both myself).  My conclusion is that a rational society will be more likely to intervene in the gasoline market than in the beer market.  That's why some people complain to the gummit about gasoline prices, but hardly anyone goes this route with beer or bottled water prices.