Re: Price Gougeing
 

jim beam wrote:
> L Alpert wrote:
>> TeGGeR® wrote:
>>
>>> jim beam <nospam@example.net> wrote in
>>> news:-fGdnUmByMOl8oveRVn-1Q@speakeasy.net:
>>>
>>>
>>>> twfsa wrote:
>>>>
>>>>> If a gas station owner has a 4000 gal under ground fuel tank, and
>>>>> fills it for lets say a $1 a gal, to make this simple his price to
>>>>> the public is $1.00 per gal.
>>>>>
>>>>> A few days later he figures that there is only 1000 gals left in
>>>>> the 4000 gal tank so he orders 3000 gals @$2.00 a gal.
>>>>>
>>>>> Here's where there ing us, instead of selling that remaining
>>>>> 1000 gals, left over from the initial 4000gal purchase @ a $1.00 a
>>>>> gal, they raise there price to $2 a gallon, for everything in the
>>>>> under ground tank. They just made 100% profit, on that 1000 gals.
>>>>> Then they lie to us saying they only make penny's on the gal
>>>>> profit,bullshit!
>>>>>
>>>>> And thats what they are doing ........most are just raising the
>>>>> price because the guy next door did.
>>>>>
>>>>> Tom
>>>>
>>>> dude, the retailer /is/ making pennies. but the /refinery/ has
>>>> stepped up it's margin to 20%. at $70 per barrel, you do the math.
>>>>
>>>> oh, and don't forget that [unnecessary] oxygenates reduce mpg's so
>>>> you have to buy more of the stuff. and don't forget that we
>>>> subsidize [oxygenate] ethanol production to the tune of billions of
>>>> dollars each year. and don't forget that we're also being asked to
>>>> pay a premium for oxygenated fuel. can you say triple whammy? are
>>>> we getting gouged? sure! but it ain't the retailer.
>>>>
>>>
>>>
>>> It ain't the oil companies either. They don't set the prices, the
>>> markets do. Cartels have some influence on prices by way of
>>> production control, but the primary movers of oil pricing are
>>> political and emotional, and are out of oil company control.
>>>
>>> Oil companies benefit from a run-up in prices, but do not cause
>>> these run- ups. Exxon saw its net profit margin increase from 8% in
>>> 2003 to 9% in 2004 on account of more expensive oil. It's probably
>>> up to nearly 10% now.
>>
>>
>> I find it hard to believe that all of the different companies can
>> come up with the same LOH rate and have the same G&A and operating
>> expenses per gallon of refined product. One would assume those with
>> the higher volume would offset the LOH rates lower.
>
> funny, ain't it.
>
>>
>> Yet, when one drives down the street, company a,b and c all have the
>> same relative retail price. Collusion?
>
> omg!!! kill the heretic!!! no, collusion would be illegal...

<enter the name of your deity here> forbid

Re: Price Gougeing
 

TeGGeR® wrote:
> "L Alpert" <alpertl@xxgmail.com> wrote in
> news:lZCdnTwXW6R0d4XeRVn-iA@comcast.com:
>
>
>>
>> Yet, when one drives down the street, company a,b and c all have the
>> same relative retail price. Collusion?
>>
>>
>>
>>
>
> No, just that operating margins are about as low as they can go.

Yes, but margins are built off of COGS. I work for a fortune 500 company,
and we have sites all over the world. Even amongst sites no one can agree
on the exact same accounting methods for figuring LOH and calculating
operating income (or loss).

I cannot believe all oil companies have the same operating expenses, as cost
per unit produced is based on too many factors, with one of the main drivers
being volume. If company A refines 100MM gallons a week, and Company B
refines 150MM gallons a week, the overall cost per unit should be driven
down. If it is, it sure isn't seen by the consumer.

>
> There IS a floor, you know. People forget this. They tend to think
> that if prices are not highly variable for a commodity, that the
> suppliers are colluding.

Price for the oil is only one factor. Operating expenses, LOH, city, state,
local taxes, health insurance is just a small example of all overhead that
the higher volume manufacturer can use to drive down these other costs in a
commodity business.

Higher volume means more personnel, which means better bargaining for health
insurance, lower prices for volume of ingredients for processing (except the
oil, of course), lower cycle time and more inventory turns. If this isn't
happening, then someone is not doing their job.

Re: Price Gougeing
 

"L Alpert" <alpertl@xxgmail.com> wrote in message
news:3P-dnZ2dnZ0e2oDUnZ2dnVCihN6dnZ2dRVn-yZ2dnZ0@comcast.com...
> Price for the oil is only one factor. Operating expenses, LOH, city,
> state, local taxes, health insurance is just a small example of all
> overhead that the higher volume manufacturer can use to drive down these
> other costs in a commodity business.

True.
But, the biggest determining factor is what the guy across the street is
selling the same commodity for.

Re: Price Gougeing
 

Steve Bigelow wrote:
> "L Alpert" <alpertl@xxgmail.com> wrote in message
> news:3P-dnZ2dnZ0e2oDUnZ2dnVCihN6dnZ2dRVn-yZ2dnZ0@comcast.com...
>> Price for the oil is only one factor. Operating expenses, LOH, city,
>> state, local taxes, health insurance is just a small example of all
>> overhead that the higher volume manufacturer can use to drive down
>> these other costs in a commodity business.
>
> True.
> But, the biggest determining factor is what the guy across the street
> is selling the same commodity for.

The discussion revolves around how stations supposedly make only pennies on
the gallon. If that is true, then all are paying the wholesalers about the
same. The distributed price from all suppliers should not be the same.
There is no true competition in the industry.

Re: Price Gougeing
 

Steve Bigelow wrote:
> "L Alpert" <alpertl@xxgmail.com> wrote in message
> news:3P-dnZ2dnZ0e2oDUnZ2dnVCihN6dnZ2dRVn-yZ2dnZ0@comcast.com...
>
>>Price for the oil is only one factor. Operating expenses, LOH, city,
>>state, local taxes, health insurance is just a small example of all
>>overhead that the higher volume manufacturer can use to drive down these
>>other costs in a commodity business.
>
>
> True.
> But, the biggest determining factor is what the guy across the street is
> selling the same commodity for.
>
>
selling price, yes, but not cost of operations, and therefore net
profit. net profit between two operations/should/ be different!!!

Re: Price Gougeing
 

"L Alpert" <alpertl@xxgmail.com> wrote in
news:8O6dnVqjiYsaUITeRVn-jg@comcast.com:

> Steve Bigelow wrote:
>> "L Alpert" <alpertl@xxgmail.com> wrote in message
>> news:3P-dnZ2dnZ0e2oDUnZ2dnVCihN6dnZ2dRVn-yZ2dnZ0@comcast.com...
>>> Price for the oil is only one factor. Operating expenses, LOH,
>>> city, state, local taxes, health insurance is just a small example
>>> of all overhead that the higher volume manufacturer can use to drive
>>> down these other costs in a commodity business.
>>
>> True.
>> But, the biggest determining factor is what the guy across the street
>> is selling the same commodity for.
>
> The discussion revolves around how stations supposedly make only
> pennies on the gallon.



They do. That's the reason they all operate convenience stores and car
washes. Margins are a lot higher.



> If that is true, then all are paying the
> wholesalers about the same. The distributed price from all suppliers
> should not be the same. There is no true competition in the industry.



You're making a fundamental mistake here in assuming that competition is
manifested as price differentials. It is not, if margins are already very
low, as they are.

In this case, the effects of competition have already been realized. If
there were no competition, the oil company would have margins more like
Microsoft. 27% vs 9%.



--
TeGGeR®

The Unofficial Honda/Acura FAQ
www.tegger.com/hondafaq/

Re: Price Gougeing
 

"L Alpert" <alpertl@xxgmail.com> wrote in news:AvKdnUTCW9PxoITeRVn-
tw@comcast.com:

> jim beam wrote:

>>>
>>> Yet, when one drives down the street, company a,b and c all have the
>>> same relative retail price. Collusion?


Not necessarily. It's just that in this case prices are as low as they can
go without exposing the industry to possible destruction.



>>
>> omg!!! kill the heretic!!! no, collusion would be illegal...
>
> <enter the name of your deity here> forbid
>
>
>


Various governments have already investigated the oil companies many times
over the years, and have failed to find ANY evidence of collusion at all.

Yeah, I know what the conspiracy theorists are going to say, "But the oil
industry has the government in its pocket!". The shenanigans of self-
appointed crusaders like Eliot Spitzer ought to put that silly notion to
bed.


--
TeGGeR®

The Unofficial Honda/Acura FAQ
www.tegger.com/hondafaq/

Re: Price Gougeing
 

"jim beam" <nospam@example.net> wrote in message
news:XeidnUxm--LmSITeRVn-1g@speakeasy.net...
> Steve Bigelow wrote:
>> "L Alpert" <alpertl@xxgmail.com> wrote in message
>> news:3P-dnZ2dnZ0e2oDUnZ2dnVCihN6dnZ2dRVn-yZ2dnZ0@comcast.com...
>>
>>>Price for the oil is only one factor. Operating expenses, LOH, city,
>>>state, local taxes, health insurance is just a small example of all
>>>overhead that the higher volume manufacturer can use to drive down these
>>>other costs in a commodity business.
>>
>>
>> True.
>> But, the biggest determining factor is what the guy across the street is
>> selling the same commodity for.
> selling price, yes, but not cost of operations, and therefore net profit.
> net profit between two operations/should/ be different!!!

Sure.
But we *are* discussing pump price, aren't we?

Re: Price Gougeing
 

TeGGeR® wrote:
> "L Alpert" <alpertl@xxgmail.com> wrote in
> news:8O6dnVqjiYsaUITeRVn-jg@comcast.com:
>
>> Steve Bigelow wrote:
>>> "L Alpert" <alpertl@xxgmail.com> wrote in message
>>> news:3P-dnZ2dnZ0e2oDUnZ2dnVCihN6dnZ2dRVn-yZ2dnZ0@comcast.com...
>>>> Price for the oil is only one factor. Operating expenses, LOH,
>>>> city, state, local taxes, health insurance is just a small example
>>>> of all overhead that the higher volume manufacturer can use to
>>>> drive down these other costs in a commodity business.
>>>
>>> True.
>>> But, the biggest determining factor is what the guy across the
>>> street is selling the same commodity for.
>>
>> The discussion revolves around how stations supposedly make only
>> pennies on the gallon.
>
>
>
> They do. That's the reason they all operate convenience stores and car
> washes. Margins are a lot higher.
>
>
>
>> If that is true, then all are paying the
>> wholesalers about the same. The distributed price from all suppliers
>> should not be the same. There is no true competition in the industry.
>
>
>
> You're making a fundamental mistake here in assuming that competition
> is manifested as price differentials. It is not, if margins are
> already very low, as they are.
>
> In this case, the effects of competition have already been realized.
> If there were no competition, the oil company would have margins more
> like Microsoft. 27% vs 9%.

True competition will foster competitive pricing, of which there is none.
Not every operation has the same expenses, and thus, the same cost per unit
produced, as previously explained.