Can someone please explain the economics
- Thread starter PieterCoetzee
- Start date
PieterCoetzee
Custom
Im prepared for the cost of NEW gas going up but somehow Im forced to accept the current gas prices being raised BECAUSE the new gas is going to cost more.
Mt analogy of the food in my freezer IS applicable. YES new food will cost more but the only reason to raise current gas is because they can. The mindset that its OK to do it and the buyers will just accept it is criminal, maybe not prosecutable but criminal.
The problem is I cant buy gas when its cheap and store it so I'll always have it. The gas companies know that so they just get to smile at us as they count our money
The "insurance" thing is just smoke. Any increased cost is for NEW gas.
PieterCoetzee
Custom
NO I wouldnt HAVE to sell it at the higher cost. An honorable seller who continued to sell at the "current" price and then who was forced to charge more as his costs rose, would be remembered by his customers
Anchorite
Custom
There is not a finite amount of finished gasoline product supplied in the US daily. You also have what's referred to as disposition accounts for how crude oil and petroleum products are transferred, distributed, or removed from the supply stream including stock changes, refinery inputs (ie, stuff to make the fuels at a particular octane, sulfer level, etc.) , exports, and products supplied for domestic consumption.
That data is used in pricing models. So no, it ain't easy.
PieterCoetzee
Custom
With respect, that has NOTHING to due with the price of the gas already at the pumps. On the morning of 9-11-01 if you rushed to the gun shop, how would you have felt if you watched the employees adding a zero to the cost of everything on the shelf?
Once again, I get, and I bet everyone accepts, the price of NEW incoming gas going up, just not the stuff already at the pumps. There is NO justification for THAT
HayesGreener
Ronin
I get what you say but I don't think the economics work that way. I don't like it either.
I look at it from the theoretical farm perspective. If the cost of hay and corn or transport for cattle goes up today, I am raising the price of beef on the hoof tomorrow. It may be months before that steer is steaks in your grocery store, but that increase will show up in the grocery store right away. It's a pretty short lead time from farm to table.
Where "new" or "old" gasoline is concerned, on any given day in the U.S. we have about 3-4 weeks of gasoline on hand. We are approaching halfway through that since hostilities started.
I expect costs to fall pretty quickly once the Gulf is secured
I look at it from the theoretical farm perspective. If the cost of hay and corn or transport for cattle goes up today, I am raising the price of beef on the hoof tomorrow. It may be months before that steer is steaks in your grocery store, but that increase will show up in the grocery store right away. It's a pretty short lead time from farm to table.
Where "new" or "old" gasoline is concerned, on any given day in the U.S. we have about 3-4 weeks of gasoline on hand. We are approaching halfway through that since hostilities started.
I expect costs to fall pretty quickly once the Gulf is secured
PieterCoetzee
Custom
OK lets take a look at your farm analogy, customers dont pay for your produce and beef UNTIL you sell it, so you price it accordingly at the time you sell it.
Yes I understand that we have a limited amount of gas on hand. Thats my point, the cost of producing t was already set and paid for when it was delivered. Raising it after delivery is gouging. Once new gas is produced the price can be set according to the cost to get it from the sand to the pumps. Nobody minds a profit, thats how things work. Gouging is criminal, trying to cover it up with smoke is propaganda and conspiracy
We are a petroleum based society even the electric car owners are part of it when they charge the e-car. Theres no getting around the need to buy gas. If this was one company, we could price shop and pick where to buy BUT its not, its the industry
Belt Fed
SAINT
It has always been that way, nothing new. i agree it ain't right but it's always went up regardless of what they paid for it in the tanks.
Anchorite
Custom
Sounds like you're complaining of price gouging while not considering supply and demand. Let's take your 9/11 example and tease that out.
Ask yourself this question......if an AWB was passed by Congress and applied nation-wide tomorrow, would you expect to see the price of AR15s DECREASE? Of how about any magazine having more than 10 rounds? Would those prices fall too? Or should retailers just sell their inventory at the price listed at the time of the implementation of the bill?
BOTH are subject to supply and demand pressures, and subject to replacement costs.
HayesGreener
Ronin
PieterCoetzee
Custom
Fair enough
jumpinjoe
Hellcat
"The problem here is that this is all the gas stations" ... yep, all the gas stations have to buy gas from the same suppliers, and all at the same price. Gasoline, and other crude refined products are a world-wide commodity, not a local one.
jumpinjoe
Hellcat
Ahhh, that's just wrong. Wrong but true!
Annihilator
Hellion
Heard on the news, we have plenty of oil, but our friends and allies are the ones who have the problem with that straight being closed down, so this administration is more concerned with them instead of the US, this is one reason for the high gas prices, personally who cares about them, let them solve their own issues, so I guess the USA doesn’t come first in this situation……
jumpinjoe
Hellcat
With due respect, are you saying seriously that you are willing to take the hit on your increased costs of the meat to replace what you sold? In other words, you're willing to take a loss even though you knew it would be a loss before you did it? It has very little to do with "honor" ... it has to do with facts of life (supply and demand). Yeh, there are probably some stations out there somewhere that intentionally add another penny or two to a gallon, then claim it all comes from the rising price of crude. But the vast majority are honorable businessmen and do what they have to do to survive. I earlier explained that most gasoline stations make only pennies on the gallon of gas. Either they pay the new, higher cost to refill their tanks, or they have none to sell to the consumer. You're the consumer friend, and you'll have to park your car/truck because you're out of gas. Think it through.
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jumpinjoe
Hellcat
Well said ... great example.
jumpinjoe
Hellcat
Even better said!
PieterCoetzee
Custom
Thats NOT what Im saying. I never said that
Im saying Id sell the existing inventory at the pre increase price, Then raise the price to cover the difference for the new/higher priced inventory. Thats what I saw happen with ammo (at one shop) during covid, and people remembered that they werent being screwed at that shop. They also remembered the shops that took advantage of them
Every station thats increases the price of the on hand inventory IS doing it
Yes you did explain it. The pennies is their profit margin, I have no problem with a reasonable profit. I want them to make a profit. I have no problem with them raising the price when the new gas arrives. To use the ammo analogy, sell the existing inventory at the profit margin from when it was bought Then when the new higher priced gas arrives, charge the price based on that same profit margin but at the higher price. You dont raise the price of todays inventory because the next delivery will be more
I think we have taken this topic as far as we can