Quote:
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Originally Posted by Yakk
So, you have 100,000 gallons of gas in your underground tank. You bought it last week for 3$/gallon.
Next week, you can buy gas for 4$/gallon.
Someone comes by, and offers to buy 100 gallons of gas from you at 3.25$/gallon. Do you sell him gas?
1> You sell him gas. You earn 325$, and place it in a bank account that earns 6%/year. Next week, you have to buy 100 more gallons of gas. You earn 36 c in interest, and pay 400$ more for gas next week.
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I'm not sure I follow...
Once you cut into the gas reserve you bought at $4/gallon, don't you just raise the price of gas sold at your station to compensate? Then you can sell the 100 gallons you bought at $4/gallon for $4.25/gallon and still earn the same profit-wise, right?