Can someone explain gas prices - Tilted Forum Project Discussion Community

THGL · 09-01-2005, 09:51 AM

Here's my question. Why are gas stations allowed to raise their prices to current levels when the gas that's in their underground tanks was purchased at a much lower price?

Here's some hypotheticals: Let's say their last delivery was 3 days ago and they paid $2.25/gallon. Their mark-up is .25/gal. so the price to the consumer is $2.50. Why are they allowed to bump up the price 50 cents overnight (current price here in Louisville is $3.19)?

Somone might say that it protects the station from when the prices fall, but in my eyes that's the cost of being in that sort of business. If there's some logical explaination, I'd love to hear it.

MageB420666 · 09-01-2005, 10:01 AM

It's called a free market economy. (although the U.S.A. is not a full free market economy, much of our economy is based on it)

The gas stations can charge whatever they want. It's your choice as to whether your going to buy it at the price they're charging.

Eweser · 09-01-2005, 10:01 AM

I'm happy to say that not all gas stations do this. My husband owns a station and he continues to charge the price of the gas in his tanks until it is refilled.

Lasereth · 09-01-2005, 10:03 AM

I've heard from numerous sources that gas prices are going up due to shortage caused by Katrina. It's illegal to raise gas prices because of a natural disaster. The info that I've heard is that the actual gas is costing the stations this much more, thus increasing the price. It's $3.30 here in Boone, NC.

-Lasereth

Gatorade Frost · 09-01-2005, 10:04 AM

So they can afford the next shipment of gas that's going to be more expensive.

Charlatan · 09-01-2005, 10:20 AM

Quote:

Originally Posted by Gatorade Frost

So they can afford the next shipment of gas that's going to be more expensive.

Now this would make sense if they were paying cash for the gas upon delivery but this isn't the case, is it?

cj2112 · 09-01-2005, 10:21 AM

OK, so the refineries that are affected by the hurricane and and floods are no longer operating, thereby creating a shortage of gasoline in that area. That I understand, however if the roads are underwater, not many people are driving, so less gas is being used, thereby negating the local shortage. I also don't understand why gas nationwide is rising when the refineries in that area only produce gasoline for that area.

guthmund · 09-01-2005, 10:22 AM

Quote:

Originally Posted by MageB420666

It's called a free market economy. (although the U.S.A. is not a full free market economy, much of our economy is based on it)

The gas stations can charge whatever they want. It's your choice as to whether your going to buy it at the price they're charging.

And really there you have it.

I believe George Carlin called it "servicing the customer."

ShaniFaye · 09-01-2005, 10:33 AM

Quote:

Originally Posted by cj2112

OK, so the refineries that are affected by the hurricane and and floods are no longer operating, thereby creating a shortage of gasoline in that area. That I understand, however if the roads are underwater, not many people are driving, so less gas is being used, thereby negating the local shortage. I also don't understand why gas nationwide is rising when the refineries in that area only produce gasoline for that area.

I am just gonna repost what I posted in the "buy gas tonite thread" (may daddy worked for Plantation pipeline for over 30 years and my grandfather worked for Colonial for over 30 years as well)

I can only explain for the south and north east....remember, that even as far away as NJ gets their gas from LA/MS depending on which oil company you're talking about.

Pipeline company lesson #1
Whats happening right now is that the two pipelines that run from texas and louisiana have their main staging areas in Baton Rouge and Pascagoola (sp?) Plantation pipeline runs up thru Virginia, Colonial runs to Linden NJ....from LA/MS staging areas to Bremen GA...the pipes run uphill thus require power for the 8000 hp motors.... The pipes should not be damaged as they lay 12 feet underground, BUT they run up hill from Baton Rouge to Bremen Ga (which is right at the alabama state line). They have no power, there are not many generators that can run a 6k-8k hp motor which is why they are only running a 35%. The line that runs from Bremen GA to Greensboro NC doesnt require power to pump the pipes because gravity does the work for them. The other option they have is to pump straight from a barge, but the barges cant get to the staging areas right now. They are kind of stuck until they can get either power, or large enuff generators to the main staging site.

On a normal day they will pump around 800,000 barrells per day...each barrell is 42 gallons. Right now if they are running at 35% they are pumping 280,000 barrells which would be 11,760,000 gallons a day.

We arent running out of gas....its just taking time to get it here.

Gatorade Frost · 09-01-2005, 10:40 AM

Quote:

Originally Posted by Charlatan

Now this would make sense if they were paying cash for the gas upon delivery but this isn't the case, is it?

I have no idea, but they're still having to pay more for the future shipments at some point so it still makes sense to have them brace for it.

Plus the free market thing does count a little bit too I'd think.

cj2112 · 09-01-2005, 10:40 AM

Quote:

Originally Posted by ShaniFaye

I am just gonna repost what I posted in the "buy gas tonite thread" (may daddy worked for Plantation pipeline for over 30 years and my grandfather worked for Colonial for over 30 years as well)

I can only explain for the south and north east....remember, that even as far away as NJ gets their gas from LA/MS depending on which oil company you're talking about.

Pipeline company lesson #1
Whats happening right now is that the two pipelines that run from texas and louisiana have their main staging areas in Baton Rouge and Pascagoola (sp?) Plantation pipeline runs up thru Virginia, Colonial runs to Linden NJ....from LA/MS staging areas to Bremen GA...the pipes run uphill thus require power for the 8000 hp motors.... The pipes should not be damaged as they lay 12 feet underground, BUT they run up hill from Baton Rouge to Bremen Ga (which is right at the alabama state line). They have no power, there are not many generators that can run a 6k-8k hp motor which is why they are only running a 35%. The line that runs from Bremen GA to Greensboro NC doesnt require power to pump the tanks because gravity does the work for them. The other option they have is to pump straight from a barge, but the barges cant get to the staging areas right now. They are kind of stuck until they can get either power, or large enuff generators to the main staging site.

On a normal day they will pump around 800,000 barrells per day...each barrell is 42 gallons. Right now if they are running at 35% they are pumping 280,000 barrells which would be 11,760,000 gallons a day.

We arent running out of gas....its just taking time to get it here.

This part of it I understand, but I don't understand prices rising here on the west coast, or the rest of the country.

ShaniFaye · 09-01-2005, 10:44 AM

Well I was just explaining why the far NE would be having higher prices....I would imagine that there are pipelines run by other companies that come out to the west coast from the same area, which would in turn be having the same problems, either that of they are just greedy

Yakk · 09-01-2005, 11:38 AM

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.

Total loss: $74.64

2> You don't sell him gas.

Total loss: $0

I think you don't sell him gas.

Instead, you set your prices at some amount above 4$, so when you refill your tank next week you won't lose money.

If prices go down, and you are smart, you do the same thing: if you bought the gas for 4$, and next week the price will be 3$, you sell gas below 4$ and above 3$. This means you lose money -- but you lost the money when you bought the gas. Selling the gas for $3.10 then replacing it for $3 is profitable.

Lasereth · 09-01-2005, 11:38 AM

I put this in the other thread, thought it would go well in this one as well: gas is higher now than it was in the early 1980's gas crisis, even adjusted for inflation.

<IMG SRC=http://bigpicture.typepad.com/./photos/uncategorized/cotd_20050406.gif>

Yay for being part of the worst gas crisis in the history for combustion engines!

-Lasereth

guthmund · 09-01-2005, 12:10 PM

Quote:

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.

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?

ratbastid · 09-01-2005, 12:16 PM

Quote:

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.

Total loss: $74.64

2> You don't sell him gas.

Total loss: $0

I think you don't sell him gas.

You're confusing Cost of Goods Sold with pure cashflow.

If you buy product at price X and sell it at price X + Y, then your profit on that product is Y. Plain and simple. I don't care who's coming with more product next week at price Z. You better price THAT product at Z + Y if you want to maintain your margin. THIS week's product's margin is figured based on a cost of X.

Stompy · 09-01-2005, 01:03 PM

Quote:

Originally Posted by MageB420666

The gas stations can charge whatever they want. It's your choice as to whether your going to buy it at the price they're charging.

That's not entirely true.

Price gouging is illegal in MI, so any stations charging an abnormal amount compared to the average get in deep trouble.

Yakk · 09-01-2005, 01:30 PM

Quote:

Originally Posted by guthmund

Quote:

Originally Posted by Yakk

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.

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?

I explained it mathematically. If you are planning on filling up your storage tank next week at 4$/gallon, then selling gas now at 3.25$/gallon will make you poorer next week than if you chose not to sell it.

In 1 week, do you want to have more money or less money? If you want to have more money, you don't sell your gas at 3.25$.

Quote:

Originally Posted by ratbastid

You're confusing Cost of Goods Sold with pure cashflow.

If you buy product at price X and sell it at price X + Y, then your profit on that product is Y. Plain and simple. I don't care who's coming with more product next week at price Z. You better price THAT product at Z + Y if you want to maintain your margin. THIS week's product's margin is figured based on a cost of X.

You are suffering from the "sunk cost fallicy". Costs you have already spent are spent, and do not directly factor into your future and present profit decisions. Econ 101. =p~

Your assets are "a tank of gas with 100,000 gallons". The price information you care about is "how much will it cost to replace that asset" and "do I want to replace it", not how much you paid for it. How much you paid for it is information that might factor into the other two decisions.

You may decide that it isn't worth your bother to replace that tank of gas next week. If that is true, you could sell for under 4$/gallon. But this only holds if you plan to not refill your fuel tank. If you can sell the fuel in your fuel tank next week for 4$/gallon next week, you should also refuse to sell at 3.25$.

It is a common fallicy to consider sunk costs (money you have already spent) as part of your future profit-maximizing decisions. Doing so loses you money.

Selling that gas at under 4$/gallon makes you lose money, because you'd rather save it and not buy gas next week, if you know the price of gas will be 4$ next week. I don't care if someone walked up to you and gave you free gas last week, or you paid 1$, 2$ or 3$/gallon for the gas last week.

Now, practically, people sell gas at whatever price other people sell gas at. The market just happens to work out something that matches my description of what is going on closer than it matches yours.

Quote:

If you buy product at price X and sell it at price X + Y, then your profit on that product is Y. Plain and simple. I don't care who's coming with more product next week at price Z. You better price THAT product at Z + Y if you want to maintain your margin. THIS week's product's margin is figured based on a cost of X.

Follow that, and you'll be less rich then you should be.

Of course, if you do not plan on nessicarially replacing all of the goods you sell this week, the situation changes massively. In which case, you could quite possibly be right.

Janey · 09-01-2005, 01:32 PM

Because they price according to "future" price. They change the prices according to what they will have to pay in the future, regardless of what they have paid for the current inventory.

And of course, we have to succumb to this practice, because there is no where else to buy gas, and when one station sees the price climb, the next one will follow suit immediately. That's why gas went up 20 cents/litre overnight, and then a further 5 cents/litre the next night.

MageB420666 · 09-01-2005, 01:59 PM

Quote:

Originally Posted by Stompy

That's not entirely true.

Price gouging is illegal in MI, so any stations charging an abnormal amount compared to the average get in deep trouble.

That's why I said the U.S.A. is not a true free market economy. The government does step in somewhat.

But, as the gas stations all raise their prices, the average goes up, so they are allowed to raise their prices even more. Kinda sucks, and because this country is willing to do an actual boycott of the industry, they will keep on charging what they want. And not buying gas for a day is not a boycott. Make it a few months and you'll see how quickly the industry will react.

Cynthetiq · 09-01-2005, 02:32 PM

some places like NJ have rules on how much gas must be in relation to wholesale prices, thus the NJ turnpike had to raise prices midweek instead of on Friday like normal.

eribrav · 09-01-2005, 03:22 PM

Quote:

Originally Posted by Yakk

I explained it mathematically. If you are planning on filling up your storage tank next week at 4$/gallon, then selling gas now at 3.25$/gallon will make you poorer next week than if you chose not to sell it.

In 1 week, do you want to have more money or less money? If you want to have more money, you don't sell your gas at 3.25$.

You are suffering from the "sunk cost fallicy". Costs you have already spent are spent, and do not directly factor into your future and present profit decisions. Econ 101. =p~

Your assets are "a tank of gas with 100,000 gallons". The price information you care about is "how much will it cost to replace that asset" and "do I want to replace it", not how much you paid for it. How much you paid for it is information that might factor into the other two decisions.

You may decide that it isn't worth your bother to replace that tank of gas next week. If that is true, you could sell for under 4$/gallon. But this only holds if you plan to not refill your fuel tank. If you can sell the fuel in your fuel tank next week for 4$/gallon next week, you should also refuse to sell at 3.25$.

It is a common fallicy to consider sunk costs (money you have already spent) as part of your future profit-maximizing decisions. Doing so loses you money.

Selling that gas at under 4$/gallon makes you lose money, because you'd rather save it and not buy gas next week, if you know the price of gas will be 4$ next week. I don't care if someone walked up to you and gave you free gas last week, or you paid 1$, 2$ or 3$/gallon for the gas last week.

Now, practically, people sell gas at whatever price other people sell gas at. The market just happens to work out something that matches my description of what is going on closer than it matches yours.

Follow that, and you'll be less rich then you should be.

Of course, if you do not plan on nessicarially replacing all of the goods you sell this week, the situation changes massively. In which case, you could quite possibly be right.

You Sir are correct.

You've all forgotten about the futures market as well which allows rational price discovery for commodities for future delivery. I'm not sure how many service station owners trade futures to help manage their risk. I do know that essentially all oil and gas producers do. The owner can look forward at any given time and see what future pricing is, and decide if he wants to buy that future production at the offered price. Forget about the idea of paying for the gas as it goes into the storage tank.........that could have been bought and paid for months ago.

ngdawg · 09-01-2005, 03:34 PM

Quote:

Originally Posted by Cynthetiq

some places like NJ have rules on how much gas must be in relation to wholesale prices, thus the NJ turnpike had to raise prices midweek instead of on Friday like normal.

NJ stations also cannot change or raise their prices more than once in any given 24 hours, so many times you may see 3 stations on one road and a difference of 20c a gallon in a given day because of when they last changed the price. Right now, the BP around the corner from me is charging 2.88 but the other two on the same street are charging 3.19. And on Monday, I paid 2.49 a gallon at a Citgo when 2 others in the area were at 2.55.

docbungle · 09-01-2005, 04:00 PM

A big part of price hikes at gas stations nationwide is because of everyone panicking. Here in Denver, not every gas station chain is affected by Katrina. However, when the news media interviews Joe Bob Bibbity in North Carolina, and he tells of his plans to raise his prices dramatically, and it gets put in USA Today, people all over the country think they should get gas now, "before it goes up again", which leads to gas stations nationwide - who's supply of gas is not hindered by Katrina - selling a lot more fuel than they're accustomed to. Which leads to runouts. THIS is what leads to price increases across the nation.

Usually, no one wants to be the most expensive in town, but now no one wants to be the cheapest. They'd rather have expensive prices and adequate supply than have the cheapest price on the street with no fuel left to sell.

docbungle · 09-01-2005, 04:06 PM

Quote:

Originally Posted by ngdawg

NJ stations also cannot change or raise their prices more than once in any given 24 hours, so many times you may see 3 stations on one road and a difference of 20c a gallon in a given day because of when they last changed the price. Right now, the BP around the corner from me is charging 2.88 but the other two on the same street are charging 3.19. And on Monday, I paid 2.49 a gallon at a Citgo when 2 others in the area were at 2.55.

This is due to contracts that have been established between the corporations and the jobbers/dealers who own their own site but are still branded with the corporations logo and sell the corporations fuel. The corporations must give the jobbers/dealers the ability to remain semi-competitive.

Delirious · 09-01-2005, 05:03 PM

Notice on the chart as soon as Bush left office the price went down and as soon as Bush came back into office the price went back up...

cementor · 09-01-2005, 07:12 PM

The underlying problem really is refining capacity. These numbers will not be exact, but here goes there reasonably close. Approximately 3% of the US gasoline refining capacity went up in smoke a couple months ago when the BP refinery in Texas blew up, some of this capacity may be back operational. Approximately 30% of the refining capacity in the US is physically located in South Louisiana. That capacity is currently down due to 1) inability to get personnel to the refinery to operate it, 2) damage or destruction to the facilities due to Katrina. Put succinctly +/-33% of the refining capacity in the US is out of commission. As was pointed out there is little demand in the La, Ms, and parts of Al, but the rest of the country continues to have a strong demand, with a drastically reduced supply or potential for reduced supply. The ares that are in full production are asked to spread their product around to allow all parts of the country to continue to function. This occurs because the national distributors Conoco, BP, Phillips, Exxon and others don't want some markets to dry up and the reduction in supply leads to higher prices and therefore increased margins. Additionally, some folks (independents and majors alike) take advantage of the situation to line their pockets and the futures prices explanation also holds water for many distributors. If you can get the higher price, do it! 'Tis the American way! I was in Canada this week and they were paying over a 1.20$/ litre which is roughly US$4.40/gallon and that was before the storm hit.

Best regards
An Oilfield Service hand!

trickyy · 09-01-2005, 07:39 PM

the price of oil went up by 53 cents today on the new york mercantile exchange, to $69.47/barrel. that's about a 2 dollar increase from august 24, but it's been hovering in the $69 range since tuesday. this is the price of oil slated for october delivery, and part of the anticipatory pricing that has been mentioned.

----------------
local price comparison online at www._____gasprices.com where you fill in your location (state or large city)

Janey · 09-02-2005, 03:15 AM

Quote:

Originally Posted by eribrav

You Sir are correct.

You've all forgotten about the futures market as well which allows rational price discovery for commodities for future delivery. I'm not sure how many service station owners trade futures to help manage their risk. I do know that essentially all oil and gas producers do. The owner can look forward at any given time and see what future pricing is, and decide if he wants to buy that future production at the offered price. Forget about the idea of paying for the gas as it goes into the storage tank.........that could have been bought and paid for months ago.

what I said...

09-02-2005, 04:30 AM

I just thought it might be interesting to show what other countries are paying for their gas around the world...

http://www.eia.doe.gov/emeu/internat...ces.html#Motor

Elphaba · 09-02-2005, 02:21 PM

Quote:

Originally Posted by Charlatan

Now this would make sense if they were paying cash for the gas upon delivery but this isn't the case, is it?

My father had a very high volume service* station and he always paid COD. I may be mistaken, but I believe that is common practice.

* (Way back when, there were service bays for vehicle repair and maintenance. Owners made a few pennies per gallon of gas sold, and what sustained the business was service work).

Climbs back into my rocking chair

eribrav · 09-02-2005, 04:20 PM

Quote:

Originally Posted by Janey

what I said...

And I'm smiling to be in the good company of the lovely lady from TO

Johnny Pyro · 09-02-2005, 04:42 PM

Cheapest I've seen around here is $3.09! Most is $3.29! I've never seen gas prices this high in my short lived 24 years. I heard it won't last too long. Thank God! $10 gave me a quarter of a tank!

flstf · 09-02-2005, 05:20 PM

I think that the oil companies and oil producing countries will eventually raise the price of oil until just before it becomes profitable for the development of alternative sources of energy. It is not in their best long term interest to allow this to happen.

I have no idea what that price might be, maybe $100 to $150 a barrel?

meembo · 09-02-2005, 06:10 PM

Gas station owners are looking at the price of the next tanker full of gas that's coming in to set their prices. For the most part, it's stupid to blame them -- they aren't the movers or the shakers in the petro-economy.

Seer666 · 09-03-2005, 05:09 AM

Quote:

Originally Posted by Lasereth

I've heard from numerous sources that gas prices are going up due to shortage caused by Katrina. It's illegal to raise gas prices because of a natural disaster. The info that I've heard is that the actual gas is costing the stations this much more, thus increasing the price. It's $3.30 here in Boone, NC.

-Lasereth

They must be able to predict the weather pretty damn good then. Gas prices were on the rise before that big bitch turned NO into a Tragicly Hip song.

Pragma · 09-03-2005, 05:27 AM

Gas prices were already rising, but the hurricane only made things so much worse.

Around here, there was one gas station that had gas at 3.25$ and people were fighting at the pumps - everywhere else was 3.40$ or more. People have gone psychotic over gas - so I'm just not driving my car anywhere for a while.

FatFreeGoodness · 09-03-2005, 05:59 AM

RE: the discussions regarding stations selling gas at much higher (or lower) prices than you paid when it went into the tank. The argument that one should ignore sunk costs is correct, but evidently hard for some people to see. I have a real life example that may help illustrate this from a different angle.
I worked for a business that insisted on at least a 10% markup on any item in stock, or a 15% markup on items special ordered. They had been in business for years and had lots of parts in stock. In some cases (electronics) the part in stock had dropped enough in price that I could special order one and sell it for a 25% markup and still beat the retail price of the one we already had in the back at a 10% markup… and the store didn’t see any problem with this. Result: the back was crammed with parts (some years old) that were steadily going down in price, while I did a brisk business special ordering the very same parts!
On the other hand, some parts (mechanical items like motors or switches) would rise over time. If a part had been in stock for a while and it was sold at a 10 or 15% markup, it was below (current) dealer cost. Some other dealers in the area knew this and would check with us before ordering parts. This often resulted in us selling a part to another dealer and immediately ordering a replacement at a higher price.

Moral: What the stuff in stock cost when you bought it is irrelevant.

All you look at is (a) What it is worth today, (b) what it will be worth in the near future.

Disagree? Pretend you bought a house five years ago for 100k. The area has shot up in value as it has gone commercial. Now you need to move. Do you offer to sell your house for 127k (an excellent 5%/year appreciation), or are you influenced by the fact your neighbor’s property sold for 800k? Are you taking advantage of the buyer with 800% markup?

pan6467 · 09-03-2005, 06:06 AM

Ray Davies and the KINKS said it best:

Quote:

A Gallon Of Gas
Written by: Ray Davies
Published by: Davray Music Ltd.

Lyrics:
I've been waiting for years to buy a brand new cadillac
But now that I've got one I want to send it right back
I can't afford the gas to fill my luxury limousine
But even if I had the dough no one's got no gasoline

I went to my local dealer to see if he could set me straight
He said there's a little gas going but I'd have to wait
But he offered some red hot speed and some really high grade hash
But a gallon of gas can't be purchased anywhere for any amount of cash

I can score you some coke and some grade one grass
But I can't get a gallon of gas
I've got some downers some speed all the drugs that you need
But I can't get a gallon of gas
There's no more left to buy or sell
There's no more oil left in the well
A gallon of gas can't be purchased anywhere
For any amount of cash

two extra verses from long version:
I love your body-work, but you're really no use
How can I drive you when I got no juice?
Because it's stuck in neutral and my engine's got no speed
And the highways are deserted
and the air smells unnaturally clean.

It's got power-assisted overdrive and carpets on the floor,
but it's parked out front just like a dead dinosaur.
And I'll be paying off the bank for 45 years or more.
It should go 100 miles an hour,
but it's never moved away from my door.

Who needs a car and a seven-forty-seven
When you can't buy a gallon of gas
Who needs a highway, an airport or a jet
When you can't get a gallon of gas
There's no more left to buy or sell
There's no more oil left in the well
A gallon of gas can't be purchased anywhere
For any amount of cash
You can't buy a gallon of gas

Albums this song can be found on:
Another One For The Road
Come Dancing With The Kinks
Kinks Kontraband
Low Budget
To The Bone (US)

goddfather40 · 09-03-2005, 07:08 AM

Granted, prices here in California have not gone up as much as in many other parts of the country, but they still are up more than 20 cents in the last week. If we get very little to none of our gas from the gulf coast, why are our prices up?

The Attorney General of California is looking into this as well:
http://news.yahoo.com/s/nm/20050902/...trina_gas_dc_1

09-01-2005, 09:51 AM	#1 (permalink)
THGL Psycho Location: Louisville, KY	Can someone explain gas prices Here's my question. Why are gas stations allowed to raise their prices to current levels when the gas that's in their underground tanks was purchased at a much lower price? Here's some hypotheticals: Let's say their last delivery was 3 days ago and they paid $2.25/gallon. Their mark-up is .25/gal. so the price to the consumer is $2.50. Why are they allowed to bump up the price 50 cents overnight (current price here in Louisville is $3.19)? Somone might say that it protects the station from when the prices fall, but in my eyes that's the cost of being in that sort of business. If there's some logical explaination, I'd love to hear it. __________________ "The truth is merely an excuse for lack of imagination." - Garak

09-01-2005, 10:01 AM	#2 (permalink)
MageB420666 <Insert wise statement here> Location: Hell if I know	It's called a free market economy. (although the U.S.A. is not a full free market economy, much of our economy is based on it) The gas stations can charge whatever they want. It's your choice as to whether your going to buy it at the price they're charging. __________________ Apathy: The best outlook this side of I don't give a damn.

09-01-2005, 10:01 AM	#3 (permalink)
Eweser Psycho Location: O-K-L-A-H-O-M-A	I'm happy to say that not all gas stations do this. My husband owns a station and he continues to charge the price of the gas in his tanks until it is refilled. __________________ "Whoever wrote this episode should die!"

09-01-2005, 10:03 AM	#4 (permalink)
Lasereth Knight of the Old Republic Location: Winston-Salem, NC	I've heard from numerous sources that gas prices are going up due to shortage caused by Katrina. It's illegal to raise gas prices because of a natural disaster. The info that I've heard is that the actual gas is costing the stations this much more, thus increasing the price. It's $3.30 here in Boone, NC. -Lasereth __________________ "A Darwinian attacks his theory, seeking to find flaws. An ID believer defends his theory, seeking to conceal flaws." -Roger Ebert

09-01-2005, 10:04 AM	#5 (permalink)
Gatorade Frost Rookie	So they can afford the next shipment of gas that's going to be more expensive. __________________ I got in a fight one time with a really big guy, and he said, "I'm going to mop the floor with your face." I said, "You'll be sorry." He said, "Oh, yeah? Why?" I said, "Well, you won't be able to get into the corners very well." Emo Philips

09-01-2005, 10:21 AM	#7 (permalink)
cj2112 Unbelievable Location: Grants Pass OR	OK, so the refineries that are affected by the hurricane and and floods are no longer operating, thereby creating a shortage of gasoline in that area. That I understand, however if the roads are underwater, not many people are driving, so less gas is being used, thereby negating the local shortage. I also don't understand why gas nationwide is rising when the refineries in that area only produce gasoline for that area.

09-01-2005, 10:44 AM	#12 (permalink)
ShaniFaye Submit to me, you know you want to Location: Lilburn, Ga	Well I was just explaining why the far NE would be having higher prices....I would imagine that there are pipelines run by other companies that come out to the west coast from the same area, which would in turn be having the same problems, either that of they are just greedy __________________ *I want the diabetic plan that comes with rollover carbs. I dont like the unused one expiring at midnite!!*

09-01-2005, 11:38 AM	#13 (permalink)
Yakk Wehret Den Anfängen! Location: Ontario, Canada	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. Total loss: $74.64 2> You don't sell him gas. Total loss: $0 I think you don't sell him gas. Instead, you set your prices at some amount above 4$, so when you refill your tank next week you won't lose money. If prices go down, and you are smart, you do the same thing: if you bought the gas for 4$, and next week the price will be 3$, you sell gas below 4$ and above 3$. This means you lose money -- but you lost the money when you bought the gas. Selling the gas for $3.10 then replacing it for $3 is profitable. __________________ Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest.

09-01-2005, 11:38 AM	#14 (permalink)
Lasereth Knight of the Old Republic Location: Winston-Salem, NC	I put this in the other thread, thought it would go well in this one as well: gas is higher now than it was in the early 1980's gas crisis, even adjusted for inflation. <IMG SRC=http://bigpicture.typepad.com/./photos/uncategorized/cotd_20050406.gif> Yay for being part of the worst gas crisis in the history for combustion engines! -Lasereth __________________ "A Darwinian attacks his theory, seeking to find flaws. An ID believer defends his theory, seeking to conceal flaws." -Roger Ebert

09-01-2005, 01:32 PM	#19 (permalink)
Janey Junkie Location: Toronto	Because they price according to "future" price. They change the prices according to what they will have to pay in the future, regardless of what they have paid for the current inventory. And of course, we have to succumb to this practice, because there is no where else to buy gas, and when one station sees the price climb, the next one will follow suit immediately. That's why gas went up 20 cents/litre overnight, and then a further 5 cents/litre the next night.

09-01-2005, 02:32 PM	#21 (permalink)
Cynthetiq Tilted Cat Head Administrator Location: Manhattan, NY	some places like NJ have rules on how much gas must be in relation to wholesale prices, thus the NJ turnpike had to raise prices midweek instead of on Friday like normal. __________________ I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. What's the best nation in the world? DO-NATION!

09-01-2005, 04:00 PM	#24 (permalink)
docbungle It's all downhill from here Location: Denver	A big part of price hikes at gas stations nationwide is because of everyone panicking. Here in Denver, not every gas station chain is affected by Katrina. However, when the news media interviews Joe Bob Bibbity in North Carolina, and he tells of his plans to raise his prices dramatically, and it gets put in USA Today, people all over the country think they should get gas now, "before it goes up again", which leads to gas stations nationwide - who's supply of gas is not hindered by Katrina - selling a lot more fuel than they're accustomed to. Which leads to runouts. THIS is what leads to price increases across the nation. Usually, no one wants to be the most expensive in town, but now no one wants to be the cheapest. They'd rather have expensive prices and adequate supply than have the cheapest price on the street with no fuel left to sell. __________________ Bad Luck City

09-01-2005, 05:03 PM	#26 (permalink)
Delirious Crazy Location: Queens, NY	Notice on the chart as soon as Bush left office the price went down and as soon as Bush came back into office the price went back up...

09-01-2005, 07:12 PM	#27 (permalink)
cementor Crazy Location: Denver	The underlying problem really is refining capacity. These numbers will not be exact, but here goes there reasonably close. Approximately 3% of the US gasoline refining capacity went up in smoke a couple months ago when the BP refinery in Texas blew up, some of this capacity may be back operational. Approximately 30% of the refining capacity in the US is physically located in South Louisiana. That capacity is currently down due to 1) inability to get personnel to the refinery to operate it, 2) damage or destruction to the facilities due to Katrina. Put succinctly +/-33% of the refining capacity in the US is out of commission. As was pointed out there is little demand in the La, Ms, and parts of Al, but the rest of the country continues to have a strong demand, with a drastically reduced supply or potential for reduced supply. The ares that are in full production are asked to spread their product around to allow all parts of the country to continue to function. This occurs because the national distributors Conoco, BP, Phillips, Exxon and others don't want some markets to dry up and the reduction in supply leads to higher prices and therefore increased margins. Additionally, some folks (independents and majors alike) take advantage of the situation to line their pockets and the futures prices explanation also holds water for many distributors. If you can get the higher price, do it! 'Tis the American way! I was in Canada this week and they were paying over a 1.20$/ litre which is roughly US$4.40/gallon and that was before the storm hit. Best regards An Oilfield Service hand! __________________ Cementor If I was any better I'd have to be twins!

09-01-2005, 07:39 PM	#28 (permalink)
trickyy ►	the price of oil went up by 53 cents today on the new york mercantile exchange, to $69.47/barrel. that's about a 2 dollar increase from august 24, but it's been hovering in the $69 range since tuesday. this is the price of oil slated for october delivery, and part of the anticipatory pricing that has been mentioned. ---------------- local price comparison online at www._____gasprices.com where you fill in your location (state or large city) Last edited by trickyy; 09-01-2005 at 09:42 PM..

09-02-2005, 04:30 AM	#30 (permalink)
zen_tom Guest	I just thought it might be interesting to show what other countries are paying for their gas around the world... http://www.eia.doe.gov/emeu/internat...ces.html#Motor

09-02-2005, 04:42 PM	#33 (permalink)
Johnny Pyro Hey Now! Location: Massachusetts (Redneck, white boy town. I hate it here.)	Cheapest I've seen around here is $3.09! Most is $3.29! I've never seen gas prices this high in my short lived 24 years. I heard it won't last too long. Thank God! $10 gave me a quarter of a tank! __________________ "From delusion lead me to truth, from darkness lead me to light, from death lead me to eternal life. - Sheriff John Wydell

09-02-2005, 05:20 PM	#34 (permalink)
flstf Easy Rider Location: Moscow on the Ohio	I think that the oil companies and oil producing countries will eventually raise the price of oil until just before it becomes profitable for the development of alternative sources of energy. It is not in their best long term interest to allow this to happen. I have no idea what that price might be, maybe $100 to $150 a barrel?

09-02-2005, 06:10 PM	#35 (permalink)
meembo Junkie Location: Connecticut	Gas station owners are looking at the price of the next tanker full of gas that's coming in to set their prices. For the most part, it's stupid to blame them -- they aren't the movers or the shakers in the petro-economy. __________________ less I say, smarter I am

09-03-2005, 05:27 AM	#37 (permalink)
Pragma I am Winter Born Location: Alexandria, VA	Gas prices were already rising, but the hurricane only made things so much worse. Around here, there was one gas station that had gas at 3.25$ and people were fighting at the pumps - everywhere else was 3.40$ or more. People have gone psychotic over gas - so I'm just not driving my car anywhere for a while. __________________ Eat antimatter, Posleen-boy!

09-03-2005, 05:59 AM	#38 (permalink)
FatFreeGoodness Tilted	RE: the discussions regarding stations selling gas at much higher (or lower) prices than you paid when it went into the tank. The argument that one should ignore sunk costs is correct, but evidently hard for some people to see. I have a real life example that may help illustrate this from a different angle. I worked for a business that insisted on at least a 10% markup on any item in stock, or a 15% markup on items special ordered. They had been in business for years and had lots of parts in stock. In some cases (electronics) the part in stock had dropped enough in price that I could special order one and sell it for a 25% markup and still beat the retail price of the one we already had in the back at a 10% markup… and the store didn’t see any problem with this. Result: the back was crammed with parts (some years old) that were steadily going down in price, while I did a brisk business special ordering the very same parts! On the other hand, some parts (mechanical items like motors or switches) would rise over time. If a part had been in stock for a while and it was sold at a 10 or 15% markup, it was below (current) dealer cost. Some other dealers in the area knew this and would check with us before ordering parts. This often resulted in us selling a part to another dealer and immediately ordering a replacement at a higher price. Moral: What the stuff in stock cost when you bought it is irrelevant. All you look at is (a) What it is worth today, (b) what it will be worth in the near future. Disagree? Pretend you bought a house five years ago for 100k. The area has shot up in value as it has gone commercial. Now you need to move. Do you offer to sell your house for 127k (an excellent 5%/year appreciation), or are you influenced by the fact your neighbor’s property sold for 800k? Are you taking advantage of the buyer with 800% markup?

09-03-2005, 07:08 AM	#40 (permalink)
goddfather40 Llama Location: Cali-for-nye-a	Granted, prices here in California have not gone up as much as in many other parts of the country, but they still are up more than 20 cents in the last week. If we get very little to none of our gas from the gulf coast, why are our prices up? The Attorney General of California is looking into this as well: http://news.yahoo.com/s/nm/20050902/...trina_gas_dc_1 __________________ My name is goddfather40 and I approved this message. I got ho's and I got bitches, In C++ I branch with switches -MC Plus+