Michael Maskalans <dml@tepidcola.com> wrote:
: On Thu, 1 Sep 2005 jon@dakota-truck.net wrote:
:> prices. The gas in the tanks cost a certain amount of money to produce
:> and bring to market. IMHO, there is no reason to change the price on
:> that gas unless a new delivery has just arrived at a different price.
:> Well, actually there *is* a reason to do it, and it has to do with
:> price fixing and profiteering. What I would love to see is the
:> creation of a gas company whose focus is running lean and pricing
:> the gas at their stations in this way. They would almost certainly
:> always have lower prices than their competitors, and in the current
:> climate, would no doubt quickly attract a loyal customer base. Assuming
: There's really no way that would work unless you had massive storage
: availbile. Fuel really *is* a commodity: it's always needed, and you need
: to price it at current market prices to make any money, or even stay in
: business.
I dunno, IMHO, its only a commodity because people treat it as such.
I can see an argument for oil being a commodity, but gasoline is just a
single product of the refining process. I think having a company that
came at the whole situation with a "widget" mindset would be a refreshing
change, and it would be interesting to see what they could do with the idea.
: Everyone always uses the example of filling the tanks on monday
: and a price spike on tuesday with the next delivery a week away... Yeah,
: that does happen but it goes the other way too - if the delivery is
: mid-spike, they end up having to sell it for LESS than they paid too. Now
: don't get me wrong, I think the spikes are artificially high and the drops
: are slower than they would be in an actually free market, but it's just
: not that simple.
: If your hypothetical fuel company had to "fill up" today, and market
: prices dropped next week so everyone else was underselling, have fun
: sitting on that most-expensive-gas-in-town for the next month or two,
: until the next BIG spike......
That's just competition, and it happens all the time when somebody
else comes along with a similar product priced below yours. You need
to either get your cost back down, shave some profit (or both) or simply
go out of business. If the market price dropped below your cost of the
fuel currently in the tanks, you could sit on it as you suggested I
suppose, but it would probably be better to sell it below cost in order
to move it out and get some cheaper fuel in your tanks. If the company
was diversified (in a sense) across a large enough geographical area,
they could afford to cover temporary losses in one area with gains in
another. This sort of idea isn't going to work for a mom and pop
station, you'd need a relatively large company, ideally with their
own refineries. If the initial investment and cost could be justified,
and they could operate efficiently enough, it probably wouldn't hurt
for it to be drilling its own oil to boot.
--
-Jon-
.-- Jon Steiger --- jon@dakota-truck.net or jon@jonsteiger.com --.
| '70 Barracuda, '90 Dakota Convertible, '92 Ram 4x4, '96 Dakota |
| '96 Intruder, '96 Kolb FireFly, '99 Cherokee, '01 Ram 3500 |
`----------------------------------- http://www.jonsteiger.com --'
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