On Thu, 01 Sep 2005 14:48:12 -0400, <jon@dakota-truck.net> wrote:
>
> 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.
>
>
The price of gasoline is based on the price of crude oil. Crude oil is
sold to the highest bidder. Just like many many other products we buy. Our
food and even our cars.
>
> 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.
>
>
Quite a few oil companies are veritically integrated. I don't think
completely because they just can't supply themselves with enuf crude to
meet the demand of their customers.
-- -Droo
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