On Thu, 01 Sep 2005 14:13:29 -0400, Michael Maskalans <dml@tepidcola.com>
wrote:
>
>
> 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. 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......
I was listening to the radio here in NJ today and this, of course, was a
big topic of conversation. I learned a few things about gas stations and
their pricings. For one, according to the radio it is illegal here in NJ
to sell gas less than what you payed for it. Sounds right. That is really
in line with the laws that prevent you from underselling your product to
drive your competitor out of business. As far as getting deliveries, a lot
of places get them every other day. Of course if you live in a less
populated area, this may not be the case, but this is NJ. A lot of these
stations here are raising their price because of the wholesalers raising
their price. The stations seem to maintain whatever markup they have. I
heard one caller talk about her husbands business marking it up 7 cents
per gallon on regular. Another caller said she worked for a company that
owned stations and their markup on regular was around 20 cents. When you
sell 10,000-20,000 gallons a week, that is a healthy profit stream. But
there really isn't too much room to move on a 7 cent markup.
-- -Droo
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