Station A, Station B, Station C...

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1,347
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wytheville, va
I'm a pretty loyal listener to Neal Boortz on the AM dial. He's a sharp guy. Most of the time. [Smile] He was opining the other day that gasoline station "gouging" rarely if ever goes on. He said that in every incidence of reported gouging, the Feds determined that no laws had been violated. While there are laws against price gouging, it is nearly impossible to clearly define what it is. That's why stations tend to get away with doing it. Here is basically what happens when word comes downs that supplies of gasoline are going to be short. On the "corners of 4th and Main," you have three stations: Station A, station B, and station C. Whether they are branded gasolines or unbranded, or a combination of both is for the most part immaterial. The pump price on the morning of the "word" coming down is 2.40 cents per gallon. Station A checks the inventory that morning and finds 16,000 gallons in the tanks. Enough for three to five days of "normal" sales. Station B checks its inventory and finds about the same thing. But Station C has less than 4500 gallons in the unleaded tank. They'll need a delivery by the end of that day, or certainly by noon the next day to be certain of not running out. Station C orders a load of fuel from the carrier they generally use. The carrier informs them that demand is high, and they'll get to them as soon as they can--if supplies are available. Station C begins to worry. Meanwhile, the Communist News Network (CNN) is reporting that gasoline could reach ump-teen dollars a gallon by week's end. Out come the lawn mower gas cans and the lines begin to form. People are not only worried about ten dollar a gallon gas, but are also worried that they won't be able to get gasoline to make it to work by early next week. Station C sees the lines, and notices that their inventory has dropped to 3,500 gallons in the last two hours. They've sold 500 gallons per hour over the last two hours, and it becomes imminent that they are going to run out of unleaded gas before either of their competitors (Station A and B). So station C decides to quell the tide a bit with a twenty cent price increase. It's perfectly legal to do this--no laws are being broken. Station C wants to profit as much from their remaining 3,500 gallons as possible, and hopefully slow sales down enough that they don't run out of fuel. The twenty cent increase cuts sales to 200 gallons per hour because... The droves begin flowing to station A and B. Now their tanks are dropping to the tune of 750 to 800 gallons per hour and they begin to wonder how long inventories will hold. They too have learned that it might be a few days before they get a delivery. Station A (having no idea how much fuel station C has on hand) decides that they aren't going to be the first station to run out of gas, so they match station C's price--twenty cents high. Station B gets hammered (naturally) and within the hour also raises its price to the same $2.60 level. This annoys station C. Now they are selling 350 gallons per hour, rather than 200. Something has to be done. Out come the long handled suction cups and up go the numbers: 2.85 cents ought to do it. Station A and B are quick to notice this. People are still lined up with the gas cans. Takers abound at two dollars and sixty cents. Station B by this time has seen the morning's 16,000 gallon inventory dwindle to only 9,500 gallons. So 2.85 it is. Station A sees the fellow at station B crossing the parking lot with the suction cup and numbers. "We're going to 2.85," he tells his chief number changer. "Get the sign changed while I punch in the changes." This little routine may repeat itself several times. Before we know it, pump prices at this corner are 4.25 cents and the Feds have been called. And the Feds come in (well, maybe they do). They question the managers at each station. They conclude that station C began the price jumps simply as a means to prevent running out of fuel before their competition did. Sounds reasonable, and in truth, it is reasonable. All subsequent actions by the stations are deemed acceptable and merely reactionary, and not against the law. And this, folks, is why stations are rarely found guilty of price gouging. There are currently no guidelines on how much a station can bump up the margin of the fuel they are selling. Wherever inventories are limited, or rumored to be limited, there won't be much if anything the Feds can do to prove gouging at the pumps. Does this suck? You bet it does. I believe that some guidelines which station operators must go by need to be implemented. That sounds odd coming from this "less is better where government is concerned" kind of guy--but we've seen the above mentioned scenario played out too many times--to the detriment of our checkbooks and credit cards--for no action to be taken. In my opinion, if station C is misfortunate enough that they have very little inventory ahead of the shortage, then so be it. That'll be the way the cookie crumbles. They'll be told that a ten percent increase inside of a 24 hour period is the limit, and anything beyond that will result in a hefty fine. Chances are that station C was gambling that prices were going to drop and therefore holding off on that order anyway. So it could be their own fault. Ten percent in 24 hours is max--unless you have a Bill of Lading showing that you have made a purchase in that time period. In this case it would be fair to price your fuel commensurately. Dan
 
Messages
1,241
Location
Glenshaw, PA
I would love to see you send that analogy to your respective Congressperson, and see if you actually get a response. I never took the time to view it from that standpoint, but I agree that something HAS to be done, or come November, we'll be seeing all the majors with record profits for a US company again.
 
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1,904
Location
Bay Area, CA
In this country we have decided that comodity prices need to be regulated(electricity, water). We also had some industries regulated to ensure safety (airlines). Although gasoline is a comodity, the government tries to ensure there is adequate competition to keep prices low. They also try to prevent collusion. Gas prices go up and down. I think that currently there is adequate competition in the oil industry. I dont know what you think should be "done" about it.
 

fuel tanker man

Thread starter
Messages
1,347
Location
wytheville, va
It is true that the media seems all to willing to help spread the doom and gloom. But we can't shut up the media (Constitution and all)... But we should be able to investigate the motives of some of the individuals who put out the doomsday type media reports. We have laws against insider trading--why not laws against individuals who stand to benefit from higher fuel prices giving out information to the media which is all but guaranteed to run the prices up? Some of those characters need to have their portfolios looked at by the proper authorities in the aftermath of such an announcement. "Five dollar a gallon gas by the end of the week" he says... yeah. Crawl up that bastadge's arse with a microscope and see what he's got to gain from the mayhem he's just created. And if you find the link (which you will) BURN HIM. The GB's (greedy bastadges) who tell us that oil production won't be back on line for days and days--and all the while knowing better--have to be held accountable. I just received a call from my bosses. The wholesale gas and diesel prices for fuel supplied by the Gulf Coast facilities (which go all the way to New Jersey) are down 60 or more cents per gallon for tomorrow (September 30th). That's SIXTY cents. Why the huge fall? My best guess is that the charade got too hard to continue. Too many people were beginning to realize that there is indeed fuel in "them thar tanks." Marathon sat on a BUNCH of gasoline in our area over the last few days. One terminal which we typically load at had over 200,000 gallons of no-lead on hand. The terminal manager told me it was there, but he said that corportate officials had put the word out not to release any of it until further notice. Now, while the terminal manager did not know the reason why Marathon wanted to hold on the the fuel, it doesn't take a rocket scientist to figure it out. The market was moving up, and they stood to make lots more money in the coming days if they simply held on to what they had until the prices went up across the board. Looking out for their investors? Yeah. Other suppliers do much the same thing, and meanwhile the masses get hosed. It is likely that the GB's will send out some more "gloom and doom" to the press by this evening (if they've not already done it) in hopes of stopping the wholesale free fall this is well underway as I type this. A negative story or two on, say, the Valero refinery which is supposed to be having such trouble might get the paper-waving-tassled-loafer-wearing-imbeciles in New York to stop the hemorraging with a late day turn around. "Hey! Someone call that mentally retarded dictator down there in South America and see if we can't get some kind of quote for CNN." "Brilliant idea, Preston! Absolutely brilliant!" And so it will go... Dan
 
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12,385
Location
Northern CA
quote:
Originally posted by Dad2leia: XS650, you said a mouthful when you said the NEWS!!! Someone needs to shut them up, and REPORT the news, NOT influence it.
No thanks, I'll take some out of control reporting over more gumnt coverups any day.
 
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13,132
Location
By Detroit
I remember when the government tried to help us in the mid 1970s by putting a price celing on gasoline. It caused rationing and long lines. I would rather pay the high price and be able to get the gasoline when I want it. Long lines and closed gas stations are no fun.
 
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12,385
Location
Northern CA
Shorter version that's closer to reality. News comes out that the price of crude is up, gas stations immediately raise prices because the suckas will pay it.
 
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8,711
Location
Nothern USA
I don't think near enough is being said here about the people with the 5 gallon cans. Even I am somewhat guilty, topping up both my car and truck last week when the price were down briefly. Punish the oil companies for trying to maintain orderly supplies in the face of panic buying? Maybe if they were allowed to make obscene profits, they might plow some it it back into increasing supply.
 
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1,241
Location
Glenshaw, PA
Winston, Exxon Mobil posted the largest net profit of any company in US history for the first and second quarters of fiscal 2005. I'm all for competition, but to say that there's a lower supply for the demand, and then rake in the cash flow at the American publics' pocketbooks, to me, just isn't really right. By the way, where is the regulation on these utilities that you mention? They've been DEregulated, and as a result of the "competition" we pay MORE now for these, than before when it was just one company per utility. But, people cried "Monopoly", so this is what we received: higher utility prices and more choices. Not a winning play in my book. XS650, you said a mouthful when you said the NEWS!!! Someone needs to shut them up, and REPORT the news, NOT influence it. labman, I would love to see the profits thrown back into the supply chain, but instead the few (and I do mean CHOSEN few. Even the shareholders (read average share holder) do NOT reap all of the benefits of the profit margin) line their pockets so much with the green, that they want even more next time. The richer they are, the cheaper and more rich they want to become.
 
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1,904
Location
Bay Area, CA
quote:
Winston, Exxon Mobil posted the largest net profit of any company in US history for the first and second quarters of fiscal 2005.
This is due to the increase in crude oil prices. XOM doesnt have a lot of control over crude oil prices. Oh, and this topic was locked for a while. Why was that?
 

fuel tanker man

Thread starter
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1,347
Location
wytheville, va
The topic got moved to this area... where good threads go to die... [Frown] It isn't in XOM's or any other oil company's best interest to keep the cost of oil down. So I don't blame them for gouging where they can. If their profits are up, and oil isn't selling any more than it used to--they're gouging--plain and simple. The oil companies are simply taking advantage of the fact that as of late folks are expecting to have to pay more for fuel. It is up to us to refuse to pay 3.00 per gallon for gasoline, and that--according to my sources in the industry--is exactly what has been happening. Fuel sales are way, way, WAY down in most parts of the country. Sure, we have to have gas to get to and from work, but the pleasure drives have been all but halted in most families. Too, folks have loaded up their credit cards paying the extra price for gasoline. But that seems to be coming to a head, as default rates on credit cards have recently reached an all time high. But as mentioned earlier, the bubble has nearly burst. You will see news stories in the coming weeks posing the question "Were fuel prices artificially inflated?" And that will be (for a change) a good question from the media. Fuel prices are still falling, and by mid next week we should see no less than a 50 cent drop per gallon at the pumps. Maybe even more. [Wink] Dan
 
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441
Location
Toronto, Canada
Sorry as this is a little bit [Off Topic!] but is suggested by the details of this thread... Not to get too far off topic but there is a reflection of a larger issue here. Some have pointed out that corporations may be doing things (gouging, lying about supply, holding back supply in anticipation of price rises etc) in the interest of their investors. The problem with current business is the liquidity of equity markets. All public companies are forced to do whatever it takes to pump up the stock today, this week, or this quarter at the most long term. They are not serving the interests of "investors" but of speculators flipping stock. There are very few "investors" left out there. I would not really object to a business witholding supply knowing they could sell at a higher price later if they were calculating it on rational balancing of their stakeholders' interests. I think capitalist economics are actually pretty effective at this. Markets do tend to balance actions of the corporation to address factors like the interests of the corporation, its employees, its customers, its suppliers, its partners and moderate all factors. So if a moderate increase in gas prices increased the profit of the corporation, ensured supply and margins for retailers, gave consumers access to sufficient product, kept jobs going, etc etc, then fine. But when all that matters is moving the stock price up by two dollars on Tuesday, insane things will happen that may not be good for any stakeholder other than the short term stock speculator. The worst thing from my point of view is that a week later the stock drops again and the only people who benefitted are the speculators who flipped the stock. I don't know what the answer is. You would have to have a "road to Damascus" conversion of the entire financial services industry to realize that the Warren Buffets of the world are right. Buying good companies for long term value is what works for all. But that is not how Wall street types are paid. But if you are paid an annual bonus that is four times your salary and is based entirely on stock flips, why would you invest in a company that would take three years to pay off for your clients, when you can flip them back and forth between stocks every three days. The real enemies of this are the "analysts" who often know nothing about the industries they cover , and the outlets that give them voice. For years I could not watch CNBC without becoming enraged with the irresponsibility of shows like Squawk Box giving an uncritical forum for these pump and dump artists. In the late 90s I thought Enron was a bad joke and was astonished that AOL still existed. When they were trumpeted by these whores i gagged. But I never thought that Enron would blow up so badly or that AOL could take over Time Warner with worthless paper. Even in my cynical state I never thought it was that bad. Many fear the power of the multinational corporation or the corporate media. I only fear the timidity of these actors in the face of expectations of speculators and self dealers who rule the financial services and media spaces.
 
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9,427
Location
Pensacola & Vero Beach FL
quote:
Originally posted by bretfraz: I believe Dan said prices would go down "mid next week", not 3 hours after he posted his comments.
Nope, he didn't. He actally said, "Fuel prices are still falling, and by mid next week we should see no less than a 50 cent drop per gallon at the pumps. Maybe even more" (emphasis added). See above. EDIT: Of course, I do fervently hope that it turns out that he's correct. . . [Cheers!] [ October 01, 2005, 02:41 PM: Message edited by: ekpolk ]
 
Messages
441
Location
Toronto, Canada
quote:
Originally posted by ekpolk:
quote:
Originally posted by bretfraz: I believe Dan said prices would go down "mid next week", not 3 hours after he posted his comments.
Nope, he didn't. He actally said, "Fuel prices are still falling, and by mid next week we should see no less than a 50 cent drop per gallon at the pumps. Maybe even more" (emphasis added). See above.

Earlier he was referring to wholesale prices which apparently fell 60 cents between Thursday and Friday.
quote:
"The wholesale gas and diesel prices for fuel supplied by the Gulf Coast facilities (which go all the way to New Jersey) are down 60 or more cents per gallon for tomorrow (September 30th). That's SIXTY cents."
He then indicated this trend would roll out to retail by mid-next week:
quote:
"Fuel prices are still falling, and by mid next week we should see no less than a 50 cent drop per gallon at the pumps. Maybe even more"
Which indicates the reality of most price gouging incidents. When rumours of increases happen, retailers are quick to jack up the prices even though they paid less for their existing inventory. When wholesale prices start to drop, they wait as long as they can to sell off the inventory at high prices. Very little else about the retail end of gasoline practices bother me, but that one does.
 
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9,427
Location
Pensacola & Vero Beach FL
With all due respect, hairsplitting. I am all the more outraged, of course, to learn that wholesale prices are falling, while retail climbs somehow, but let me assure you that from the perspective of the guy who's standing there in front of a pump that reads "$3.39 per gallon", prices are most definitely <b><i>increasing</b></i>. I suppose what we're really arguing about is sloppy use of adjectives. While I want to know about the overall situation (so I can get just that much angrier...), at the pump, there's only one price that matters: RETAIL. And that went up $0.30 per gallon in the last four days. Please don't tell me that prices are falling. I was dumb to buy a car that gets only 22 mpg highway, but I'm not that dumb. . .
 
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