Katrina

[OperaTenor]

Hi Shap,

Like I was attempting to point out above, if that was the case, shouldn't my two local obscenities have raised their prices accordingly? I doubt theyr'e waiting until their next fuel load to raiseprices.

BTW, other stations in Sandy Eggo have been slowly raising prices over the same period these have stayed the same.

[OperaTenor]

[hijack] I can't believe I got away with using that term and nobody questioned it! [/hijack]

[Shapley]

OT,

The left coast has its own refineries and oil sources, I doubt they recieve much from the Gulf of Mexico. Particularly so since California requires special blends that are not used elsewhere in the nation. There is also the question of reserves. If there is sufficient volume of refined fuel on hand, it will take a while for the cost of replacement to affect prices there.

Analysts were quoted on the news yesterday as saying there would probably be sharp rises in fuel costs in the Southeast and Northeast first, which will then "filter" their way across the country.

V/R
Shapley

[piqaboo]

I have read, somewhere somewhen, that small gas station owners have very little markup. So when prices rise a lot, they get hurt because sales drop, but their profit margin didnt.

What we typically experience is:
Price of oil rises 3cents/barrel.
Within 24 hours, local gasoline prices increase 7-10cents/gallon.

But, let oil prices DROP $1/barrel, and we'll see a 15cent decrease at the pump when those barrels (post refining) reach inventory.

So, although I see the point of charging a little more to cover your future cost increases, I agree with TM to this extent: there is gouging and its being done by those who wholesale gasoline. Its probably not being done by your local gas station owner.

[Haggis@wk]

This is gonna hurt me more than you think.....


France May Mobilize Relief From Caribbean

"French humanitarian aid officials met on Thursday to examine ways of providing support for victims of Hurricane Katrina (search) in the United States, a French Foreign Ministry spokesman said. France is considering ways of mobilizing relief teams from the French Antilles (search) in the Caribbean, ministry spokesman Denis Simonneau said at a news conference."

(Ed. "Well, it just says they may help"

I'm just glad I saw it before OT did!)

Actually I welcome anyone's help, I'm just sceptical about how much we'll get.

[Trumpetmaster]

Piq,
The distributor to the local gas station owner is probably the ones lining their pockets.
I think the local gas station owner is getting the raw end of the deal here.

I'm not opposed to paying a few cents more per gallon.. but gee... it went up 50 cents overnight.

That's absurd....

[Shapley]

Haggis,

I posted that link this morning.

But don't worry, nobody on this board will believe it, because it's on Fox News.

V/R
Shapley

[mmichaelson]

I LIKE Foxnews. . .

[analog]

Psip - interesting that was a BP station you pictured.

Did you see yesterday's TV interview of their CEO, one T Boone Pickens? He said, cold as steel, that price of gas "must be used to crush demand."

When I was a young man (in the days of Black&white TV), T Boone Pickens was etablishing his reputation as a wall street corporate raider. He'd steal pension funds or whatever cash a company had. Definitely a role model for the Enron guys decades later.

Despite my being far more conservative now than I was then, he's still too much for me. I'm turning in my BP card.

[piqaboo]

a) crushing demand...yeah my boss is gonna let me stop coming to work because of the price of gas.....

[zlosin]

I just topped up the tank 1/2 hour ago. $3.37/gal.
Yesterday when I drove by and thought about filling up but didn't, it was $3.19. Get it now while it is still cheep! Saturday it was $2.64

[zlosin]

Originally posted by analog:
Psip - interesting that was a BP station you pictured.

Did you see yesterday's TV interview of their CEO, one T Boone Pickens? He said, cold as steel, that price of gas "must be used to crush demand."

Is that old SOB still alive? figures. I hope he and Osama become good friends in Hell.

[hal 9000]

Originally posted by Shapley:
TM,

Suppose I decide to sell fuel for a living. I have the pumps, tanks, etc., which were signed over to me by the previous owner, who then ran down the road screaming and hollering. (Well, okay, he was screaming and hollering when he signed the papers over, and he didn't look at all well.)

I borrow $5,000 for a tank of gas (5000 gallons at a $1 a gallon). Okay, so it's a small operation. I intend to sell those 5000 gallons for $1.20 a gallon, from which I will earn a profit of $1000, $500 of which I will pay on the loan, and $500 of which I will put in my pocket.

All is going well, but after I've sold half, I'm told that I will have to pay $1.25 a gallon for the next load. Now I'm in a pickle, I still need to make payment on the original loan, and I still want to eat, so I'd like to have that $500 left over. Instead, I'll have to borrow another $750, after making payment, and go hungry.

My best solution is to raise my price, so that I make enough to pocket my $500, repay $500, and have $6250 available to buy another tankload. At this point, I've got $3000 and 2500 gallons in the tank, so I need to sell the remaining 2500 gallons at $1.70 to get to where I need to be.

Otherwise, I'll be running down the road, like the previous owner.

V/R
Shapley

Fuzzy Math Alert

At first glance, this looks like it makes sense but look at it again:

You buy 5000 gal at $1.00/per gallon -> you've spent $5000.

You sell those 5000 gal at $1.20/per gallon-> you've made $6000.

You use $5000 of that to pay back the loan, now you still have your profit of $1000. You of course lose some of that profit to interest, but it still remains a large profit from which you have nothing left on the loan to pay.

[hal 9000]

That fuzzy math inspired me to do a basic model in Excel to see what the numbers would look like.

Using Shapley's initial numbers, I decided to look at a 12 week period of the 'unfortunate' gas station owner (GSO).

Assumptions:

1. The GSO purchases 5000 gal per week.
2. The GSO's cost per gal the first week is $1.00/gal and goes up by $0.25 each week.
3. The GSO always sell the gas at only $0.20 per gal more than he paid for it.
4. The GSO pockets half of the profits and reinvests the other half in the next weeks gasoline purchase (lowering the amount of money he has to borrow to purchase all 5000 gals each week).

With these assumptions, it seems our 'poor' GSO only makes $39,000 in profit during that 12 week period. Poor guy. <img src="http://us.i1.yimg.com/us.yimg.com/i/mesg/emoticons7/45.gif" alt=" - " />

Here is the spreadsheet I used to calculate this profit.

<img src="http://carlsoncm.tripod.com/gas.jpg" alt=" - " />

Incidentally, if this same model was extended for a years time with the gas cost capping at $3.75/gal (resold at $3.95/gal), our GSO only stands to make just under $1 million for that year. The horror!

[Serenity]

Hal, the nation could use your accounting skills in the Social Security....
no, wait....
any government activity posting numbers in red.

[hal 9000]

:p

Thanks Serenity. But it should be noted that those figures are not by any means practical. But they do show that this whole 'charging gas prices based on what the wholesalers are going to be charged in the future' is nothing but a greedy endeavor. Just another version of the tactics used in the Enron scandal.

<small>[ 09-02-2005, 12:44 AM: Message edited by: hal 9000 ]</small>

[Serenity]

I see the same thing happening in the stock market on a regular basis.

[OperaTenor]

Originally posted by piqaboo:
a)
b) Dont worry, Shapley and Haggis, that info was in one of OT's links also.

Just goes to show you; they're not reading the links I post......

:p

Hal9000, I bow to your number-crunching excellence and superiority.

:awe:

<small>[ 09-02-2005, 02:54 AM: Message edited by: OperaTenor ]</small>

[Trumpetmaster]

Hal9000,

If we go by your math and take what the Local GSO owner says, then the Local GSO is painting a picture that is not at all accurate and riding the end of the crest for making the almighty $$$. Then we consumers alone are getting the squeeze.

TM

<small>[ 09-02-2005, 07:40 AM: Message edited by: TrumpetMaster ]</small>

[Haggis@wk]

"Just goes to show you; they're not reading the links I post......"


You post links?????

Sorry, work is a full time bear and I'm feeling alot like that salmon swimming upstream......