Gas Price Gougers #&@%!

[MikePA]

It just seems quite obvious that if the price of oil or labor does not rise significantly at the refinery, than the refinery should have no major price increases. And if the distributor has no major price increases then he should not charge the stations any major price increases. And if the station has no major price increases then they should not have a major increase in their prices to the customers.

Every entity you mention, from the refinery to the retailer, has to charge what it will cost to replace their inventory whenever they estimate they will have to replace it.

You spent all your money to buy a barrel of widgets;

• You paid $110 for the barrel last week.
• Today's price is $115.
• After Gustav, estimates are a barrel will cost $130.

What price are you going to sell it for?
What you paid for it? No, you would lose $20 and wouldn't have enough money to replace it.
Today's price? No, you'd lose $15 and wouldn't have enough money to replace it.

You are going to sell it for what you think it will cost you to replace it.

Why do people find this so difficult to understand? It applies to any business and it is simple economics. It's particularly important with a product where supply and demand are so close that it creates volatile prices.

Does this mean people are not gouging? No. But 40 cents/gallon? Even if someone let the 35 gallon tank on their full size pickup/SUV get down to almost empty it's another $14.00. A small premium to pay for deciding to wait until the last minute.

Not to mention, the track of Gustav has been in the news for quite a while. Why are people filling up their tanks now?

 

[Willl]

because their life depends on it.

How so ?

 

[tallyho8]

Every entity you mention, from the refinery to the retailer, has to charge what it will cost to replace their inventory whenever they estimate they will have to replace it.
You spent all your money to buy a barrel of widgets;

• You paid $110 for the barrel last week.
• Today's price is $115.
• After Gustav, estimates are a barrel will cost $130.

Bird's article clearly states "Light, sweet crude for October delivery fell 13 cents to settle $115.46 a barrel on the New York Mercantile Exchange".
The refineries have already contracted to buy their oil for September and October and the prices they are paying are lower than the prices they had to pay for August oil.

What price are you going to sell it for?
What you paid for it? No, you would lose $20 and wouldn't have enough money to replace it.
Today's price? No, you'd lose $15 and wouldn't have enough money to replace it.You are going to sell it for what you think it will cost you to replace it.

They know the replacement price already and it will be less than the present price.

Not to mention, the track of Gustav has been in the news for quite a while. Why are people filling up their tanks now?

1. People heard the proposed track several days ago and filled up several days ago but, they have been steadily using their vehicles and need to fill up again to evacuate. Is this too hard to understand? If you filled the tank of your main vehicle several days ago, would it still be full?
2. The track reported several days ago had Gustav coming straight to New Orleans. Would you be willing to bet your life that the track won't change and hit Biloxi, Lake Charles or Houston instead? Since you know exactly where it is going to hit, why don't you tell us so that many of us don't have to evacuate unnecessarily?

 

[MikePA]

I give up. Everyone is gouging and everyone who waited until the last minute had a good reason.

 

[tallyho8]

Originally Posted by tallyho8
because their life depends on it.

How so ?

If people don't evacuate ahead of the storm, many thousands can be killed as they were in Katrina. Most people must depend on their own transportation to evacuate as there is not enough public transportation to evacuate everyone. As I am writing this I am watching the local news and I see lines of people blocks long waiting for assistance to evacuate. It is highly doubtful that they will be able to evacuate 2/3 of the people from the area before the storm if it is on track. Even with all the preparations made in the last 3 years, if this storm is comparable to Katrina and hits the same area, thousands may die again.

 

[MikePA]

...thousands may die again.

Thousands? This thread is starting to make more sense.

The official LA death toll for Katrina as of 1/27/08 was 1,104. A total of 1,200 died in LA, MS and AL.

 

[tallyho8]

I give up. Everyone is gouging and everyone who waited until the last minute had a good reason.

People are NOT waiting for the last minute. As I explained earlier, people started filling up their tanks and evacuating Friday and the storm is not supposed to hit until Monday night. However, it takes days to evacuate over 1,000,000 people. This can not be accomplished in only 1 or 2 days. People who bought tickets to leave town on Greyhound or the airlines are already out of luck because Greyhound and most flights have already shut down. They now must depend on public assistance. The prisoners in New Orleans prisons were the first to be evacuated so that might have been one of the safest places to be.

Luckily, everyone is not gouging. Our grocery stores are still selling bread and essentials at regular prices and Home Depot is selling flashlight and plywood at standard prices. Pharmacies have not raised their prices even though many hospitals have already shut down and evacuated.

 

[tallyho8]

Thousands? This thread is starting to make more sense.

The official LA death toll for Katrina as of 1/27/08 was 1,104. A total of 1,200 died in LA, MS and AL.

Does the fact that only 900 may die instead of 2000 change the intent of this thread any?

 

[Bird]

Sound business practices would allow for a better way to make money without having to rely on your distributors theory on what the next truckload is going to cost you.

David, I'd really like for you to explain such "Sound business practices". I will assume (perhaps erroneously) that you've never owned or managed a retail business as I have. If you are a retailer and you ignore what your distributors tell you prices will be in the future, you won't be in business long. I can guarantee that will not be a "sound business practice".

As far as I know, there is no law requiring you to give a starving child a slice of bread if he shows up on your doorstep, nor are you prevented from trying to charge him $10 for that slice of bread, however, anyone doing so would not remain on my list of favorite people.

I didn't realize you were expecting the gas stations to provide charity, which is a fine thing, if you have the wherewithall to do it. How much gas are you going to buy for those other poor souls who need it? I would assume if you expect the gas stations to provide charity, you will also. And I admire you for that.

 

[jdbower]

Shortly after 9/11 the local gas stations ran out of gas because people panicked and started hording. Expensive gas is still much better than no gas. Would this have been prevented if the stations raised their prices? Quite possibly.

If you're getting out of town high prices serve a purpose. They remind us that we need to think about whether we need gas and that wherever we're going should have cheaper gas. Buy a few gallons at the inflated prices just to get out and then pull over 50 miles outside of town for a little cheaper gas. Repeat until you get where you're going or gas is cheap enough to fill your tank. You pay a few cents more but the people who can't leave (and emergency services vehicles who need to be there) still have gas.

The other alternative is to try to enforce that people can't buy more than 5 gallons at a time, but that penalizes people who drive poor mileage cars and may need a system to prevent people from station hopping because they're hording. At that point the expense of monitoring would probably exceed the cost of just having the local government get their act together to get people bused out.

No easy solution. People aren't polite and can't see the big picture in the best of times, throw in panic and you start needing something to reign them in. The free market method of raising prices works, but favors the wealthy. The government control method shares the cost among the tax base, but is yet another thing the government regulates and tends to punish the wealthy (who pay the most taxes to support it but wouldn't be eligible for the free busing).