"Charlie Self" wrote in message
oups.com...
AFAIK, it's unusual for a profit percentage to increase, or drop, by a
whole lot. What usually happens is more of an item is sold, at the same
percentage of profit, so that there is a gain in profitability. There
are numerous tactics for increasing profits that include dropping the
profit per unit sold, in order to increase the number of units sold.
The supply/demand curve for gasoline is different that most of the other
products that we purchase.
I read somewhere that one major oil company had a 40% increase in
profits, while another had a 60% increase. There was no way to tell
what method was used, but I do know that distributors who are attaching
what appears to be 6-8 cents a day to gasoline prices are not doing it
because the refinery is passing that along. When a barrel of oil goes
up, the price of the gasoline goes up, and the price of the gasoline to
the refinery/distributor has not yet risen, and may not for a week or
two. Thus, the public is getting gouged rather nicely. One local outfit
priced their gas at $2.39.9 when the truck filled their tanks. That
price increased to $2.47.9 today, though no truck has been near the
place. What happened? I think the owner drove through town and realized
he was a dime under anyone else, so he tacked most of that on.
Welcome to commodity economics.
Profiteering is not at all unusual in such situations. I don't know
whether it is moral or not, but I do know that I'd rather pay more for
gas with a dealer who prices it honestly from the start than I would
from one who pops the price based on what he discovers the market will
bear after he has set his normal profit percentage.
I don't know where competitive pricing stops and price gouging starts.
Unfortunately, based on our purchasing habits, we don't give the oil
companies much incentive to lower prices.
As an aside, here's something interesting I found. On an inflation-adjusted
basis (2005 dollars), the price of crude oil peaked in the early 80s at
$84.29/bbl. In fact, from the late 70s through the early 80's, crude oil
cost more than it does now. Of course, you'll never hear that in a
newscast, because it suits their purpose to report "record oil prices".
Here's another one...in the early 70's, crude oil traded at (again in 2005
dollars) $9.03/bbl.
todd