You think you have problems with high gasoline prices....

Lately I've seen some stations which usually have the lowest price for gas,
charging higher prices than other stations. Then I realized why they might
be doing this....

I think gas station underground storage tanks hold around 30,000 gallons?

If they are paying $2.50 a gallon, that would be $75,000.00 to fill their
tanks!

Then if the price goes up to $2.70 a gallon for their price, that would
then be $81,000.00 to fill their tanks.

Or an additional expense for them of $6,000.00!

Then you get a large grocery store chain which also sells gas - has 150
stores. That would be an additional $900,000.00 they would need to come up
with if the price increased 20 cents per gallon!

I read that some gas stations only make as little as 4 cents a gallon. So
if they sold 30,000 gallons of gas, then they would only make $1,200.00.

So they must be having a difficult time, not only trying to make a profit,
but also trying to get enough money together to re-fill their tanks at a
much higher price next time. Thus I would think they will need to collect
*now* the amount of money they will need to pay when they fill up their
tanks in the future???

Sounds like a cash flow nightmare....

"Bill" writes:
So they must be having a difficult time, not only trying to make a profit,
but also trying to get enough money together to re-fill their tanks at a
much higher price next time. Thus I would think they will need to collect
*now* the amount of money they will need to pay when they fill up their
tanks in the future???

Yes, gas stations generally raise their prices in anticipation
of how much it'll cost them for the next delivery. That is,
the price you pay is usually based on how much the station
thinks gas is *going to* cost, not how much they paid for the
gas you're pumping.

Jonathan Kamens wrote:
"Bill" writes:

So they must be having a difficult time, not only trying to make a profit,
but also trying to get enough money together to re-fill their tanks at a
much higher price next time. Thus I would think they will need to collect
*now* the amount of money they will need to pay when they fill up their
tanks in the future???


Yes, gas stations generally raise their prices in anticipation
of how much it'll cost them for the next delivery. That is,
the price you pay is usually based on how much the station
thinks gas is *going to* cost, not how much they paid for the
gas you're pumping.

Do they lower them in anticipation of a price drop?

--
To reply via e-mail please delete 1 c from paccbell

George Grapman writes:
Do they lower them in anticipation of a price drop?

Yes, because of market pressures -- if they don't, some other
gas station will and will sell more gas.

Of course, different stations respond to the market pressures
at different speeds.

Jonathan Kamens wrote:
George Grapman writes:
Do they lower them in anticipation of a price drop?

Yes, because of market pressures -- if they don't, some other
gas station will and will sell more gas.

Of course, different stations respond to the market pressures
at different speeds.

But the history shows that the price never drops back to what it was.
The higher the rise, the higher the final price will be when the crisis
is over.

This started with prices around $2.00 here, it is now approaching
$3.00. My bet is we will never see gas (here) at under $2.75 again and
will be lucky if it ever goes down to that.

Harry K

On 2 Sep 2005 06:40:50 -0700 "Harry K" wrote:

:Jonathan Kamens wrote:
: George Grapman writes:
: Do they lower them in anticipation of a price drop?

: Yes, because of market pressures -- if they don't, some other
: gas station will and will sell more gas.
:
: Of course, different stations respond to the market pressures
: at different speeds.

:But the history shows that the price never drops back to what it was.
:The higher the rise, the higher the final price will be when the crisis
:is over.

1982-1983 ring a bell?

:This started with prices around $2.00 here, it is now approaching
:$3.00. My bet is we will never see gas (here) at under $2.75 again and
:will be lucky if it ever goes down to that.

Just how old are you anyway?

--
Binyamin Dissen
http://www.dissensoftware.com

Should you use the mailblocks package and expect a response from me,
you should preauthorize the dissensoftware.com domain.

I very rarely bother responding to challenge/response systems,
especially those from irresponsible companies.

In misc.consumers.house Harry K wrote:

But the history shows that the price never drops back to what it was.
The higher the rise, the higher the final price will be when the crisis
is over.

This started with prices around $2.00 here, it is now approaching
$3.00. My bet is we will never see gas (here) at under $2.75 again and
will be lucky if it ever goes down to that.

Where is "here"?

Do you happen to recall the price of gas in the summer of 1998 through 1999
was in your area? How did those prices compare to the few years before?

I personally am expecting gas to be under $2 again within 18 months.

Harry K wrote
Jonathan Kamens wrote
George Grapman writes

Do they lower them in anticipation of a price drop?

Yes, because of market pressures -- if they don't,
some other gas station will and will sell more gas.

Of course, different stations respond to
the market pressures at different speeds.

But the history shows that the price never drops back to what it was.

Lie.

The higher the rise, the higher the final price will be when the crisis is
over.

Have fun explaining how come that didnt happen after the 70s.

This started with prices around $2.00 here, it is now approaching
$3.00. My bet is we will never see gas (here) at under $2.75 again
and will be lucky if it ever goes down to that.

Plenty of mindless pig ignorant hysterics said the same thing in the 70s too.

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On Thu, 01 Sep 2005 17:13:33 GMT, George Grapman
wrote:

Jonathan Kamens wrote:
"Bill" writes:

So they must be having a difficult time, not only trying to make a
profit, but also trying to get enough money together to re-fill
their tanks at a much higher price next time. Thus I would think
they will need to collect *now* the amount of money they will need
to pay when they fill up their tanks in the future???


Yes, gas stations generally raise their prices in anticipation
of how much it'll cost them for the next delivery. That is,
the price you pay is usually based on how much the station
thinks gas is *going to* cost, not how much they paid for the
gas you're pumping.

Do they lower them in anticipation of a price drop?

How droll!


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--
-john
wide-open at throttle dot info

~~~~~~~~
The time to repair the roof is when the sun is shining
- JFK
~~~~~~~~

Bill wrote:
You think you have problems with high gasoline prices....

Lately I've seen some stations which usually have the lowest price for gas,
charging higher prices than other stations. Then I realized why they might
be doing this....

I think gas station underground storage tanks hold around 30,000 gallons?

If they are paying $2.50 a gallon, that would be $75,000.00 to fill their
tanks!

I saw a TV news story on this. I forget which network. They said
that these smaller independent gas stations -- the ones that usually
have bargain prices -- operate by looking for deals and buying excess
gas from the major gas companies. But the "majors" (as this particular
analyst called them), when there are shortages, will favor their own
chain of retail stations over independents who want to buy from them.
They put the independent stations on an allocation based on previous
usage, so that the maximum they can buy is 110% or 120% of what they
bought in some previous time period (same day previous year, same day
previous month, or rolling average over some period like the last
month or quarter).

The bottom line is that these independent bargain stations normally
have low prices because they are picking up surplus here and there
at cut rates. But now there IS no surplus, or not much of it. They
have less flexibility to shop around for low rates, and they also
have less available to them overall, so they are going to buy less
gas at a higher rate and charge a lot more.

The net result is that the independent "bargain" stations are now
charging more than the name-brand major chains. Which probably
sucks for them, but on the other hand, when there are shortages,
people become a lot less price sensitive, so the bargain stations
won't have too much trouble unloading that gas even though they're
charging more than people expect.

- Logan

I asked how big the underground tanks were at a gas station and the guy
told me they could hold 120,000 gallons.

He also said they were only keeping them about 1/3 full lately. Note that
he had a concerned look on his face when he said this.

And just yesterday the prices around here went from the $2.60's to around
$3.00 (over $3.00 for premium and diesel).

I would imagine that they would need to be *very* careful about their
pricing so that they will have enough cash to fill their tanks next time
around... [i.e. cash flow - money invested in their inventory, etc.]

Saw the same thing happen when the price of cigarettes went up quite a bit
suddenly. Many smaller stores reduced their inventory. Big bucks!

Bill wrote:
I asked how big the underground tanks were at a gas station and the guy
told me they could hold 120,000 gallons.

He also said they were only keeping them about 1/3 full lately. Note that
he had a concerned look on his face when he said this.

if he can get by on 1/3 of a tank, why not? why fill the tank when
wholesale prices are so expensive?

"SoCalMike" wrote in message
...
Bill wrote:
I asked how big the underground tanks were at a gas station and the guy
told me they could hold 120,000 gallons.

He also said they were only keeping them about 1/3 full lately. Note that
he had a concerned look on his face when he said this.

if he can get by on 1/3 of a tank, why not? why fill the tank when
wholesale prices are so expensive?

....Because wholesale might become even *more* expensive in the future.
Something that needs to be considered.

Heck, I filled up my car's tank almost every morning on the way to work this
week, even though it was only a few gallons low. Because I knew that when
I'd come home that night, the gas stations would be charging .20 or so more
than they were in the morning. I would think a station owner might consider
a similar strategy if he can pull it off.

Logan Shaw wrote:
Bill wrote:

You think you have problems with high gasoline prices....

Lately I've seen some stations which usually have the lowest price for
gas,
charging higher prices than other stations. Then I realized why they
might
be doing this....

I think gas station underground storage tanks hold around 30,000 gallons?

If they are paying $2.50 a gallon, that would be $75,000.00 to fill their
tanks!


I saw a TV news story on this. I forget which network. They said
that these smaller independent gas stations -- the ones that usually
have bargain prices -- operate by looking for deals and buying excess
gas from the major gas companies. But the "majors" (as this particular
analyst called them), when there are shortages, will favor their own
chain of retail stations over independents who want to buy from them.
They put the independent stations on an allocation based on previous
usage, so that the maximum they can buy is 110% or 120% of what they
bought in some previous time period (same day previous year, same day
previous month, or rolling average over some period like the last
month or quarter).

The bottom line is that these independent bargain stations normally
have low prices because they are picking up surplus here and there
at cut rates. But now there IS no surplus, or not much of it. They
have less flexibility to shop around for low rates, and they also
have less available to them overall, so they are going to buy less
gas at a higher rate and charge a lot more.

The net result is that the independent "bargain" stations are now
charging more than the name-brand major chains. Which probably
sucks for them, but on the other hand, when there are shortages,
people become a lot less price sensitive, so the bargain stations
won't have too much trouble unloading that gas even though they're
charging more than people expect.

- Logan


which makes sense. i saw an independant station that was *closed*. roped
off with yellow tape. the prices on the sign were about 30 cents higher
than other places- about $3.30/gal, when the 76 station down the street
was $2.97.

guess it doesnt make sense to stay open when no one in their right mind
would pay those prices.

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On Thu, 1 Sep 2005 08:49:55 -0700, "Bill"
wrote:

I read that some gas stations only make as little as 4 cents a
gallon.


That's a damned lie.
I just checked with some locals here in northern California, where
petrol is higher than most other locations, and the average is 50
cents per gallon blue sky (profit). Therefore the margin is more on
the order of 70 or 80 cents per gallon. There are some honest
dealers here who admit to making at least 40 cents on the gallon.
Then there are the liars.


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--
-john
wide-open at throttle dot info

~~~~~~~~
The time to repair the roof is when the sun is shining
- JFK
~~~~~~~~

"That's a damned lie.
I just checked with some locals here in northern California, where
petrol is higher than most other locations, and the average is 50
cents per gallon blue sky (profit). Therefore the margin is more on
the order of 70 or 80 cents per gallon. There are some honest
dealers here who admit to making at least 40 cents on the gallon.
Then there are the liars. "

Gasoline retailers making 50 cents a gallon profit? LOL There have
been lots of reports showing the breakdown of the cost of gasoline at
the pump. I've never seeen any with retailers earning margins of 80
cents and profits of 50 cents. A typical margin is 10-15 cents. Over
half the cost is now reflected in the price of crude. Follow that
with in decreasing order, refining cost, taxes, and transportation, and
there isn't a lot left for the retailer. In fact, that's why many of
them earn more profit from having a convenience store as part of the
operation.

Bill wrote:
You think you have problems with high gasoline prices....

Lately I've seen some stations which usually have the lowest price for gas,
charging higher prices than other stations. Then I realized why they might
be doing this....

I think gas station underground storage tanks hold around 30,000 gallons?

If they are paying $2.50 a gallon, that would be $75,000.00 to fill their
tanks!

Then if the price goes up to $2.70 a gallon for their price, that would
then be $81,000.00 to fill their tanks.

Or an additional expense for them of $6,000.00!

Then you get a large grocery store chain which also sells gas - has 150
stores. That would be an additional $900,000.00 they would need to come up
with if the price increased 20 cents per gallon!

I read that some gas stations only make as little as 4 cents a gallon. So
if they sold 30,000 gallons of gas, then they would only make $1,200.00.

So they must be having a difficult time, not only trying to make a profit,
but also trying to get enough money together to re-fill their tanks at a
much higher price next time. Thus I would think they will need to collect
*now* the amount of money they will need to pay when they fill up their
tanks in the future???

Sounds like a cash flow nightmare....

I have a relative with a gas station, and it is very difficult to make a
profit. In fact he does not make a profit on gas, if you factor in the
fixed costs. He has to decide how much gas to order, based on the
anticipated direction in wholesale prices, since he doesn't want to get
stuck with expensive gas in his tanks when prices are going down, he
wants to fill his tanks just before prices go up. His gross profit is
around 10 cents per gallon, and he pumps around 50K gallons per month.
This is only $5000 in gross margin, not enough to pay the franchise
fees, rent, taxes, fees, and a cashier.

On Wed, 07 Sep 2005 15:05:10 GMT, SMS
wrote:


I have a relative with a gas station, and it is very difficult to make a
profit. In fact he does not make a profit on gas, if you factor in the
fixed costs. He has to decide how much gas to order, based on the
anticipated direction in wholesale prices, since he doesn't want to get
stuck with expensive gas in his tanks when prices are going down, he
wants to fill his tanks just before prices go up. His gross profit is
around 10 cents per gallon, and he pumps around 50K gallons per month.
This is only $5000 in gross margin, not enough to pay the franchise
fees, rent, taxes, fees, and a cashier.

Does your relative base his pump prices on (a) what he thinks he'll
pay for the next tankload, or (b) what he's paid for gas already in
the tank? Or is it (a) when prices are rising and (b) when prices are
dropping?

The Etobian wrote:

Does your relative base his pump prices on (a) what he thinks he'll
pay for the next tankload, or (b) what he's paid for gas already in
the tank? Or is it (a) when prices are rising and (b) when prices are
dropping?

The price is NOT based on the price of the fuel already in the tanks.
You'd think that this would be the fairest way to price, but the problem
is that you cannot charge a higher price when the wholesale price is
falling, just because you paid more for the gas in your tanks, so
conversely you have to balance it out by not charging less when the
wholesale price is rising yet you paid less for the gas in your tanks.
Where you can make money is to fill your tanks just before you know
prices are going up, and hope that they fall slightly prior to the next
fill-up.

SMS wrote:
The price is NOT based on the price of the fuel already in the tanks.
You'd think that this would be the fairest way to price,

Not necessarily. What it cost them in the past is just that: the past.
I would expect them to price it at whatever it's worth right now.

That means if they bought it cheap and are making a hefty profit, I'm
OK with that. It would be nice for them to share their luck with me,
but I don't expect them to since they're a business. On the other
side of the coin, I don't expect them to charge a lot for it if they
bought it when prices were high but prices have dropped a lot since
them. That's their problem in exactly the same way that it's their
good fortune if they managed to buy low and sell high.

- Logan

On Thu, 08 Sep 2005 00:29:57 GMT, SMS
wrote:

The price is NOT based on the price of the fuel already in the tanks.
You'd think that this would be the fairest way to price, but the problem
is that you cannot charge a higher price when the wholesale price is
falling, just because you paid more for the gas in your tanks, so
conversely you have to balance it out by not charging less when the
wholesale price is rising yet you paid less for the gas in your tanks.
Where you can make money is to fill your tanks just before you know
prices are going up, and hope that they fall slightly prior to the next
fill-up.

If that's the case, why is it that when wholesale prices spike up, we
see almost instantaneous spikes at the pump, but when wholesale prices
drop sharply, it takes many many days to see the first penny drop and
it takes weeks for the retail prices to return to the normal markup
over wholesale?

In article , The Etobian
wrote:

If that's the case, why is it that when wholesale prices spike up, we
see almost instantaneous spikes at the pump, but when wholesale prices
drop sharply, it takes many many days to see the first penny drop and
it takes weeks for the retail prices to return to the normal markup
over wholesale?

Why does a male dog lick his dick?

Because he can.

--
"Let's just admit that public education is mediocre at best." -- Frank Zappa