Are we being robbed?

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Pilgrim

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Every morning last week the price/gal was higher than the night before and everynight on the way home it was higher than it was that morning.

Remember, this is for gas that was in the ground the prior week. No more costs for the dealers just higher prices twice a day for OLD gas.

Are we getting robbed? You tell me.
 
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I odn't know what it's like where you guys are, but gas prices are heading down right now. Gas was 3.35 on Sunday and today it's down to 3.19.

National average is 3.07. Pricer per barrel went down something like 16 cents in the last few days. But did you know that 18 cents of every gallon goes to the govt, and they refuse to even lower that to get through this?

Bastards...
 

Rob Boudrie

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Pilgrim said:
Every morning last week the price/gal was higher than the night before and everynight on the way home it was higher than it was that morning.

Remember, this is for gas that was in the ground the prior week. No more costs for the dealers just higher prices twice a day for OLD gas.

Are we getting robbed? You tell me.
Some questions:

1. If the price goes down, but the dealer paid more, will you be willing to pay the dealer based on his old price for the gas in the ground?

2. How do you determine how much to ask for your house? Do you look at your cost, how long you've held it, and inflation and set a reasonable markup or do you try to get the most the market will bear?

3. If you answer to #2 is "no", and #3 is "market price", by what logic do you assume you should operate under a different set of rules when you are the buyer rather than the seller?
 
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Don't forget the state tax of 23.5 cpg for the state and 18.4 for federal which comes to 41.9 cpg in taxes on gas.

God I hate tax's.

I really feel for everyone who has to commute and am glad I don't have my old job, I would be spending $457/month on gas for commuting. I made about $800/mo.
 

Greg

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Rob Boudrie said:
Pilgrim said:
Every morning last week the price/gal was higher than the night before and everynight on the way home it was higher than it was that morning.

Remember, this is for gas that was in the ground the prior week. No more costs for the dealers just higher prices twice a day for OLD gas.

Are we getting robbed? You tell me.
Some questions:

1. If the price goes down, but the dealer paid more, will you be willing to pay the dealer based on his old price for the gas in the ground?

2. How do you determine how much to ask for your house? Do you look at your cost, how long you've held it, and inflation and set a reasonable markup or do you try to get the most the market will bear?

3. If you answer to #2 is "no", and #3 is "market price", by what logic do you assume you should operate under a different set of rules when you are the buyer rather than the seller?
Great points.Believe it or not,gas stations are just trying to stay in business.They make most of thier money on the soda,candy etc...Very little markup on gas.
 
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Greg said:
Rob Boudrie said:
Pilgrim said:
Every morning last week the price/gal was higher than the night before and everynight on the way home it was higher than it was that morning.

Remember, this is for gas that was in the ground the prior week. No more costs for the dealers just higher prices twice a day for OLD gas.

Are we getting robbed? You tell me.
Some questions:

1. If the price goes down, but the dealer paid more, will you be willing to pay the dealer based on his old price for the gas in the ground?

2. How do you determine how much to ask for your house? Do you look at your cost, how long you've held it, and inflation and set a reasonable markup or do you try to get the most the market will bear?

3. If you answer to #2 is "no", and #3 is "market price", by what logic do you assume you should operate under a different set of rules when you are the buyer rather than the seller?
Great points.Believe it or not,gas stations are just trying to stay in business.They make most of thier money on the soda,candy etc...Very little markup on gas.
Here's what I'm saying. And maybe I'm wrong. But I was under the impression that the Gas market works on Futures. Just like say...pork bellys.

So, when the price of a barrel of crude goes up. The station raises the price to meet the cost of replacement. Correct? That's fine. I understand that, if they don't raise the price for what they have in the ground. Then they don't have the money to buy the next dump.

Now, they've made that money, paid for the next dump. The price of a barrel goes down. They are still making the same profit, so they only need to make the money for the next dumb. So the price should do down, right?

It is, but not to what the market is saying that wholesale prices are.

All I'm saying is they are quick to raise the price at the pump. But they are still slow to put it back, if they even do.

When Pork bellys goes down. The people that are selling them will lose money. That's the risk in Futures. It just seems that the owners are getting the best of both worlds.

Like I said, maybe I'm getting this all wrong.
 

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Remember; when you buy gas, you're not paying for the cost of the actual gas you are putting in your tank. You are paying the replacement cost of that gas.
That having been said, it always seems to go up on speculation, but never down.
 

Chris

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And on top of it all, there was a story on the radio this morning about record profits for the third quarter for Exxon/Mobil.

As much as I hate the Democrats for the "Hand OUt" state they prefer, the current administration's support of bloated oil profits while telling the public that it's all market pressures is pretty damn sour too. All those red state farmers who can no longer afford to fuel their tractors might find different leanings next election cycle. Hope all those Republican Fat Cats enjoy thier oil profits before the next Democrat run administration tax it all away to give to their votors.
 

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C-pher said:
Here's what I'm saying. And maybe I'm wrong. But I was under the impression that the Gas market works on Futures. Just like say...pork bellys.

So, when the price of a barrel of crude goes up. The station raises the price to meet the cost of replacement. Correct? That's fine. I understand that, if they don't raise the price for what they have in the ground. Then they don't have the money to buy the next dump.

Now, they've made that money, paid for the next dump. The price of a barrel goes down. They are still making the same profit, so they only need to make the money for the next dumb. So the price should do down, right?
So if you're planning on bailing out of this pit for someplace sane like Arizona, do you sell your house here for the (let's say) $400K that your can easily get for it, or only for the $250 you need to purchase a comparable replacement house in Arizona? What make's you think that there are different categories of markets that operate on different bases? People are in business to make a profit. Period. Futures, spot markets and the like may be important in understanding how the wholesale prices of gasoline will change over time, but have little if anything to do with your local gas station. The manager knows what he has to pay for gas and how much is rent (or mortgage), insurance, taxes, utilities, wages, workman's comp and other expenses are. That determines what he's going to need to make to stay in business. The local competition and demand determine how much he can charge for gas. Given those constraints, he's going to try to make the most money that he can. Those who choose to ignore those simple realities end up out of business and living on welfare.

Ken
 
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PatMcD said:
Remember; when you buy gas, you're not paying for the cost of the actual gas you are putting in your tank. You are paying the replacement cost of that gas.
That having been said, it always seems to go up on speculation, but never down.
Correct. And, the same goes for when the price goes down. The station is selling it for less than what they paid for it, but in the end it kind of evens out. Hubby used to manage a convenience store eons ago that also sold gas. They only make .05 to .10 cents per gallon of gas sold, and there were times when he was selling it for less than what the company paid for it. FWIW
 
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Yup, and remember, Gasoline is a Commodity. Prices do go up and down, as they have locally. They went DOWN 20 cents over the past few days, from 3.499 to 3.299
 
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OK, so when you have one station charging 3.46 and the one across the street charging 3.19, what's the difference.

I understand making a profit. I just don't want price gouging going on. And if you have this going on, I think that's what happening.

And Lynne said that the profit margin was only .05 cents. But when wholesale is 2.15 and they are charging 3.40, that's more than what they say.

The difference between a home and gas is this. If the market is saying that the house is 400, but I don't want to pay it. Two things are going to happen. The price of homes are going to go down. Or I'm going to rent for a lot less.

We don't have that chance with Gas. We HAVE to pay what they put up. That or we don't drive to work.

That and while the stations are charging more than market value, it's raising the cost of everything we use.

I don't see a overpriced market of homes making the cost of my milk go up.

Believe what you want. But retail demand and futures are different. And don't work the same. While one effects something else, one does not.

Correct?
 
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C-pher said:
Believe what you want. But retail demand and futures are different. And don't work the same. While one effects something else, one does not.

Correct?
To a certain degree hun. Usually the greater the demand, the lower the price becomes, unless it's a commodity in short supply. In that case, the higher the demand, the higher the cost. Since oil is coming down (was $64 and change end of business day today because damage wasn't as bad as they feared to the rigs in the gulf) and some of the refineries are coming back on line with more expected shortly, then the price of gas should start to drop.

Also, the difference in price of the gas stations - if they've been notified that they're getting a dump and they know what the price is, then they can start dropping the price as long as they know they've got stock coming in. Once the refineries are all back on line, then you can expect to see price wars again between the stations. The larger the supplier (i.e. Exxon/Mobil), then you can probably expect them to start the drop in price first. Usually, anyway. I've seen some no-name gas stations selling gas a lot higher than Mobil, Citgo, etc.

And, what you stated for the wholesale of $2.15... That may well be what they paid for it, however, future fills in their tanks will cost more. They have always raised the price when they know that something is going to happen, or is happening, and as soon as the news shows that whatever that thing was has changed, then they drop it. Think about it. When the price of a barrell dropped, we saw it at the pumps within a week, right? It certainly takes longer than a week for that lower cost barrell to make it through the process and get to the pumps. Ergo, the station is loosing money at that point, but they also know that sooner or later it'll catch up and then something else will happen to increase the gas cost.

I don't play oil futures, but hubby and I do play the futures and it's basically (and mostly) the same principle with all the commodities.
 
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A bit long, but this might help some....

Oil Prices Fall; Gasoline Prices Decline
By BRAD FOSS
AP Business Writer

WASHINGTON - The supply fears that dominated energy-market psychology in the aftermath of Hurricane Katrina receded somewhat on Wednesday as attention turned to expectations of softening demand. Futures prices for crude oil, gasoline and heating oil fell.
"As much as Katrina has taken supply off the table, there's also demand it has taken off the table," said oil analyst John Kilduff of Fimat USA in New York.

Some of the demand that has been lost is due to the devastation and evacuation of New Orleans. The rest is likely to be a consumer response to higher prices, Kilduff said.

Backing that view was a monthly report from the Energy Department that revised downward its forecast for petroleum demand growth in the U.S. by 38 percent. The report predicted a 100,000 barrels per day increase in U.S. petroleum demand in 2005; that is down from 160,000 barrels per day a month earlier "largely due to sharply higher prices," the agency said.

Light sweet crude for October delivery fell $1.59 to settle at $64.37 a barrel on the New York Mercantile Exchange.

Nymex oil futures are roughly $6 below their intraday high of $70.85 reached Aug. 30 in the wake of Katrina, but prices are about 50 percent higher than a year ago.

"Nothing's cheap, it's just that it's coming way down from the panic buying that ensued in the hurricane's aftermath," Kilduff said.

Despite lingering concerns about refinery outages along the Gulf Coast, gasoline futures dipped more than 3 cents to settle at $2.0222 per gallon. Heating oil futures fell by 9.2 cents to $1.9623 per gallon.

On London's International Petroleum Exchange, October Brent futures fell $1.78 to settle at $62.89 a barrel.

"You have to believe that high prices have certainly hurt some demand," said oil broker Tom Bentz of BNP Paribas Commodity Futures in New York. "But how much is another story. If prices at the pump start falling, everyone will go right back to their old ways of guzzling gas."

Analysts said crude-oil futures also declined for the third straight trading session because of the gradual recovery of petroleum production in the Gulf of Mexico.

More than 860,000 barrels per day, or 57 percent, of Gulf of Mexico oil production remains offline, according to federal statistics released Wednesday. But a week ago, 95 percent of oil output had been shut down.

Also providing some relief to the oil market was a pledge last week from more than 20 nations under the International Energy Agency to release the equivalent of 2 million barrels per day of crude and refined products. More than 680,000 barrels per day of that total will consist of gasoline and diesel, the IEA said Wednesday.

However, the amount of crude oil processed into gasoline, diesel and other fuels by Gulf Coast refineries could be reduced by close to 1 million barrels per day for at least several weeks because of hurricane-related power outages and water damage, according to the preliminary damage assessments.

The four refineries believed to be most affected by Katrina are:

_ Chevron Corp.'s 325,000 barrels per day plant in Pascagoula, Miss.

_ ConocoPhillips' 247,000 barrels per day plant in Belle Chasse, La.

_ ExxonMobil Corp.'s 187,000 barrels per day plant in Chalmette, La.

_ Murphy Oil Corp.'s 120,000 barrels per day plant in Meraux, La.

Another segment of the Gulf's energy infrastructure that may have sustained longer-term damage is the web of underwater pipelines critical to the gathering and transportation of natural gas. Three natural gas processing plants owned by Enterprise Products Partners LP are not yet operational and, depending on the extent of damage, could be out for weeks. BP PLC said Wednesday that its Pascagoula natural-gas processing plant had power but was not running because offshore pipelines were not able to deliver fuel to the plant.

"The longer term impact of Katrina may be felt much more intensely in North American natural gas markets, which like refining have displayed a new dimension of vulnerability," said Energyintel analyst Tom Wallin in a research note from New York.

More than 4 billion cubic feet a day, or 40 percent, of the region's natural gas production remained shut down as of Wednesday, according to the federal Minerals Management Service.

Still, that is a big improvement from a week ago, when almost 88 percent of daily natural gas output was offline and natural gas futures fell by 45.6 cents Wednesday to settle at $11.201 per 1,000 cubic feet. A year ago, natural gas futures traded below $5.

Since Aug. 26, 71.7 billion cubic feet of output have been lost, while 13.6 million barrels of crude have been lost.

In testimony before Congress on Tuesday, Rebecca Watson, assistant secretary for land and minerals management, said four large deepwater platforms accounting for 10 percent of the Gulf's total oil output suffered extensive damage that could take 3 to 6 months to fix.

On Tuesday, the Energy Department said the average retail price of regular unleaded climbed by 46 cents last week to $3.07 per gallon. That's a nominal record, but still 4 cents below the inflation-adjusted high reached 25 years ago, according to agency statistics.
 
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OK, but I'm talking the difference between the cost of Gas vs. the cost of a home.

I have the choice to pay for a price of a home, or rent. If I don't want to pay for the price of a 400 g home. Then I find a place and rent for a third of the cost of a mortage.

And you said, "the greater the demand, the lower the price becomes"

I always thought that it was the other way around. The greater the demand, the higher the price because more people wanted it.

I guess that I'm thinking about this all wrong.
 
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C-pher said:
OK, but I'm talking the difference between the cost of Gas vs. the cost of a home.

I have the choice to pay for a price of a home, or rent. If I don't want to pay for the price of a 400 g home. Then I find a place and rent for a third of the cost of a mortage.

And you said, "the greater the demand, the lower the price becomes"

I always thought that it was the other way around. The greater the demand, the higher the price because more people wanted it.

I guess that I'm thinking about this all wrong.
You really can't compare gas vs. housing. The housing market basically depends on the interest rates. The lower the rate, it's a sellers market. The higher the rate it's a buyers market. (Although in my area, it's cheaper to pay my mortgage and condo fee every month than it would be to rent - yikes!) The housing market is usually pretty constant. Meaning of late anyway, it keeps going up, but that too will fall shortly. We can't keep increasing the price of housing like it's been going the past couple of years. Sooner or later, that bubble too will pop.

As far as the greater the demand, the lower the price - let's take DVD players. When they first came out, they were expensive. But, people began to buy them. Now, you can pick one up for $50. The greater the demand (i.e. sales), the more ramped up companies become to produce them (meaning they buy in greater bulk quantities), and the lower the cost becomes to produce them - meaning lower retail prices.

Commodities don't fall in to the same category. Let's take soy beans for a sec. (guess what we've played the futures on? :D ) Soy is totally at the whim of mother nature. If there's no rain in the forecast, the price goes up. No rain means less of a crop yield. Rain in the forecast and multiple days of it, price goes down because the yield will be much higher.

Clams during red tide. Price goes up because there's a "shortage". Red tide goes away, price drops because the affected clam beds are now opened. The demand hasn't changed, but the supply has.

It's the same with gas/oil. Take away the source of the product (the refineries) and the price will go up. Even tho it'll take a while for the increase to hit the pumps, because the stations don't make a lot on the gas itself, they increase the price because they know that sooner or later, they will be paying more for it. So, as much as it seems like their price gouging now (and some may be doing it a bit more than they should), it doesn't mean it's totally unjustified. Sooner or later we would be paying the higher price - they just get it over with sooner. And, when the price drops, then we see the benefits of it. Maybe not as quick as we saw the prices goes up last week, but they will drop.
 

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(1) Maybe the difference between the wholesale price of gas is a $1.05 or so per gallon. That's hardly the same as the profit margin. If it were, no restaurant would ever go out of business when they can sell $12 bottles of wine for $45, but most of them still do. As I posted earlier, there are a couple of other costs involved.

(2) So you don't like the example of selling your home. Let's pretend that you can get all the .22lr ammunition you want for 10 cents a brick. Are you going to look at it and think, "Gee, I can cover my costs and make a reasonable profit by charging 25 cents a brick, so that's what I'll do" or are you going to think, "Well, everybody else is charging aroung $10 a brick, so I'll be a nice guy and only charge $9." Don't bother telling me which you'd do, just be honest with yourself, and remember, all your customers will love you for selling at lower prices than everybody else.

Ken
 
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KMaurer said:
(2) So you don't like the example of selling your home. Let's pretend that you can get all the .22lr ammunition you want for 10 cents a brick. Are you going to look at it and think, "Gee, I can cover my costs and make a reasonable profit by charging 25 cents a brick, so that's what I'll do" or are you going to think, "Well, everybody else is charging aroung $10 a brick, so I'll be a nice guy and only charge $9." Don't bother telling me which you'd do, just be honest with yourself, and remember, all your customers will love you for selling at lower prices than everybody else.
Ken hun, was that directed at me? If it was, then I would sell for $9, and not because I'm being a "nice guy". If I'm making money on it, and I can sell for less than the competition, then I'll go for quanitity. (Keep in mind luv - I *was* in the retail biz and did just that - which is why my store was a success) :D
 
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