What Happened to the gas crisis
- Thread starter pennwalk
- Start date
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Glenn9643
Veteran Member
Personally, I think the problem, if there is one, is with your local distributors.
Our prices jumped at most stations locally after the storm, as did those in other areas. Our CITGO stations were 2.49 prior to the storm and were competitive. After the storm they went up to 2.59. It hasn't been any higher yet. There were times we couldn't buy all the gas we wanted but the price was 2.59. If they can sell it at that, seems the other distributors could too.
Our prices jumped at most stations locally after the storm, as did those in other areas. Our CITGO stations were 2.49 prior to the storm and were competitive. After the storm they went up to 2.59. It hasn't been any higher yet. There were times we couldn't buy all the gas we wanted but the price was 2.59. If they can sell it at that, seems the other distributors could too.
JimR
Elite Member
</font><font color="blue" class="small">( It is down from 3.15 to now 2.85..Still $0.40 higher then 1 month ago. )</font>
The cheapest I've seen in Worcester is $2.93 and that is cash only. Someone r-ping someone here.
The cheapest I've seen in Worcester is $2.93 and that is cash only. Someone r-ping someone here.
Junkman
Super Member
It was $2.86 for regular unleaded this evening in Southbridge and Sturbridge. In Spencer and Brookfield on Rt. 9, it was still $3.03 this evening.
OKnewguy
Platinum Member
Hey guys, sorry to rub it in but we are at $2.35 for the last couple of days here in OKC OK. /forums/images/graemlins/smile.gif Lets hope it keeps up this latest trend.
dave
dave
Alan L.
Elite Member
You have a store full of widgets and they are in high demand, and you learn that your cost to replace them is going up, if you don't immediately raise the price to whatever the market will bear, you won't stay in business very long.
You can't set your prices based on the cost of product in the tank - you have to base it on replacement cost. Why would you sell gas at $3.00 (that cost you $2.85) when you know when the truck comes and delivers your next load it will cost you $3.20? So you are going to sell the gas for less than it will cost you?
You can't set your prices based on the cost of product in the tank - you have to base it on replacement cost. Why would you sell gas at $3.00 (that cost you $2.85) when you know when the truck comes and delivers your next load it will cost you $3.20? So you are going to sell the gas for less than it will cost you?
Alan L.
Elite Member
Junkman: Sounds like we shoulda bought some of those oil stocks. I didn't.
Alan L.
Elite Member
Junkman, I'm sure glad you put that "T" in there.
ejtaylor822
Gold Member
Allen, first of all thanks for taking time to explain this. I still say there are some shenanigans going on here….
I come to your store on Monday and buy 10 widgets for $1 a piece. I know they will all be sold this week and I will have to get more next week. In order for me to stay in business and have some take home pay for the CFO and kids I have to sell the widgets at 10% above cost; $1.10 a piece.
I sell 5 of them Tuesday for a $1.10. I still have 5 widgets in my pocket from my Monday purchase at a $1 a piece when I come back to your store on Wednesday and learn that the widgets are now $2 a piece. I immediately start selling my widgets for $2.20 ea. My customers complain about the high prices but I say, hey, call Allen. He’s selling them for $2.00 a piece. However, if I sell my remaining Monday Widgets at $2.20 ea (replacement cost), I just made a 120% profit.
Now going through this scenario, the “light bulb” came on when I consider the week after next and you just dropped your prices back down to a $1 each and I still have 5 widgets remaining in my inventory that I paid $2. I definitely see your point there. Selling my remaining widgets at $1.10, that I need to sell at $2.20, I’m taking a 50% operating loss. However, over the total run I have a 70% net profit based upon equal volume.
I understand what you are saying – thanks for the economics refresher it's a little more clear now. I can see how the replacement costs could totally eat up any and all profits and companies would go out of business. But, when talking about gas prices they seem to go up a whole lot faster then they go down. I still think the oil companies and others are taking advantage of the situation.
I come to your store on Monday and buy 10 widgets for $1 a piece. I know they will all be sold this week and I will have to get more next week. In order for me to stay in business and have some take home pay for the CFO and kids I have to sell the widgets at 10% above cost; $1.10 a piece.
I sell 5 of them Tuesday for a $1.10. I still have 5 widgets in my pocket from my Monday purchase at a $1 a piece when I come back to your store on Wednesday and learn that the widgets are now $2 a piece. I immediately start selling my widgets for $2.20 ea. My customers complain about the high prices but I say, hey, call Allen. He’s selling them for $2.00 a piece. However, if I sell my remaining Monday Widgets at $2.20 ea (replacement cost), I just made a 120% profit.
Now going through this scenario, the “light bulb” came on when I consider the week after next and you just dropped your prices back down to a $1 each and I still have 5 widgets remaining in my inventory that I paid $2. I definitely see your point there. Selling my remaining widgets at $1.10, that I need to sell at $2.20, I’m taking a 50% operating loss. However, over the total run I have a 70% net profit based upon equal volume.
I understand what you are saying – thanks for the economics refresher it's a little more clear now. I can see how the replacement costs could totally eat up any and all profits and companies would go out of business. But, when talking about gas prices they seem to go up a whole lot faster then they go down. I still think the oil companies and others are taking advantage of the situation.
