And that attitude is what is wrong with business today. I've been a
small businessman since at least '68, and to date I haven't found it
necessary to screw my clients out of the last dime in order to get by.
I'm sorta' w/ ya' on this, Charlie, altho I understand the other as
Unfortunately, it's the distributors who control the pump prices
(essentially, local markups are pretty competitive in most places) and
they seem to be, as you note, very prompt in the up direction, not so
prompt in the other...
I don't have data on what the refiners are doing (in the relatively few
cases where they and the major distributors aren't the same)...I suspect
the independents are following the big boys because they'd get crushed
if they didn't.
What I was writing of was at the local station level. Go in Friday and
see a truck filling the tanks, and an 8 cent increase on the pump. Go
by Sunday, and see another 8 cent increase, and another on Wednesday,
but the next truck doesn't arrive until that Friday.
That's neither distributor nor refiner. Just neighbor screwing neighbor
out of a few bucks.
Actually, if you were to investigate, you would probably find that each
of those increases at the local station did reflect costs his
distributor had just passed on to him...I know for a fact that's what
happens here as I know two local re-distributors/retailer wells as well
as knowing what we do on the driveway pumps at the local farmers' coop
of which I am a member...
Here in this last week we got hit w/ two increases in one afternoon
plust another the next day...
And that assumes the store is in a location they have a choice of
distributors willing to sell to anyone on a hit-or-miss business.
That's not common here--in fact, it's quite uncommon. I suppose in more
populated areas, there is enough competition to keep such an arrangement
Ah, well...shows nuttin's the same <every>where... :)
I still can understand him keeping prices at the pump in line w/
everyone else even if I would personally prefer he didn't...
I know that your case is the exception, rather than the rule, if true.
Y'see, there's more people overall who want to sell gas than there is gas
available most places. Makes the distributor pretty powerful indeed.
Of course, I can't speak for your one station, only the ones I know.
The little two-pump places are gone here. Can't afford to pay the
environmental bond on the underground tanks
Yeah. Our little two pump place just installed a supplement to its six
There appears to be no shortage of gas available here, which may be why
our prices are lower than most other places. We are between two small
cities, so there are numerous distributors available...and plenty of
stations. But I was writing of country stores...and, IME, it has been a
couple decades since any of those in this area were "two pump"
stations. Gas is basically honey for the trap that draws people inside
for other items, all ingeniously priced high, but not so high it is
worth driving 10 miles into the nearest town.
That's hardly what I'd consider "country store"...that's larger than the
single largest station in town, here (except for a couple of the
And, one of the two fella's I mentioned earlier is the largest retailer
in town w/ three stations and the business (he's 2nd generation) has
been w/ the same nationally branded distributorship since in the late
40s and that distributorship has threatened to cut them off because
they're not large enough volume...
I think Charlie is trying to say you should sell things based on what
you paid for them, not based on what you are going to have to pay to
replace them in the normal course of business. I disagree. If the
wholesale price of gas goes up $.05, it is immaterial how much I paid
for the gas currently in my storage tank, the real question is how
much do I have to pay to replace whatever I sell to you at the pump.
The difference between my current replacement cost and my current pump
price is my real profit. Yeah, I wrote that as if I owned a station. I
don't, but the concept is the same whether we talk gas, bread or
houses. As an exagerated example, If you bought a house 20 years ago
the price you would want to sell it for would have nothing to do with
the price you paid, but a lot to do with what it is going to cost you
to replace that house so that you still have a place to live.
Specious analogy. If you sell houses for a living, you might make the
comparison and call it valid. But to say you live in a house and have
to get more for it than you paid so you can pay replacement costs is
not any kind of analogical situation.
You and George are a business shark's dream.
I'm with Charlie here on this one. Yes, the business is going to pay
$0.05 per gallon more to replace what is currently being sold (that was
purchased for a price $0.05 less than the new price), but the business is
also going to sell that new product at the corresponding higher price. The
only thing that raising the price on the current inventory does is increase
the cash flow to accomodate the new price, but then the new priced gas
(assuming price stabilizes) is now providing an additional $0.10 per gallon
(you didn't think the $0.05 increase was not going to be added to the new
gas as well, did you?). Acid test is if the price of wholesale goes down
$0.05 per gallon, does the retailer immediately lower the price of the gas
he purchased at the higher price (but had previously covered by raising
prices on lower-cost gas before the new price hit), or does the retailer
wait until the new, lower priced gas is delivered and paid for?
Not saying there is anything illegal about any of this, it just is
irritating and does nothing to encourage faith in one's fellow humans.
OTOH, if the dealers in an area have some sort of "deal" that assures
nobody strays outside of certain band of prices, then *that* is illegal.
If you're gonna be dumb, you better be tough
You're normally a thinker, not a wisher, so let me try another example in
hope that at least you will catch on.
Tanker drives up to deliver 10,000 gallons, on which I, as owner stand to
make, say eight cents a gallon . Seven thousand later, the price jumps
eight cents a gallon. Do I:
1) Forfeit all my profit, from which I expected to pay my expenses and put a
chicken on the table?
2) Try to get some money back to protect my cash flow by pushing up the
price on the remaining three to replacement cost?
3) Just buy less gas to sell for the same potential eight cents next time
because I have less money?
You make the call.
Now, since during times of rising prices I take it in the shorts regardless
of the option exercised, my hopes are for falling prices, where I may
recover some of my losses in a rising market and stay in business in spite
of a rather irregular cash flow. I can only do this by holding pump prices
during a decline in distributor prices.
Oh yes Charlie, the logo on the truck that pulls up to fill my tanks need
not match the logo on the sign. My distributor supplies gasoline to several
"brand" stations, and, especially at night, is prone to topping me off with
whatever truck has some fuel left in it. That way he doesn't have to take
it back to the depot with him. Same distributor, different logo.
And that has what to do with anything? Locally, distributors come out
of the tank farm and supply just about everyone, and just about
everyone knows it. Big surprise? Maybe for you, but it's been going on
for 35-40 years, IME.
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