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Old 11-14-2018, 08:31 AM
 
65,420 posts, read 66,872,597 times
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Quote:
Originally Posted by Troyfan View Post
If I owned a gas station this is how I'd run it. Say I bought gas at $2 a gallon. Then the price went down to $1.50. I'd try my damndest to get back at least my $2 that I had put into the gas I bought. I might lower it little, gradually. But I'd do my best to get back my $2 because I have to pay that to the supplier.

Now, if the price I paid went up to $2.50, I'd raise my price immediately. Because my customers would have no alternative. All the other gas stations would do the same.

This happen all the way up and down the oil delivery chain.
We have the same issues in the electrical supply business with wire . What you quickly learn is you can only get away with what your competitors do .

It is not just the wire you lose if you are high but everything else that goes with it. I would think gas stations make quite a bit on the snacks ,coffee ,ice and soda too and they don’t want to lose that too if the customer goes elsewhere

In our business if we want to sell much wire we have to drop with the market regardless of what we paid as that is not what our competitors paid . When they drop we drop .

There are major players who are big wire houses who set the pace. They move daily with the markets so we do to

When the price rises our price goes up the next day regardless of what we paid .

At one time we sold so much copper we used future contracts to hedge pricing

 
Old 11-14-2018, 08:34 AM
 
312 posts, read 162,167 times
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Quote:
Originally Posted by JonathanLB View Post
I'm just confused when I read stock market updates or economic reports and it mentions the Dow is down, S&P 500 is down, cites these reasons why, negative economic stuff, blah blah, etc., then crude oil was also down. Why is the last one thrown into that?! For 99.99% of everyone, oil being down is a GOOD economic thing! Everyone celebrates! Nobody cares if it's down in a negative way, seriously, nobody. I don't know anyone who wants high oil prices. Airlines, hotels, consumers, online retailers, shipping companies, everyone who drives (so everyone, basically), we all want low oil prices. There are like 19 people who are bummed to read oil prices are down and they are owners of oil companies. And honestly, as you said, screw them, who cares what they want.

You mean the 19 million or more who are the shareholders (either directly or indirectly through pension funds, 401ks and such). There are no single "owner" of oil companies, they are mostly public corporations.
 
Old 11-14-2018, 08:39 AM
 
65,420 posts, read 66,872,597 times
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Quote:
Originally Posted by JonathanLB View Post
I'm just confused when I read stock market updates or economic reports and it mentions the Dow is down, S&P 500 is down, cites these reasons why, negative economic stuff, blah blah, etc., then crude oil was also down. Why is the last one thrown into that?! For 99.99% of everyone, oil being down is a GOOD economic thing! Everyone celebrates! Nobody cares if it's down in a negative way, seriously, nobody. I don't know anyone who wants high oil prices. Airlines, hotels, consumers, online retailers, shipping companies, everyone who drives (so everyone, basically), we all want low oil prices. There are like 19 people who are bummed to read oil prices are down and they are owners of oil companies. And honestly, as you said, screw them, who cares what they want.
Because oil is so volatile companies that make product, lock in their costs with futures contracts so pricing can be somewhat stabilized . It is the oil and gas companies that shift with the market . Even homeowners can lock in their heating oil costs for the season
 
Old 11-14-2018, 08:47 AM
 
Location: Billings, MT
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Quote:
Originally Posted by mysticaltyger View Post
I understand the sentiment, but the greed of the oil companies has been well established since the first major oil crisis in the early 1970s. What do Americans do as soon as the price of oil drops? Buy the biggest gas guzzler the bank will lend them money for, of course. At this point, it's on us.

Actually, the greed of the oil companies goes all the way back to the creation of The Ethyl Corporation which resulted in the elimination of alcohol as an anti-knock additive in vehicle fuel, and replacing it with tetra-ethyl lead because the lead compound was cheaper than alcohol. That, even though both the inventor of leaded gasoline (Thomas Midgely) and Henry Ford considered alcohol "the fuel of the future!"

Google it.
 
Old 11-14-2018, 09:13 AM
 
4,990 posts, read 2,228,164 times
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The guys working the pipeline aren't worth my destain.

I worked logistics for a transporter. Absolutely gobbled up the 'weather conditions' excuse. Business would pay us 'extra' to ride thru storms. Little did they know we had warehouses right down the road and it cost us little to get that stock/order to them. Same holds true for the oil industry and how folks roll over to price hikes due to some current "unforeseen" epidemic.
America can't even directly get its supply directly from the middle east. We have to buy it from Canada who in turn gets the oil we need. I long for the day where fuel/oil is not the rich man's salvation. I'd love to see another energy source become available at a minuscule cost to the consumer. Poor mobile oil had profits blowing out the wazoooo but had zero intention to pass any savings to the consumer. 8.3 billion profit quarterly.
 
Old 11-14-2018, 09:58 AM
 
Location: Caribou, Me.
5,028 posts, read 3,586,994 times
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Quote:
Originally Posted by Electrician4you View Post
So Iím assuming youíre going to stop buying fuel?
No, my very simple friend. That's one reason I am angry at them. Many elderly and poor people can't afford to switch to cheaper forms of heat, or afford newer cars that are more fuel efficient. The oil dudes and dudettes have many people over a barrel. If it were easy to get off oil as an individual, I wouldn't be upset in the least. I would just say to people, stop whining and stop using their product.

But what kind of industry/product operates on the principle of "poke people (your customers) in the eye, and then laugh at them when they howl"?? It seems to be a principle that you espouse. It's a pretty sucky principle.
 
Old 11-14-2018, 10:01 AM
 
Location: Caribou, Me.
5,028 posts, read 3,586,994 times
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Quote:
Originally Posted by cebuan View Post
That form of capitalism is not perverted -- it is exactly the way capitalism is intended to work. The means of production is controlled by those who own it. They guard against their own risk of downturn, but are not so quick to mitigate movement in their favor until the market forces them to..
That's my point. They are almost the only industry which works in this way. They are the anomaly.

They have people over a barrel. It's a raw power dynamic. Ideally, there would be at least a little bit of competition in the oil industry, so that when raw crude prices drop, customers would see lower prices. This happens, but VERY slowly. Why so slow?? I have called oil industry execs and experts to ask them this question. Nobody seems to know the answer. Very strange. (They all point the finger at other players in the industry....)
Hhhhmmmmm............
 
Old 11-14-2018, 10:03 AM
 
Location: Caribou, Me.
5,028 posts, read 3,586,994 times
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Quote:
Originally Posted by mathjak107 View Post
You better hate dairy farmers too . A gallon of milk cost more than a gallon of gas and that comes from a farm upstate . Oil can come from some of the most inhospitable places on the planet and get shipped around the world with all kinds of processing and handling.

If the oil industry are price fixers they are the worst ever at it . That is why energy stocks even have to pay such big dividends to attract investors .most of them suck at growing investor money.
The inflation adjusted price of oil is likely one of the biggest bargains .
I am not talking about that. I am not saying it is overpriced in general. I am saying that the prices to consumers go UP, but they do not come DOWN. Even when crude prices drop a bunch.
Explain that???
 
Old 11-14-2018, 10:05 AM
 
Location: Caribou, Me.
5,028 posts, read 3,586,994 times
Reputation: 3554
Quote:
Originally Posted by Troyfan View Post
If I owned a gas station this is how I'd run it. Say I bought gas at $2 a gallon. Then the price went down to $1.50. I'd try my damndest to get back at least my $2 that I had put into the gas I bought. I might lower it little, gradually. But I'd do my best to get back my $2 because I have to pay that to the supplier.

Now, if the price I paid went up to $2.50, I'd raise my price immediately. Because my customers would have no alternative. All the other gas stations would do the same.

This happen all the way up and down the oil delivery chain.
You hit the nail on the head. This is the problem. So they instantly raise their prices, when their own cost goes up. But they never do the inverse.

So I wish them all much, much pain.
 
Old 11-14-2018, 10:05 AM
 
65,420 posts, read 66,872,597 times
Reputation: 43781
Huh , we paid over 4 bucks a gallon for gas in 2007 . I paid as low as 2.38 a year ago.

Most manufacturers lock in costs for up to a year with futures contracts so they don’t change prices up or down many times until the contract expires. But prices certainly change on gas and oil
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