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People thinking that we'll all just have to "tighten our belts," but otherwise we and the economy will be more or less fine are mistaken. This is a consumer based economy. What happens when people drastically cut back consumption? Businesses go bankrupt. Debts get defaulted on. A massive deflationary death spiral ensues.
Consumption can be propped up with even more consumer debt. It can perhaps delay the Day of Reckoning for a little while longer, but it will have even more severe long-term repercussions.
Over 10 years ago with gas at $4 a gallon and everyone screaming about the oil companies I did some rough financial calculations.
Out of that $4 about 30 cents of after tax profit was generated.
The government, via leases, tax on profit, implicit gas tax, import fees, property taxes, payroll taxes and so forth was getting somewhere well over $1, perhaps more like $1.50. The remaining amounts went to extraction, salaries, shipping etc.
None of the "If bots" have provided any credible proof of $8 gas etc and as noted in my other post, this reeks of Alex Jones winding people up over economic doom to sell them stuff and he did it the last time gas hit $4 too.
If there was truly not much profit in gasoline sales...dont you think there would be less companies bothering?
I have a sneaky feeling there is more profit than we are led to believe...I work for one of the top 3 largest gas station chains in the country, they are very secretive about what they pay for fuel. When one of our stations gets a gas delivery, it will list the number of gallons and the date, and thats it!! Only a select few in upper mgmt are privy to these figures.
High energy prices are always a factor in inflation. To some degree, it's art of a cycle of up and down of the economy and energy with the geopolitical often causing big problems like now. I think we'll need a recession to slow inflation.
Need it or not - it’s coming. Aside from the increasing gasoline prices, we still jd have a BIG supply chain issue that’s going to get worse. The Dock Workers in California are getting prepared for new Contract Talks. We have a Truck shortage & Driver Shortage + Diesel is already over $6 a gallon in California. We will have a commercial Fertilizer shortage this year - it’s made with petroleum byproducts.
Russia is a major producer of potash, phosphate and nitrogen containing fertilisers - key crop and soil nutrients. It produces more than 50 million tonnes a year of the fertilisers, 13% of the global total.
That’s not to mention all the Metals.
Quote:
Originally Posted by RMESMH
A CNN reporter is 'parked' in front of a station in L.A. that = $6.95 per gallon for regular, and $7.55 for supreme.
A bit ago (before seeing Mathguy's gasbuddy link) I looked up the average for L.A. on gasbuddy and it's $5.37 per gallon.
I got a taste of the future last week while visiting Death Valley National Park. I was on fumes, so I rolled in to the station at Furnace Creek. $ 7.49 a gallon, the only gas for 60 miles. Paid $ 126 to fill up. Ouch! It's "only" $ 5.89 at my local station here in L.A. as of yesterday.
If you think gas prices will go that high, then you should definitely invest in crude oil right now.
Oil companies will have to deal with the high prices too. High oil prices ripple through the entire economy and supply chain, and it increases the oil companies costs of production.
If there was truly not much profit in gasoline sales...dont you think there would be less companies bothering?
I have a sneaky feeling there is more profit than we are led to believe...I work for one of the top 3 largest gas station chains in the country, they are very secretive about what they pay for fuel. When one of our stations gets a gas delivery, it will list the number of gallons and the date, and thats it!! Only a select few in upper mgmt are privy to these figures.
There is little profit "per gallon" of gasoline sold at gas stations to the end-user (person who fills up their Chevy at the pump). It's pennies on the gallon, literally. There are federal taxes no matter which state you buy your gas from. Then some states have a gas tax. And some counties have a gas tax. Some towns have a gas tax. There are also fees that aren't actual taxes, built into the gallon pricing. Then there's the overhead - employee wages, insurance, utility bill, delivery fees, unemployment insurance, the employer's contribution of the social security tax and workers' comp insurance. That comes out of the per-gallon price too. There's also loss costs - wiper fluid, stolen squeegies, replacing the paper towels that customers grab by the inch instead of just one or two sheets at a time, and so on.
When all is said and done, that $4.00 gallon will net a gas station owner maybe 14 cents in actual profit.
Back in the 50’s when I got my first job, I made $.75 per hour. Gas was about $.25 per gal. Work an hour and pay for 3 gal of gas.
I don’t know the minimum wage today, but I hear the number $15 per hour tossed around. Gas seems to be headed to $5 per gal. Work an hour and pay for 3 gal of gas. I wish I was young again when everything was so cheap.
Last edited by Southern man; 03-06-2022 at 03:57 PM..
I watched a video today of an economic forecaster who said that if all of the dominoes started to fall and things got out of control -- we could see $10 gas and 25% inflation. Yikes.
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