Home Repair forum - Oil chiefs say high prices not our fault

Author

Oil chiefs say high prices not our fault

monkey_cartman@yahoo.com

2008-04-01, 8:27 pm

Oil chiefs say high prices not our fault

By H. JOSEF HEBERT, Associated Press Writer 1 minute ago

WASHINGTON - Don't blame us, oil industry chiefs told a skeptical
Congress. Top executives of the country's five biggest oil companies
said Tuesday they know record fuel prices are hurting people, but they
argued it's not their fault and their huge profits are in line with
other industries.
ADVERTISEMENT

Appearing before a House committee, the executives were pressed to
explain why they should continue to get billions of dollars in tax
breaks when they made $123 billion last year and motorists are paying
record gasoline prices at the pump.

"On April Fool's Day, the biggest joke of all is being played on
American families by Big Oil," Rep. Edward Markey, D-Mass., said,
aiming his remarks at the five executives sitting shoulder-to-shoulder
in a congressional hearing room.

"Our earnings, although high in absolute terms, need to be viewed in
the context of the scale and cyclical, long-term nature of our
industry as well as the huge investment requirements," said J.S.
Simon, senior vice president of Exxon Mobil Corp., which made a record
$40 billion last year.

"We depend on high earnings during the up cycle to sustain ...
investment over the long term, including the down cycles," he
continued.

The up cycle has been going on too long, suggested Rep. Emanuel
Cleaver, D-Mo. "The anger level is rising significantly."

Alluding to the fact that Congress often doesn't rate very high in
opinion polls, Cleaver told the executives: "Your approval rating is
lower than ours, and that means you're down low."

Several lawmakers noted the rising price of gasoline at the pump, now
averaging $3.29 a gallon amid talk of $4 a gallon this summer.

"I heard what you are hearing. Americans are very worried about the
rising price of energy," said John Hofmeister, president of Shell Oil
Co., echoing remarks by the other four executives including
representatives of BP America Inc., Chevron Corp. and ConocoPhillips.

While Democrats hammered the executives for their profits and demanded
they do more to develop alternative energy sources such as wind, solar
and biofuels, Republican lawmakers called for opening more areas for
drilling to boost domestic production of oil and gas.

What would bring lower prices? asked Rep. James Sensenbrenner of
Wisconsin, the committee's ranking Republican

"We need access to all kinds of energy supply," replied Robert Malone,
chairman of BP America, adding that 85 percent of the country's
coastal waters are off limits to drilling.

But Markey wanted to know why the companies aren't investing more in
energy projects other than oil and gas -- or giving up some tax breaks
so the money could be directed to promote renewable fuels and
conservation and take pressure off oil and gas supplies.

"Why is Exxon Mobil resisting the renewable revolution," asked Markey,
noting that the other four companies together have invested $3.5
billion in solar, wind and biodiesel projects.

Exxon is spending $100 million on research into climate change at
Stanford University, replied Simon, but current alternative energy
technologies "just do not have an appreciable impact" in addressing
"the challenge we're trying to meet."

The appearance Tuesday before the Select Committee on Energy
Independence and Global Warming was not the first time that oil
executives had faced the harsh words of a lawmakers frustrated over
their inability to do anything about soaring oil and gasoline costs.

In November 2005, executives of the same companies sought to explain
high energy costs at a Senate hearing at which Hofmeister emphasized
the cyclical nature of his industry. "What goes up almost always comes
down," he told the senators on a day when oil cost $60 a barrel.

About six months later, the executives were grilled again on Capitol
Hill when a barrel of oil cost $75. As the three-hour House hearing
came to a close Tuesday, the price of oil settled at just over $100 a
barrel on the New York exchange.

"We face a new reality, volatility, high prices, greater competition
for resources," said Peter Robertson, vice president of Chevron Corp.,
adding that he understands that "Americans see the pain" of $100-a-
barrel oil.

Markey challenged the executives to pledge to invest 10 percent of
their profits to develop renewable energy and give up $18 billion in
tax breaks over 10 years so money could be funneled to support other
energy and conservation.

They responded that their companies already are spending on
alternative energy projects and argued that new taxes would dampen
investment and could lead to even higher prices.

"Imposing punitive taxes on American energy companies, which already
pay record taxes, will discourage the sustained investment needed to
continue safeguarding U.S. energy security," said Simon. He said over
the past five years Exxon Mobil's U.S. tax bill exceeded its U.S.
earnings by $19 billion.

Markey was not impressed.

"These companies are defending billions of federal subsidies ... while
reaping over a hundred billion dollars in profits in just the last
year alone," he said. The companies are reaping "a windfall of
revenue" while poor people have to choose between heating and eating
because of high energy prices.

Elsewhere on Tuesday, many independent truckers parked their rigs and
others slowed to a crawl on highways to protest high fuel prices. The
demonstrations were only scattered, but long lines of trucks were
moving at about 20 mph on the New Jersey Turnpike, and three drivers
were ticketed for impeding traffic on Interstate 55 outside Chicago,
driving three abreast at low speeds.

Jesse

2008-04-01, 8:27 pm

> Elsewhere on Tuesday, many independent truckers parked their rigs and
> others slowed to a crawl on highways to protest high fuel prices.

Wasting fuel to protest high fuel prices. Genius!
An to be sure the parkers were running those engines to keep amused and
warm.

Edwin Pawlowski

2008-04-01, 9:26 pm

"Jesse" <jess225107nospam@hotmail.com> wrote in message
news:lNAIj.14848$oE1.11140@trndny09...
>
>
> Wasting fuel to protest high fuel prices. Genius!
> An to be sure the parkers were running those engines to keep amused and
> warm.

Maybe I'm missing something, but truckers have been charging a fuel
surcharge for a few years now. Where is that money going? The purpose of
the surcharge is to cover the high fuel costs.

NotMe

2008-04-01, 9:26 pm

"Edwin Pawlowski" <esp@snet.net> wrote in message
news:5YBIj.560$Gq7.486@newssvr19.news.prodigy.net...
|
| "Jesse" <jess225107nospam@hotmail.com> wrote in message
| news:lNAIj.14848$oE1.11140@trndny09...
| >
| >> Elsewhere on Tuesday, many independent truckers parked their rigs and
| >> others slowed to a crawl on highways to protest high fuel prices.
| >
| > Wasting fuel to protest high fuel prices. Genius!
| > An to be sure the parkers were running those engines to keep amused and
| > warm.
|
| Maybe I'm missing something, but truckers have been charging a fuel
| surcharge for a few years now. Where is that money going? The purpose of
| the surcharge is to cover the high fuel costs.

Shippers, not truckers have been applying a surcharge. Little if any is
getting to the independents.

VRWC Destruction Machine

2008-04-02, 3:25 am

monkey_cartman@yahoo.com wrote in crayon...

>Oil chiefs say high prices not our fault

It's not their fault record sales yields record profits.
It's not their fault they pay 40.7% in taxes compared to 22.1% paid by
other manufacturers.
It's not their fault they can't drill for oil offshore of the United
States, ANWAR or in the lower 48 states.
It not their fault for doing a good job for their stockholders even
with the limitations impose on them by government.
-

Mitchell Holman thinks he is the greatest thing on
Usenet since Muhammed al Gore invented the Internet.
If Usenet revolves around Mitchie-Boy Holman why
won't he answer a simple question?

Who gives a rat's XXX who Mitchell Holman is?

zacks@construction-imaging.com

2008-04-02, 9:26 am

On Apr 1, 10:12=A0pm, "Edwin Pawlowski" <e...@snet.net> wrote:
> "Jesse" <jess225107nos...@hotmail.com> wrote in message
>
> news:lNAIj.14848$oE1.11140@trndny09...
>
>
>
>
>
> Maybe I'm missing something, but truckers have been charging a fuel
> surcharge for a few years now. =A0Where is that money going? =A0The purpos=
e of
> the surcharge is to cover the high fuel costs.

Yeah, you are missing something. Can you say "indepenent truckers"???

MFOgilvie

2008-04-02, 9:26 am

On Apr 1, 10:21=A0pm, "NotMe" <m...@privacy.net> wrote:
> "Edwin Pawlowski" <e...@snet.net> wrote in message
>
> news:5YBIj.560$Gq7.486@newssvr19.news.prodigy.net...
> || "Jesse" <jess225107nos...@hotmail.com> wrote in message
>
> |news:lNAIj.14848$oE1.11140@trndny09...
> | >
> | >> Elsewhere on Tuesday, many independent truckers parked their rigs and=

> | >> others slowed to a crawl on highways to protest high fuel prices.
> | >
> | > Wasting fuel to protest high fuel prices. Genius!
> | > An to be sure the parkers were running those engines to keep amused an=
d
> | > warm.
> |
> | Maybe I'm missing something, but truckers have been charging a fuel
> | surcharge for a few years now. =A0Where is that money going? =A0The purp=
ose of
> | the surcharge is to cover the high fuel costs.
>
> Shippers, not truckers have been applying a surcharge. =A0Little if any is=

> getting to the independents.

But by the same token, aren't the independents in control of their own
shipping rates? It's reasonable to assume as one's operating costs
increase, the cost of their good services increase accordingly.

Kurt Ullman

2008-04-02, 1:25 pm

In article
<09fedfb0-a9c1-409f-8b40-d786d7f893b5@b1g2000hsg.googlegroups.com>,
MFOgilvie <matthew.f.ogilvie@lmco.com> wrote:

> But by the same token, aren't the independents in control of their own
> shipping rates? It's reasonable to assume as one's operating costs
> increase, the cost of their good services increase accordingly.
You would be very wrong on your assumptions. Price is not only
decided by cost of goods. Demand is down related to the slow down, there
are too many trucks chasing too few loads, so they have to get what the
market will pay.

SteveB

2008-04-02, 1:25 pm

The oil companies make 8 cents a gallon. Various governments tax it over a
dollar a gallon. Do the math, you fucking genius.

Steve

George Grapman

2008-04-02, 1:25 pm

SteveB wrote:
> The oil companies make 8 cents a gallon. Various governments tax it over a
> dollar a gallon. Do the math, you fucking genius.
>
> Steve
>
>
So why do the companies show record profits?

gfretwell@aol.com

2008-04-02, 1:25 pm

On Wed, 2 Apr 2008 09:42:25 -0800, "SteveB"
<pittmanpirate@henderson.com> wrote:

>The oil companies make 8 cents a gallon. Various governments tax it over a
>dollar a gallon. Do the math, you fucking genius.

Bullshit

http://www.gaspricewatch.com/usgastaxes.asp

George Grapman

2008-04-02, 1:25 pm

gfretwell@aol.com wrote:
> On Wed, 2 Apr 2008 09:42:25 -0800, "SteveB"
> <pittmanpirate@henderson.com> wrote:
>
>
>
> Bullshit
>
> http://www.gaspricewatch.com/usgastaxes.asp

http://www.sfgate.com/cgi-bin/artic...2/MNU7VU217.DTL

The oil company executives contended that their record profits last year
were in line with other industries, noting that oil and gas companies
earned an average of 8.3 cents per dollar of sales, compared with 7.8
cents per dollar for the Dow Jones average.

znuybv

2008-04-02, 1:25 pm

On Apr 2, 9:15 am, George Grapman <sfgeo...@paccbell.net> wrote:
> gfretw...@aol.com wrote:
>
>
>
>
> http://www.sfgate.com/cgi-bin/artic...04/02/MNU7VU...
>
> The oil company executives contended that their record profits last year
> were in line with other industries, noting that oil and gas companies
> earned an average of 8.3 cents per dollar of sales, compared with 7.8
> cents per dollar for the Dow Jones average.

The energy policy of the US government contributes substantially to
the high price of fuel.

Kurt Ullman

2008-04-02, 1:25 pm

In article
<13f51a56-2ab1-43fb-9738-ba7ae5c472e0@i7g2000prf.googlegroups.com>,
znuybv <thowilson@gmail.com> wrote:

> O
> The energy policy of the US government contributes substantially to
> the high price of fuel.

Personally would say that the LACK of an energy policy.. but we
probably aren't that far away over all...

znuybv

2008-04-02, 1:25 pm

On Apr 2, 9:25 am, Kurt Ullman <kurtull...@yahoo.com> wrote:
> In article
> <13f51a56-2ab1-43fb-9738-ba7ae5c47...@i7g2000prf.googlegroups.com>,
>
> znuybv <thowil...@gmail.com> wrote:
>
> Personally would say that the LACK of an energy policy.. but we
> probably aren't that far away over all...

I respectfully disagree. It is not the lack of policy it is THE
policy that cripples us.

Go to this site and read the 170 pages. If you tell me that this is a
lack of policy and not a policy then you are not as smart as I
thought.
http://www.whitehouse.gov/energy/Na...ergy-Policy.pdf

Kurt Ullman

2008-04-02, 1:25 pm

In article
<d51b8b92-a750-493e-b8b1-d29b3f64c025@i7g2000prf.googlegroups.com>,
znuybv <thowilson@gmail.com> wrote:

> http://www.whitehouse.gov/energy/Na...ergy-Policy.pdf

Already did that. I see a whole bunch of parts, a couple of pieces,
but no over-arching thing that ties them all together. I guess I don't
see a coherent or coordinated policy among the paper's output.

znuybv

2008-04-02, 1:25 pm

On Apr 2, 9:58 am, Kurt Ullman <kurtull...@yahoo.com> wrote:
> In article
> <d51b8b92-a750-493e-b8b1-d29b3f64c...@i7g2000prf.googlegroups.com>,
>
> znuybv <thowil...@gmail.com> wrote:
>
> Already did that. I see a whole bunch of parts, a couple of pieces,
> but no over-arching thing that ties them all together. I guess I don't
> see a coherent or coordinated policy among the paper's output.

There IS a coherent coordinated policy. That is my point. It's
probably so obvious that you don't see it. The policy is to restrict
the exploration and refining capacity of oil.

MFOgilvie

2008-04-02, 1:25 pm

On Apr 2, 10:34=A0am, Kurt Ullman <kurtull...@yahoo.com> wrote:
> In article
> <09fedfb0-a9c1-409f-8b40-d786d7f89...@b1g2000hsg.googlegroups.com>,
>
> =A0MFOgilvie <matthew.f.ogil...@lmco.com> wrote:
>
> =A0 =A0 =A0 You would be very wrong on your assumptions. Price is not only=

> decided by cost of goods. Demand is down related to the slow down, there
> are too many trucks chasing too few loads, so they have to get what the
> market will pay.

I understand all of that, but those prices are not etched in stone,
either.

Kurt Ullman

2008-04-02, 1:25 pm

In article
<f059afa6-f2a4-444a-a8a1-3326d281db15@a70g2000hsh.googlegroups.com>,
MFOgilvie <mattogilvie55@aol.com> wrote:

> On Apr 2, 10:34_am, Kurt Ullman <kurtull...@yahoo.com> wrote:
>
> I understand all of that, but those prices are not etched in stone,
> either.

Nope. But they appear to etched in stone given the current
conditions. Otherwise the truckers would be in a position to get more
than they are. They are in control of their own shipping rates. But if
that means take the current deal or sit out for awhile, the real world
options may be a limited.

OneTwoThree

2008-04-02, 1:25 pm

"George Grapman" <sfgeorge@paccbell.net> wrote in message
news:i7OIj.36902$J41.26227@newssvr14.news.prodigy.net...
> SteveB wrote:
> So why do the companies show record profits?

Simple math, George. you claim to watch and read several business sources.
Do you actually read the numbers?

Here is a simple example.

Product X sells for 1 dollar and costs 80 cents, leaving the seller a 20
cent profit. due to circumstances, the cost of product X doubles to 1 dollar
60 cents. the seller also ups their profit from 20 cents to 30 cents,
selling the product for 1 dollar 90 cents.( which is actually a drop in the
net from 20 percent to 16 percent.

but the number reported is 30 cents versus 20 cents. profits are " up" arent
they.

actually most profits are also reported in terms of profit per share of
stock. so the analysis requires some more detailed analysis.

but in general, what you read in the paper or hear on the one liner news
reports is completely misleading.

..

OneTwoThree

2008-04-02, 1:25 pm

"George Grapman" <sfgeorge@paccbell.net> wrote in message
news:giOIj.36905$J41.25838@newssvr14.news.prodigy.net...
> gfretwell@aol.com wrote:
>
>
> http://www.sfgate.com/cgi-bin/artic...2/MNU7VU217.DTL
>
>
>
> The oil company executives contended that their record profits last year
> were in line with other industries, noting that oil and gas companies
> earned an average of 8.3 cents per dollar of sales, compared with 7.8
> cents per dollar for the Dow Jones average.

the story is sadly lacking in analysis. for example, is that 8.3 cents the
net profit? let's say it is. what was the net a year ago? two years ago?

I am guessing but confident that the oil company net has no where near
increased at the rate that the retail price of gasoline has, or more
accurately, at the rate that the cost of a barrel of oil has.

..

neoconis_ignoramus

2008-04-02, 1:25 pm

On Apr 2, 10:32=A0am, "OneTwoThree" <you...@notverysmart.ru> wrote:
> "George Grapman" <sfgeo...@paccbell.net> wrote in message
>
> news:giOIj.36905$J41.25838@newssvr14.news.prodigy.net...
>
>
>
>
>
>
[color=darkred]
>
>
>
..[color=darkred]
>
[color=darkred]
>
> the story is sadly lacking in analysis. for example, is that 8.3 cents the=

> net profit? let's say it is. what was the net a year ago? two years ago?
>
> I am guessing but confident that the oil company net has no where near
> increased at the rate that the retail price of gasoline has, or more
> accurately, at the rate that the cost of a barrel of oil has.
>
> .- Hide quoted text -
>
> - Show quoted text -

You'd be guessing wrong, but hey, that's what you and your slobbering
con friends are good at.

XOM's net income and profit margins over the last 10 years below.
Notice anything, nitwit? That's riiiggghht - a player in a mature,
purportedly competitive industry has managed to doulbe its profit
margin in 10 years.

Do tell us how a restrictive exploration / drilling policy is holding
XOM back again? I need some good laughs.

Year Net Inc. Margin
1998 6,370 5.41%
1999 7,910 4.26%
2000 17,720 7.61%
2001 15,320 7.18%
2002 11,460 5.60%
2003 21,510 8.72%
2004 25,330 8.50%
2005 36,130 9.75%
2006 39,500 10.46%
2007 40,610 10.04%

Kurt Ullman

2008-04-02, 5:25 pm

In article <P-SdnSjpqO-oXm7anZ2dnUVZ_g6dnZ2d@comcast.com>,
"OneTwoThree" <youare@notverysmart.ru> wrote:

> the story is sadly lacking in analysis. for example, is that 8.3 cents the
> net profit? let's say it is. what was the net a year ago? two years ago?
Their profit margins recently have run in the 10-11% range, about
average to a little below the S&P 500. It has been within that range
for at least 5 years and IIRC (always a concern) for around the last 15
or so.

> I am guessing but confident that the oil company net has no where near
> increased at the rate that the retail price of gasoline has, or more
> accurately, at the rate that the cost of a barrel of oil has.
>
Profit margins have stayed the same (although I must admit to having
looked for sure since the first of the year). In fact some indications
are that they make LESS money during high prices.
"After review, we find that the accounting
profitability of the major, integrated oil companies is actually lower
on average
during periods of extremely high gas and oil prices (and, in fact, are
even lower
than in times of extremely low gas and oil prices). Large oil companies
are most
profitable during periods of moderate gasoline prices. Yet, small
vertically
integrated oil companies and firms primarily in the business of refining
purchased crude oil exhibit a consistently inverse relationship between
profit
margins and retail gas prices‹as gas prices increase, these firms become
less
profitable. We find no evidence that the accounting profitability of oil
companies
(measured using gross profits) increases during episodes of very high
retail
gasoline prices. Our findings are consistent with the notion that high
gas prices
are primarily a cost-driven phenomenon, rather than just a consequence of
demand shocks or collusion. While we do not attribute any altruistic
motivation
to the oil companies, the evidence intimates that the burden of gas
prices is
partially shouldered by the industry, thereby reducing the burden on the
consumer.
www.phoenix-center.org/pcpp/PCPP26Final.pdf
"As reported in the Wall Street Journal:
"It is Congress and state governments that take 59 cents a gallon on
average of fuel taxes at the pump â¤² almost six times the average of 10
cents per gallon profit that the oil companies make."
So, even if all of the oil industry profits were taxed away, a $3.00
gallon of gasoline would only drop to $2.90."

trader4@optonline.net

2008-04-02, 5:25 pm

On Apr 2, 1:19=A0pm, Kurt Ullman <kurtull...@yahoo.com> wrote:
> In article
> <f059afa6-f2a4-444a-a8a1-3326d281d...@a70g2000hsh.googlegroups.com>,
>
>
>
>
>
> =A0MFOgilvie <mattogilvi...@aol.com> wrote:
>
wn[color=darkred]
s[color=darkred]
>
only[color=darkred]
re[color=darkred]
e[color=darkred]
>
>
> =A0 =A0Nope. But they appear to etched in stone given the current
> conditions. Otherwise the truckers would be in a position to get more
> than they are. They are in control of their own shipping rates. But if
> that means take the current deal or sit out for awhile, the real world
> options may be a limited.- Hide quoted text -
>
> - Show quoted text -

I would submit that most of the truckers have passed on higher fuel
costs by raising their rates. And the economy, while slowing, is not
so bad that shipping is off substantially. In other words, while
some truckers are bitching, the laws of economics continue to work.

SteveB

2008-04-02, 5:25 pm

SteveB

2008-04-02, 5:25 pm

What we REALLY need to do is to search out EVERY stockholder in a gas
company and deliver one single .45 ACP to the forehead.

All the retired worker ants who have a 401, or any kind of a retirement plan
that owns more then ONE share of stock.

That ought to get rid of all the greedy bastards that are taking advantage
of the citizenry.

Steve

VRWC Destruction Machine

2008-04-02, 5:25 pm

George Grapman <sfgeorge@paccbell.net> wrote in crayon...

>SteveB wrote:
> So why do the companies show record profits?

It doesn't take a genius to figure it out, Curious George. All one has
to have is a pulse.

They have record sales. If a company sold 5 million widgets at 10
cents on the dollar one year and they sold 10 million widgets at 10
cents on the dollar the next year. Will they show a record profit the
second year?

It's time to ask yourself, "Are you smarter than a 5th grader",
Curious George?

I think not.

-

Mitchell Holman thinks he is the greatest thing on
Usenet since Muhammed al Gore invented the Internet.
If Usenet revolves around Mitchie-Boy Holman why
won't he answer a simple question?

Who gives a rat's XXX who Mitchell Holman is?

David Hartung

2008-04-02, 5:25 pm

George Grapman wrote:
> SteveB wrote:
> So why do the companies show record profits?

Perhaps because they are selling billions of gallons?

David Hartung

2008-04-02, 5:25 pm

neoconis_ignoramus wrote:
> On Apr 2, 10:32 am, "OneTwoThree" <you...@notverysmart.ru> wrote:
>
> You'd be guessing wrong, but hey, that's what you and your slobbering
> con friends are good at.
>
> XOM's net income and profit margins over the last 10 years below.
> Notice anything, nitwit? That's riiiggghht - a player in a mature,
> purportedly competitive industry has managed to doulbe its profit
> margin in 10 years.
>
> Do tell us how a restrictive exploration / drilling policy is holding
> XOM back again? I need some good laughs.
>
> Year Net Inc. Margin
> 1998 6,370 5.41%
> 1999 7,910 4.26%
> 2000 17,720 7.61%
> 2001 15,320 7.18%
> 2002 11,460 5.60%
> 2003 21,510 8.72%
> 2004 25,330 8.50%
> 2005 36,130 9.75%
> 2006 39,500 10.46%
> 2007 40,610 10.04%

Where did you get this information?

Carl Swanson

2008-04-02, 5:25 pm

VRWC Destruction Machine wrote:
> George Grapman <sfgeorge@paccbell.net> wrote in crayon...
>
>
> It doesn't take a genius to figure it out, Curious George. All one has
> to have is a pulse.
>
> They have record sales. If a company sold 5 million widgets at 10
> cents on the dollar one year and they sold 10 million widgets at 10
> cents on the dollar the next year. Will they show a record profit the
> second year?

http://www.sfgate.com/cgi-bin/artic...9/BUD3VSBR6.DTL

Specifically, state residents bought 1 percent less gas last year, but
California's rate of gas consumption has now fallen for two years in a
row, something that almost never happens outside a serious recession.
Sales tracked by the state Board of Equalization dropped 0.7 percent in
2006.
>
> It's time to ask yourself, "Are you smarter than a 5th grader",
> Curious George?
>
> I think not.
>

David Hartung

2008-04-02, 5:25 pm

SteveB wrote:
> <gfretwell@aol.com> wrote in message
> news:o1f7v3d182v7j656c333c1at9342a3o3v0@4ax.com...
>
> Google "gasoline price breakdown"
>
> Click the first hit.

Very Interesting.

VRWC Destruction Machine

2008-04-02, 5:25 pm

gfretwell@aol.com wrote in crayon...

>On Wed, 2 Apr 2008 09:42:25 -0800, "SteveB"
><pittmanpirate@henderson.com> wrote:
>
>
>
>Bullshit
>
>http://www.gaspricewatch.com/usgastaxes.asp

Your link gives incomplete estimates b because it leaves out other
costs.

For California it gives:

http://www.energy.ca.gov/gasoline/margins/index.html

Other taxes include a 6% state sales tax and 1.25% county, plus
additional local sales taxes and 1.2 cents per gallon state UST fee.

Actual costs Gallon of Gas (California) for March 31, 2008:

Distribution Costs, Marketing Costs and Profits $0.06
Crude Oil Cost $2.42
Refinery Cost and Profits $0.48
State Underground Storage Tank Fee $0.01
State and Local Sales Tax $0.27
State Excise Tax $0.18
Federal Excise Tax $0.18

Retail price $3.61
Net Profit $0.49

Profit Margin 13.5%

-

Mitchell Holman thinks he is the greatest thing on
Usenet since Muhammed al Gore invented the Internet.
If Usenet revolves around Mitchie-Boy Holman why
won't he answer a simple question?

Who gives a rat's XXX who Mitchell Holman is?

OneTwoThree

2008-04-02, 5:25 pm

"SteveB" <pittmanpirate@henderson.com> wrote in message
news:kl1dc5-klo.ln1@news.infowest.com...
>
> <gfretwell@aol.com> wrote in message
> news:o1f7v3d182v7j656c333c1at9342a3o3v0@4ax.com...
>
> Google "gasoline price breakdown"
>
> Click the first hit.

quite an interesting read

>
> Enjoy.
>
> Steve
>

OneTwoThree

2008-04-02, 5:25 pm

<gfretwell@aol.com> wrote in message
news:o1f7v3d182v7j656c333c1at9342a3o3v0@4ax.com...
> On Wed, 2 Apr 2008 09:42:25 -0800, "SteveB"
> <pittmanpirate@henderson.com> wrote:
>
>
>
> Bullshit
>
> http://www.gaspricewatch.com/usgastaxes.asp

interesting but confusing read. you have to add the federal 18 cents per
gallon to the state tax in the appropriate column, then get out the
calculator to factor in the sales taxes and other taxes that are a
percentage of the sales price. In California, for example, you have to add
the 18 cent federal tax to the 18 cent state tax, arriving at 36 cents,
which does not include the 7-8.5% sales tax, depending on the county. plus
the additional 1.2 cents per gallon UST fee, whatever that is. If my math is
correct, when a retailer sells gas for 3.56 (the cost at the cheapest place
here in town) that price includes about 40 cents sales tax. add the 36 cents
state and federal taxes, and you are getting about 76 cents in taxes on a
gallon of gas, or a total tax rate of over 20% per gallon. That's a pretty
hefty tax.

(note - my math may be off a few cents. it would help if I knew the real
wholesale cost and the profit margin of the seller)

..

VRWC Destruction Machine

2008-04-02, 5:25 pm

George Grapman <sfgeorge@paccbell.net> wrote in crayon...

>gfretwell@aol.com wrote:
>
>
>http://www.sfgate.com/cgi-bin/artic...2/MNU7VU217.DTL
>
>
>
>The oil company executives contended that their record profits last year
>were in line with other industries, noting that oil and gas companies
>earned an average of 8.3 cents per dollar of sales, compared with 7.8
>cents per dollar for the Dow Jones average.

For instance, in 2004 Exxon Mobil earned more money -- $25.33 billion
-- than any other company on the Fortune 500 list of largest
corporations. But by another measure of profitability, gross profit
margin, it ranked No. 127.
-

Mitchell Holman thinks he is the greatest thing on
Usenet since Muhammed al Gore invented the Internet.
If Usenet revolves around Mitchie-Boy Holman why
won't he answer a simple question?

Who gives a rat's XXX who Mitchell Holman is?

OneTwoThree

2008-04-02, 5:25 pm

"VRWC Destruction Machine" <RightWay@vrwcdm.com> wrote in message
news:63p7v3hq38632mmo1ngiqkj7qcsp15hp1j@4ax.com...
> gfretwell@aol.com wrote in crayon...
>
>
> Your link gives incomplete estimates b because it leaves out other
> costs.
>
> For California it gives:
>
> http://www.energy.ca.gov/gasoline/margins/index.html
>
> Other taxes include a 6% state sales tax and 1.25% county, plus
> additional local sales taxes and 1.2 cents per gallon state UST fee.
>
> Actual costs Gallon of Gas (California) for March 31, 2008:
>
> Distribution Costs, Marketing Costs and Profits $0.06
> Crude Oil Cost $2.42
> Refinery Cost and Profits $0.48
> State Underground Storage Tank Fee $0.01
> State and Local Sales Tax $0.27
> State Excise Tax $0.18
> Federal Excise Tax $0.18
>
> Retail price $3.61
> Net Profit $0.49
>
> Profit Margin 13.5%

its interesting looking at the numbers closely. my question to you is this:
does that 49 cents net profit include the profit of the retail gas seller?
my quick work on the calculator indicate that the 49 cent number includes
profits of several entities along the way. so the 13.5% margin is not what
goes into the "oil company" pocket, but into several different pockets.

>
> -
>
> Mitchell Holman thinks he is the greatest thing on
> Usenet since Muhammed al Gore invented the Internet.
> If Usenet revolves around Mitchie-Boy Holman why
> won't he answer a simple question?
>
> Who gives a rat's XXX who Mitchell Holman is?

VRWC Destruction Machine

2008-04-02, 5:25 pm

"OneTwoThree" <youare@notverysmart.ru> wrote in crayon...

>
>"George Grapman" <sfgeorge@paccbell.net> wrote in message
>news:giOIj.36905$J41.25838@newssvr14.news.prodigy.net...
>
>
>the story is sadly lacking in analysis. for example, is that 8.3 cents the
>net profit? let's say it is. what was the net a year ago? two years ago?

Curious George doesn't analyze anything. He just goes off on knee jerk
rants.

>I am guessing but confident that the oil company net has no where near
>increased at the rate that the retail price of gasoline has, or more
>accurately, at the rate that the cost of a barrel of oil has.
>
Crude and taxes affect gasoline prices. Profit margins haven't changed
much in the last few years.

In all the posts in this thread no one has presented any proof the oil
companies are gouging. Government makes twice the profit margin on a
gallon of gas than the oil companies themselves. Good luck in having
the Feds investigate the gouging done by government.
-

Mitchell Holman thinks he is the greatest thing on
Usenet since Muhammed al Gore invented the Internet.
If Usenet revolves around Mitchie-Boy Holman why
won't he answer a simple question?

Who gives a rat's XXX who Mitchell Holman is?

VRWC Destruction Machine

2008-04-02, 5:25 pm

Kurt Ullman <kurtullman@yahoo.com> wrote in crayon...

>In article
><13f51a56-2ab1-43fb-9738-ba7ae5c472e0@i7g2000prf.googlegroups.com>,
> znuybv <thowilson@gmail.com> wrote:
>
>
> Personally would say that the LACK of an energy policy.. but we
>probably aren't that far away over all...

Oil is the same price the world over since it is traded on the global
markets.

The US pays $100 for a barrel of oil. Average price of gas $3.29 a
gallon. Europe pays $100 for a barrel of oil. Average price of gas in
Europe in US measurements is between $6.00-$7.00 a gallon. Is
European gas sold by Evian?
-

Mitchell Holman thinks he is the greatest thing on
Usenet since Muhammed al Gore invented the Internet.
If Usenet revolves around Mitchie-Boy Holman why
won't he answer a simple question?

Who gives a rat's XXX who Mitchell Holman is?

neoconis_ignoramus

2008-04-02, 5:25 pm

On Apr 2, 1:01=A0pm, David Hartung <d_hart...@comcast.net> wrote:
> neoconis_ignoramus wrote:
>
>
it[color=darkred]
....[color=darkred]
ar[color=darkred]
the[color=darkred]
?[color=darkred]
>
>
>
>
>
>
>
>
> Where did you get this information?- Hide quoted text -
>
> - Show quoted text -

Available anywhere. Try Morningstar.com

Carl Swanson

2008-04-02, 5:25 pm

VRWC Destruction Machine wrote:
> "OneTwoThree" <youare@notverysmart.ru> wrote in crayon...
>
>
> Curious George doesn't analyze anything. He just goes off on knee jerk
> rants.
>
> Crude and taxes affect gasoline prices. Profit margins haven't changed
> much in the last few years.

http://www.businessweek.com/magazin...21/b3934114.htm

The biggest profit-margin gains came in two comparatively low-margin
sectors: energy and materials, which continue to benefit from supersized
jumps in oil and commodity prices. Oil prices hanging above $50 per
barrel and the world's insatiable appetite for energy pushed the profit
margin for that industry up to 9.1%, from 7.5% for the first quarter of
2004. Total earnings surged 50% over the period. Materials companies did
energy one better: Higher metal and timber prices led margins to widen
by 2.6 percentage points, to 6.3%, as profits jumped 103%.

http://www.reuters.com/article/reut...422168020070504

"The profit outlook is incredible, the refinery margins are
significantly higher than last year or the past three years," Fadel
Gheit, an analyst with Oppenheimer& Co., told Reuters.

"It would be safe to say that if margins don't collapse from here, the
refiners will probably do 20 to 30 percent higher profits this year than
last year," added Gheit

>
> In all the posts in this thread no one has presented any proof the oil
> companies are gouging. Government makes twice the profit margin on a
> gallon of gas than the oil companies themselves. Good luck in having
> the Feds investigate the gouging done by government.
> -

Jim Yanik

2008-04-02, 8:25 pm

"OneTwoThree" <youare@notverysmart.ru> wrote in
news:P-SdnSjpqO-oXm7anZ2dnUVZ_g6dnZ2d@comcast.com:

>
> "George Grapman" <sfgeorge@paccbell.net> wrote in message
> news:giOIj.36905$J41.25838@newssvr14.news.prodigy.net...
>
>
> the story is sadly lacking in analysis. for example, is that 8.3 cents
> the net profit? let's say it is. what was the net a year ago? two
> years ago?
>
> I am guessing but confident that the oil company net has no where near
> increased at the rate that the retail price of gasoline has, or more
> accurately, at the rate that the cost of a barrel of oil has.

Also,if total US fuel consumption rises,then profits will rise too.

More gas-sucking SUVs/PU trucks and hi-performance cars,more miles
driven(ALL vehicles),= more gas consumption.

Then include more oil burned for electric power.....

--
Jim Yanik
jyanik
at
kua.net

Kurt Ullman

2008-04-02, 8:25 pm

In article <Xns9A74BF014D0F7jyanikkuanet@64.209.0.84>,
Jim Yanik <jyanik@abuse.gov> wrote:

>
> Then include more oil burned for electric power.....

How much oil is burned for power? Most of those plants are natural
gas, which isn't an oil product.

OneTwoThree

2008-04-02, 8:25 pm

"Carl Swanson" <cswanson@lbcbo.com> wrote in message
news:_uSIj.24428$Ej5.6461@newssvr29.news.prodigy.net...
> VRWC Destruction Machine wrote:
>
> http://www.businessweek.com/magazin...21/b3934114.htm
>
>
>
>
> The biggest profit-margin gains came in two comparatively low-margin
> sectors: energy and materials, which continue to benefit from supersized
> jumps in oil and commodity prices. Oil prices hanging above $50 per barrel
> and the world's insatiable appetite for energy pushed the profit margin
> for that industry up to 9.1%, from 7.5% for the first quarter of 2004.
> Total earnings surged 50% over the period. Materials companies did energy
> one better: Higher metal and timber prices led margins to widen by 2.6
> percentage points, to 6.3%, as profits jumped 103%.

very good reading, as is usually the case with business week - however - the
article is close to 3 years old.

hey wait - I thought the economy was in the toilet 3 years ago. that's what
the leftist anti Bush loons were saying, anyway.....

>
>
> http://www.reuters.com/article/reut...422168020070504

this one year old Reuters article is pretty shallow on the face of it. it is
speculative, and gives no indication as to the basis of the speculation.

[color=darkred]
>
>
>
>
> "The profit outlook is incredible, the refinery margins are significantly
> higher than last year or the past three years," Fadel Gheit, an analyst
> with Oppenheimer& Co., told Reuters.
>
> "It would be safe to say that if margins don't collapse from here, the
> refiners will probably do 20 to 30 percent higher profits this year than
> last year," added Gheit
>

Jim Yanik

2008-04-02, 8:25 pm

Kurt Ullman <kurtullman@yahoo.com> wrote in news:kurtullman-
7DE640.18534902042008@70-3-168-216.area5.spcsdns.net:

> In article <Xns9A74BF014D0F7jyanikkuanet@64.209.0.84>,
> Jim Yanik <jyanik@abuse.gov> wrote:
>
>
>
> How much oil is burned for power? Most of those plants are natural
> gas, which isn't an oil product.
>

1.6% of all electric power,in 2006
http://www.eia.doe.gov/cneaf/electr...pa/epa_sum.html

I know it's a very small amount relative to the other fossil fuel power
sources,but it's still using petroleum.

(due to EPA regs,many oil-fired plants are converting to natural gas.)

here's the breakdown of fossil fuel use by type;
http://www.eia.doe.gov/cneaf/electr...pa/epat4p1.html

In addition,oil[diesel-electric trains] is also used to transport coal for
electric power generation...I don't know if that's included in the figures
for oil-fired generators. ;-)

I vote for more nuclear power plants,drilling in ANWR and the Gulf of
Mexico.

--
Jim Yanik
jyanik
at
kua.net

SteveB

2008-04-02, 8:25 pm

"neoconis_ignoramus" <bellamacina@verizon.net> wrote in message
news:7a2e7189-b42b-4ba0-9f7c-1d4ee48327bf@u10g2000prn.googlegroups.com...
On Apr 2, 1:01 pm, David Hartung <d_hart...@comcast.net> wrote:
> neoconis_ignoramus wrote:
>
>
>
>
>
>
>
>
>
>
> Where did you get this information?- Hide quoted text -
>
> - Show quoted text -

Available anywhere. Try Morningstar.com

I'm sorry, but if the information and facts do not agree with the bias of
the uninformed person, it is invalid, false, and irrelevant.

Steve ;-)

SteveB

2008-04-02, 8:25 pm

"VRWC Destruction Machine" <RightWay@vrwcdm.com> wrote in message
news:63p7v3hq38632mmo1ngiqkj7qcsp15hp1j@4ax.com...
> gfretwell@aol.com wrote in crayon...
>
>
> Your link gives incomplete estimates b because it leaves out other
> costs.
>
> For California it gives:
>
> http://www.energy.ca.gov/gasoline/margins/index.html
>
> Other taxes include a 6% state sales tax and 1.25% county, plus
> additional local sales taxes and 1.2 cents per gallon state UST fee.
>
> Actual costs Gallon of Gas (California) for March 31, 2008:
>
> Distribution Costs, Marketing Costs and Profits $0.06
> Crude Oil Cost $2.42
> Refinery Cost and Profits $0.48
> State Underground Storage Tank Fee $0.01
> State and Local Sales Tax $0.27
> State Excise Tax $0.18
> Federal Excise Tax $0.18
>
> Retail price $3.61
> Net Profit $0.49
>
> Profit Margin 13.5%
>
> -
>
> Mitchell Holman thinks he is the greatest thing on
> Usenet since Muhammed al Gore invented the Internet.
> If Usenet revolves around Mitchie-Boy Holman why
> won't he answer a simple question?
>
> Who gives a rat's XXX who Mitchell Holman is?

I knew someone would pick nits on a state to state basis. The original
premise still stands. Oil companies do not make as much as governments do
on petroleum products. They just do all the work. And take all the risks.

Steve

SteveB

2008-04-02, 8:25 pm

"OneTwoThree" <youare@notverysmart.ru> wrote

>
> its interesting looking at the numbers closely. my question to you is
> this: does that 49 cents net profit include the profit of the retail gas
> seller? my quick work on the calculator indicate that the 49 cent number
> includes profits of several entities along the way. so the 13.5% margin is
> not what goes into the "oil company" pocket, but into several different
> pockets.

The local Rip and Gyp has always fascinated me. On Monday, they have 10,000
gallons of gas delivered. On Tuesday, there's a war in Outer Karsfarkistan,
and the price goes up 25 cents a gallon, even though the ten thousand
gallons in the ground were bought at the pre Karsfarkistan War price. But,
nonetheless, the price immediately goes up a quarter. Now, peace is
declared in Outer Karsfarkistan, and it still takes three months for the
price to ratchet down. A little.

Fascinating. And yet, some clueless morons whine about oil companies
gouging. They have nothing to do with what the local Rip and Gyp charges no
matter how cheap they bought the gas.

Steve

Edwin Pawlowski

2008-04-02, 9:25 pm

<zacks@construction-imaging.com> wrote in message
news:6e86aba4-f03c-4d7e-b296-f2221b155006@p25g2000hsf.googlegroups.com...
On Apr 1, 10:12 pm, "Edwin Pawlowski" <e...@snet.net> wrote:
> "Jesse" <jess225107nos...@hotmail.com> wrote in message
>
> news:lNAIj.14848$oE1.11140@trndny09...
>
>
>
>
>
> Maybe I'm missing something, but truckers have been charging a fuel
> surcharge for a few years now. Where is that money going? The purpose of
> the surcharge is to cover the high fuel costs.

Yeah, you are missing something. Can you say "indepenent truckers"???

I certainly can, and I certainly see a lot of freight bills from the
independent truckers with the fuel surcharge. I'm paying it so they should
have the money to buy fuel. Sure, there may be some lag from pump increase
to actual surcharge change, but change they do.

Our local carrier does the same thing. He buys fuel in bulk (usually once a
month) and applies the surcharge accordingly. He does it to cover costs and
he is not hurting from the fuel cost for that reason.

Edwin Pawlowski

2008-04-02, 9:25 pm

"NotMe" <me@privacy.net> wrote in message
> Shippers, not truckers have been applying a surcharge. Little if any is
> getting to the independents.

We use a lot of independents. Every one of them has a fuel surcharge. So,
where is the money.?

NotMe

2008-04-03, 3:25 am

"Edwin Pawlowski" <esp@snet.net> wrote in message
news:JVWIj.11669$qS5.386@nlpi069.nbdc.sbc.com...
|
| "NotMe" <me@privacy.net> wrote in message
| > Shippers, not truckers have been applying a surcharge. Little if any is
| > getting to the independents.
|
| We use a lot of independents. Every one of them has a fuel surcharge. So,
| where is the money.?

By independents are you talking owner/operators or independent trucking
companies?

My sample is admittedly small (and may not be representative) but none of
the owner operators I know personally are seeing any of the surcharge.

Edwin Pawlowski

2008-04-03, 9:25 am

"NotMe" <me@privacy.net> wrote in message
>
> By independents are you talking owner/operators or independent trucking
> companies?
>
> My sample is admittedly small (and may not be representative) but none of
> the owner operators I know personally are seeing any of the surcharge.
>
>

We use both, but I'm referring to the owner/operator, the guy that pays the
fuel bill. I'll have to ask them to be sure they are getting the money we
are paying and not the brokers.

Kurt Ullman

2008-04-03, 9:25 am

In article <Xns9A74D41FE936Ejyanikkuanet@64.209.0.85>,
Jim Yanik <jyanik@abuse.gov> wrote:

> Kurt Ullman <kurtullman@yahoo.com> wrote in news:kurtullman-
> 7DE640.18534902042008@70-3-168-216.area5.spcsdns.net:
>
>
> 1.6% of all electric power,in 2006
> http://www.eia.doe.gov/cneaf/electr...pa/epa_sum.html
Thanks. Interesting.

>

Kurt Ullman

2008-04-03, 9:25 am

In article <4nmdc5-8ok2.ln1@news.infowest.com>,
"SteveB" <pittmanpirate@henderson.com> wrote:

> I'm sorry, but if the information and facts do not agree with the bias of
> the uninformed person, it is invalid, false, and irrelevant.
>
> Steve ;-)

Ideologue: noun. Someone who disagrees with the writer on

an issue and is insufficiently apologetic about it.

Stolen from Billo in misc.writing

Kurt Ullman

2008-04-03, 9:25 am

In article <JVWIj.11669$qS5.386@nlpi069.nbdc.sbc.com>,
"Edwin Pawlowski" <esp@snet.net> wrote:

> "NotMe" <me@privacy.net> wrote in message
>
> We use a lot of independents. Every one of them has a fuel surcharge. So,
> where is the money.?

There was a rather interesting thing on 20/20 or one of the similar
shows about how the brokers are getting the fuel surcharge and then
keeping it instead of sending it along to the truckers. Sorta surprised
no one has sued over that.
O

SteveB

2008-04-03, 1:26 pm

"Edwin Pawlowski" <esp@snet.net> wrote in message
news:1K1Jj.11726$qS5.1790@nlpi069.nbdc.sbc.com...
>
> "NotMe" <me@privacy.net> wrote in message
>
> We use both, but I'm referring to the owner/operator, the guy that pays
> the fuel bill. I'll have to ask them to be sure they are getting the
> money we are paying and not the brokers.

All of mine just say, "Do you want the shipment or don't you? I'm busy."

Steve

HeyBub

2008-04-03, 1:26 pm

SteveB wrote:

> The local Rip and Gyp has always fascinated me. On Monday, they have
> 10,000 gallons of gas delivered. On Tuesday, there's a war in Outer
> Karsfarkistan, and the price goes up 25 cents a gallon, even though
> the ten thousand gallons in the ground were bought at the pre
> Karsfarkistan War price. But, nonetheless, the price immediately
> goes up a quarter. Now, peace is declared in Outer Karsfarkistan,
> and it still takes three months for the price to ratchet down. A
> little.
> Fascinating. And yet, some clueless morons whine about oil companies
> gouging. They have nothing to do with what the local Rip and Gyp
> charges no matter how cheap they bought the gas.
>

In Economics, this is called "Rocket Up, Feather Down." It is the way
pricing works for commodities.

First, whether the 10,000 gallons is in your tank, the gas station's tank,
or still in the ground in Ickystan, it has a value determined by the market.

Take a simple example: Gas station buys two gallons of gas at $3 each
expecting to sell them for $3.25 (twenty-three cents for other expenses and
two cents profit). That is, he needs an additional fifty cents on the sale
for his business to survive. If his prices don't change, he needs to take in
$6.50. He sells one gallon of gas the first day at $3.25.

The next day, his replacement cost goes to $3.25 before he can sell one of
his gallons. He needs $6.50 ultimately to replenish his stocks and 50 cents
gross profit, but has on hand $3.25 and one gallon of gas. He's got to sell
that remaining one gallon at $3.75 to break even!

Point is, it's not only the markup that has to be considered - it's the
replacement cost of the raw materials.

NotMe

2008-04-03, 1:26 pm

"Kurt Ullman"

| > > Shippers, not truckers have been applying a surcharge. Little if any
is
| > > getting to the independents.
| >
| > We use a lot of independents. Every one of them has a fuel surcharge.
So,
| > where is the money.?
|
| There was a rather interesting thing on 20/20 or one of the similar
| shows about how the brokers are getting the fuel surcharge and then
| keeping it instead of sending it along to the truckers. Sorta surprised
| no one has sued over that.

Don't file suit and you get the short end of the stick. File suit and get
beaten with the stick (i.e. no jobs)

As to the oil companies maintaining 'it's not our fault' reminds me of many
of the pronouncements of the ENRON bunch.

NotMe

2008-04-03, 1:26 pm

"HeyBub" <heybub@gmail.com> wrote in message
news:A5mdneMD2LnKa2nanZ2dnUVZ_jadnZ2d@earthlink.com...
| SteveB wrote:
|
| > The local Rip and Gyp has always fascinated me. On Monday, they have
| > 10,000 gallons of gas delivered. On Tuesday, there's a war in Outer
| > Karsfarkistan, and the price goes up 25 cents a gallon, even though
| > the ten thousand gallons in the ground were bought at the pre
| > Karsfarkistan War price. But, nonetheless, the price immediately
| > goes up a quarter. Now, peace is declared in Outer Karsfarkistan,
| > and it still takes three months for the price to ratchet down. A
| > little.
| > Fascinating. And yet, some clueless morons whine about oil companies
| > gouging. They have nothing to do with what the local Rip and Gyp
| > charges no matter how cheap they bought the gas.
| >
|
| In Economics, this is called "Rocket Up, Feather Down." It is the way
| pricing works for commodities.
|
| First, whether the 10,000 gallons is in your tank, the gas station's tank,
| or still in the ground in Ickystan, it has a value determined by the
market.
|
| Take a simple example: Gas station buys two gallons of gas at $3 each
| expecting to sell them for $3.25 (twenty-three cents for other expenses
and
| two cents profit). That is, he needs an additional fifty cents on the sale
| for his business to survive. If his prices don't change, he needs to take
in
| $6.50. He sells one gallon of gas the first day at $3.25.
|
| The next day, his replacement cost goes to $3.25 before he can sell one of
| his gallons. He needs $6.50 ultimately to replenish his stocks and 50
cents
| gross profit, but has on hand $3.25 and one gallon of gas. He's got to
sell
| that remaining one gallon at $3.75 to break even!
|
| Point is, it's not only the markup that has to be considered - it's the
| replacement cost of the raw materials.

I'm reminded of the fuel shortages of the '70s. No fuel at $n but the next
day lots of fuel at $n+x. (even with price controls)

And don't kid yourself there was LOTS of fuel in the '70s to the point were
there was no place else to store it.

LinkBot