Originally Posted by UtahDan (Post 250487)

Exute is right for once. I was listing to a broadcast a few days ago about AAA's most recent report that during the period when crude prices fell 15% pump prices only fell 3% nationally. They take the position that while prices eventually come down, station owners will wait a week or so before passing the savings on to the consumer where as they will raise prices immediately when demand or prices increase. They also report that stations near one another almost invariable refrain from competing with each other, but rather collude so that they all profit.

I think it is a legitimate question to ask whether this is an industry where the market principles that make most things work are actually in operation. It seems like there are many anticompetitive practices being utilized. If this is so, it ought not be.

Originally Posted by il Padrino Ute (Post 250489)

I'm not sure I understand why station owners should have to drop their prices for gasoline below the cost of what they paid for it. If a station owner pays $X for each gallon of gas from the refinery and charges the customer $X+.05 for each gallon of gas, why should he lower the cost of a gallon of gas until he pays less for it at his price?

Originally Posted by UtahDan (Post 250493)

Who is saying that? I read the article to say that they dropped their prices 3% when what they were paying for it dropped 15%. If they do that, they certainly do make money on it.

Originally Posted by il Padrino Ute (Post 250502)

Perhaps on the national average, this is what is happening. I based my comments on knowing and talking with the owner of Rhinehart Oil - who also owns Harts gas stations. He is a person who has more integrity than most everyone I know, and is very straight forward when it comes to how he does business with his stations. If he tells me that he makes his money from inside sales, then I believe him.

But my question still remains the same - why would a station owner sell the gas for less than he paid for it?

As an aside, I still think the biggest thief in the cost of gasoline is the federal government. It steals 18 cents/gallon from us each time we buy fuel and it does absolutely nothing to earn it.

Originally Posted by il Padrino Ute (Post 250485)

Are you contending that the cost of gas for the station should have no effect on the retail price of the gas for the customer? Is that what you call "nonsensical rationale?"

You really are clueless, aren't you?

Originally Posted by il Padrino Ute (Post 250502)

Perhaps on the national average, this is what is happening. I based my comments on knowing and talking with the owner of Rhinehart Oil - who also owns Harts gas stations. He is a person who has more integrity than most everyone I know, and is very straight forward when it comes to how he does business with his stations. If he tells me that he makes his money from inside sales, then I believe him.

But my question still remains the same - why would a station owner sell the gas for less than he paid for it?

As an aside, I still think the biggest thief in the cost of gasoline is the federal government. It steals 18 cents/gallon from us each time we buy fuel and it does absolutely nothing to earn it.

Originally Posted by Flystripper (Post 250505)

I have seen the financial statements of many mom and pop owned gas stations. The margins on gasoline are very, very thin. ie. pennies per gallon and that is before SG&A. Your friend is right, much of the profit from gas stations comes from inside sales.

Originally Posted by exUte (Post 250532)

fluctuate with the price of crude oil. Take a stab of where you think some of the $.18 goes? Roads, highways maybe?

There is markup up and down the gasoline mfg. / distribution lines. Everyone makes $$ !

Originally Posted by il Padrino Ute (Post 250538)

I never knew you were a socialist.