Topic: Get Free Gas by simple correlation on prices. - page 2. (Read 5694 times)

Wal-Mart offers gas as a loss-leader, at something like a 3-5 cent discount.

Regardless, what do you suppose the transport costs are on margins of 5 cents?  Not to mention the labor costs or health costs...

If they can get increased business that offsets having a loss-leader in gas, they will do this.  There are some independent owners out there.  Why are they not selling a ton cheaper, crushing competition, and having the other stations get no business?

Good thing Microsoft bought out Google and Ebay before they got too big.

Buying out companies at a premium just for another to show up like wack-a-mole is a very expensive proposition.  Try to think through your nutjob theories before publishing them on the internet, though.  If you have thought through them, try thinking harder.

But I do wish you luck on buying your underground bomb to save $5.

Ok, I will just take my town. The $1 example was extreme just to make the point. In reality just a 5¢ difference would work, a 10¢ difference would be fantastic. Lets say a Convenient store sells 1000 gallons a day at a 1.10 / gallon. The average they get to keep is 7¢ per gallon. So they take in $1100 dollars and get to keep $77 dollars for the mark up. Remember Gas is the lowest mark up at any gas station. The average mark up is at minimum 100% for retail merchandise. So just by selling a few extra candy bars will quickly make up for the Gas.

Lets say they sell 100 candy bars at 1$ at the 1.10 gas price. They make $50 dollars profit off of the Candy Bars alone. Now if they sold the gas at a loss at $1, they have a net loss of 3¢. They give up the 7¢ mark up and take a loss of 3¢.

Now because of their lower prices, their gas sales go up to say $2000 dollars a day at a loss of $60 per day.  So they need to make up at least $60 dollars to break even.

Now traffic doubled, it stands that their in store purchases doubled. But the prices in the store have at least a 100% mark up. But anyone that shops at a convenient store know the mark up is higher than that.

Let me ask, do you thing the store will make more money by taking a 3¢ per gallon hit on the gas and taking a 50% increase on their other items that are marked up at least 100%.

But it gets better, if they make money on that model, and they invest the increase into an interest bearing account on a percentage basis to further subsidize the fuel. It would be funny to buy 10 year T-Notes at 4%, and use the Government to help. (kind of a Gotchya). They will have a model of being able to out compete competitors and put downward pressure on price of others.

Not on a grand Oil Industry Model, but on a Individual Basis with in the Oil Industry Model. So how does the Oil Industry prevent this from happening. Well with Contracts, and Laws that they have lobbied for.  Or like other industries, just buy them out. Actually in other industries their is a model to compete to get bought out. Especially in the electronics industry and internet. Buy your competitors before they can harm your bottom line.

But certain industries have prevented the competition to avoid it.  Banking, Oil, etc...

But as an individual, we can bypass all those things. If many do it on a small scale, they can't stop it.

If only with 20 Gallon gas containers. Not saying I do it: But if I was selling to my neighbors from portable Boat Gasoline Tanks, they save about 5¢, I make about 5¢ per gallon. (TAX free). Pulling it of has a lot to do with Trust. Do your friends and neighbors Trust you.

This is called a loss-leader.  Not really that uncommon.  Grocery stores do this all the time.  And no, selling gas at a $200 loss per semi-truck would not lead to an increase of $200 in business per customer.

They aren't allowed to do it?  More like they aren't idiots.

That is the genius behind their system. They lock in the profits to them by preventing others from raising and in some cases lowering the price.

For example, there are truck stops that should have very low gas prices, because they can take profits from their other businesses in the truck stop and self subsidize the gas price to get greater traffic. ( The Casino Model - most loose money on food and beverage but make it up in increased traffic due to the Great Food and prices )

Show me one example of this in the United States, and I will concede to you.  Imagine: a truck stop that could self subsidizes the Gas buy a $1 a gallon. They would make a fortune on Mechanical Services, Restaurant Services, Parts, Gadgets, etc.... because of the increase traffic. The margins on the other sales greatly out weigh the margins on Gas.  So why isn't this occurring?  Because they are not allowed to do it.

The Casino Business Model in just one Gas Franchise would become the number one gas station in the U.S.

If they were price fixing, why are they price fixing the price too low?  You have all these different ideas and theories, all in conflict with each other.  There is not a consistent train of thought.

And no, I'm not a Keynesian.  But do you listen to Alex Jones?

Collusion can happen, but it's very hard to enforce without governments.  There is too great an incentive to cheat.

Me too, You think there is no such thing as collusion, in economic models through use of the Government, Laws, and Competitive communication.

Are you a Keynesian? 

Nearest refinery is 170 miles away:


http://www.tsocorp.com/TSOCorp/SocialResponsibility/Environment/MANDANREFINERYENVIRONMENTS

Someone should go ahead and call those gas stations and find out what effect the vast international oil conspiracy has on their prices.

I found the problem.  You have absolutely no understanding of economics.

Examine that, you must buy it. There is little competition. You can easily charge a lot more for it.

When supply is low and demand high, the price should go up.  So at the most remote gas station, the price should be high. We know the demand is there, if there are not a lot of others selling the same product, the price should be high.  But why isn't it?  I have been trying to tell you.

How about this one, in Lake Charles, LA ( the whole town is a Refinery), there is a Circle K gas station sitting in the middle of the refinery right next to the interstate. Supply and Demand should dictate that it should be the lowest.  Nope, one of highest prices in the whole state.

Now, you don't have to go to far to show, "conspiracies" in Louisiana.  Other than Alaska, it should have the lowest gas prices. Alaska has high gas prices too but they pay their citizens royalties of around $2000 a year to offset the prices. Imagine that, you make money just for being a citizen in Alaska.

But if you have asked around at your gas stations, (managers), you will start to see the picture. Prices are dictated to them. When it comes to gas, it is not truly a supply/demand model.

I thought prices were determined by the vast oil conspiracy?

http://maps.google.com/maps?q=gasoline near 45.45955%2C-101.91356

This is the farthest point from a McDonalds in the US, and all of the gas stations nearby.  But it won't tell you much since prices are determined by supply and demand, and the supply in sparsely-populated areas is usually higher than the supply in big cities.

Why would the remote gas station having the highest prices disprove your point?  You are also forgetting that not all gas is the same.  There are a ton of different blends, etc..., some more costly than others.

I already have disproved your point (that it takes 30-60 days for prices to hit the pumps).  Look at gas prices over time.  Look at a graph of oil futures over time.  The lag is not 30-60 days.  For example, war breaks out in Libya, oil prices rise.  Gas prices will have gone up within a week, maybe even within a day.  You can look at the correlation of the prices, and shift it by different amounts, and see where the greatest correlation occurs.  Use a huge backtest of data to account for seasonal adjustments, refineries coming on and offline, etc...  This is super easy to prove if it were true.  So go ahead and do it, rather than rely on your gut instinct.  With that much money on the line, I can't believe you are so clever that you are the only person to ever figure this out.

Mandatory markups are a completely different issue.

If it was that easy to make money, there is no reason why a gas station owner wouldn't employ this strategy (or just raise his prices immediately ... oh wait, you believe in a vast conspiracy that forces gas stations to lose money), and just close his doors (or close all but 1 pump, or slow down their pumps) during the cheap times, save the gas for later, then sell it then.

Yes, I do.  Your right, go along with it. Keep the bubble intact.

I am just Delusional,     I do like playing chess however. There is no price fixing by mandatory mark ups of 7-11 cents. It just doesn't exist.

Tell you what, go find the most remote gas station in America, call it for its Gas Prices. It should be the most expensive gas in the country. You can subtract all the taxes from everywhere to get the baseline. 

BTW: the biggest reason in differences in prices it the TAXES, the FED, State, and Localities charge.

IF the most remotest gas station in America has the highest or even a high gas price, I will concede.  But it won't.

OK, First I am assuming we are talking in the U.S.  If so, yes I have proof.  For one, one of my friends owns a station. But I know that won't suffice so I will endeavor to source it.

Futures are Futures, not the spot market. The laws in the U.S. is that the price in stations is based of the current supply in the tank at the price for which they paid for it plus mark up.  For example: if you bought gas for your station at $3, held onto it until $4 and then sold the gas, you would get arrested and fined. But that would make no sense for a Gas Station to do (depending on traffic). <-- That is covered by anti-gouging laws. Google them.

So lets source it for you:

Earlier this week, Kehler's wholesale price jumped by 4 cents a gallon. The price is set by Sunoco Inc., from whom he leases his gas station and is contractually obligated to buy.

Shipments arrive overnight, whenever a remote sensor tells Sunoco that Kehler's tanks are low. The wholesale increase means Kehler will have to raise his pump prices soon -- if he wants a shot at breaking even on gas sales.
http://www.usatoday.com/news/nation/2008-05-23-1070321808_x.htm



Proposed law would allow gas stations to set fuel prices
http://www.virginiagasprices.com/News_Page.aspx?msg_pg=2&id=35700&master=1&category=1357&topic=437086&page_no=1&ign=1



Just like independent owners, he records nearby competitors' prices, the manager said. But rather than adjusting his, he reports his survey results to his company - to what Beachler called the chain's "pricing office." From there, he's told what prices to post for the day, or at least until he's told to survey again.
"Believe me, that guy in his (pricing office) cubicle knows what's going on" with the competition around his company's stations, Beachler said.
Chain station pricing offices and independents also check on the wholesale prices that major gas suppliers set late each day for gas to be bought the next morning from terminals where the suppliers send it from refineries, usually by pipeline.
http://www.pjstar.com/business/x61381715/Who-sets-the-gas-prices-Thats-not-an-easy-answer

And each State has Gasoline Pricing Laws. New Jersey will even prosecute you if you raise the price twice in a day. You can google the laws yourself.

As far as the Franchise contracts for the stations, I won't disclose my friends. But he is told by a Pricing Office what the price will be for the day.

If however, you are connected to the fuel via a pipeline to the station, the price will and can actually change hourly if the state allows it.

Having a franchise contract doesn't mean you can't set your own prices.  Obviously they won't sell gas to franchises super cheap.  But that doesn't mean that they can't charge more because of whatever reason they want.  It's just competition keeps them from setting them too high.

Do you have any evidence of this?  Or is it your own made up conspiracy theory?  Because I have seen gas prices skyrocket overnight due to the oil futures market going up huge.  I've seen it drop huge overnight as well.

You are telling me that every independent gas station owner and franchisee, who already has huge tanks, couldn't just stop selling gas for a week to make this extra profit?  They already have 10-20,000 gallon tanks.  If the price goes up by 10 cents, they could make an extra $1-2000 by just holding the gas.  So why don't they do this?  You are the only genius, and people who already have the infrastructure in place are all idiots?

It's funny, most people have the opposite complaint you do.  "Gas went up 20 cents last night, but they still have the same gas in the tank they paid for last night!  That's gouging!  They bought it cheap, the should sell it cheap!"  This is the exact thing you are claiming they cannot do.

The reason they do this, of course, is because 1) they can, and 2) sometimes the price goes down, and they need to sell current inventory.  They are much more likely to sell gas at the price they expect to refill their tanks at than whatever they paid for the last tank.

Go to any gold coin dealer, same thing.  If you sell them a coin for $1400, and then gold drops to $1350 next week, your coin is not going to still be for sale for $1425.  It will be for sale at $1375 (or whatever premium exists).  Same thing if you sell it to them when its $1400/oz, and it goes up to $1500/oz.  That coin won't be sold for $1500 anymore.  By your logic, you could buy lots of gold coins when the price rises, since by the time the gold dealer restocks his inventory, the price will go up! But he changes his prices often according to the futures market.

OK, I know you have no idea !!!  Agreed.

Where do these gas stations get their gas from, BP Stations from BP, Shell from Shell, etc...  Most of these have franchise contracts, these contracts, control pricing.  Sorry just the way it is. 

Now, lets assume you want to go it alone and be none franchisee, and buy gas.  Where do you get it from? Well you don't have to many options, BP, Shell, Chevron, Citgo, ExxonMobile, etc...  You will not get the Franchise rate, you will pay a premium.  But then you can set the Profit Margin yourself, but to what end. Your price by design will be higher than everyone else.

Here is an excerpt about Divorcement Law:

Independent retailers often have difficulty surviving in industries marked by a high degree of vertical integration. In the petroleum industry, for example, many gas stations are owned and operated by oil refineries. These companies are able to control the wholesale price of gasoline sold to locally owned franchise stations. They also set the going rate at the pump through company-operated stations. By narrowing the difference between the wholesale and retail prices, oil refiners can squeeze independent and franchise gas stations out of the market.

But don't believe me, go ask a locally owned operator. He will tell you.


However, if you happen to have a oil well in your back yard, own a refinery, and a gas station. Your set, charge what you want.

So why haven't any gas station owners decided to just stop selling gas (hoard it until they can charge more), and make all this money?  Are they all stupid?

I have no idea where you are getting this information that suppliers force them to sell it under a certain price.  Competition generally does that.  If what you are saying is actually true, how come I can drive past one station the next day, yet the prices rises $.15/gallon sometimes (even when a new tanker hasn't arrived)?  Prices fluctuate daily on gas stations, and it certainly isn't because they are getting new shipments.

So your theory is that there are suppliers that control the retail price (but it still changes daily), and the government limits the price increase (but it changes daily)?  Do you have any facts or is this all speculation?

In the U.S. the contracts that Gas Station owners get from the suppliers, limit the mark up. Basically they are told what they will make off of each gallon sold. And it is small, as the contract has a NDA attached. Most owners bitch about the paltry amount they get from the supplier.  Unless your a big station, you don't make much off of gas. Better hope they come into your store. If you noticed, they sometime use the trick of not putting paper in the pump, so you must walk into the store to get it.

And over and above the contract, the government has strict rules on gas pricing. Although this came about from price gouging after disasters.  Personally I don't think the needed the laws, as the owners that tried it after Katrina became pariahs afterwards. They still get called names.