WTF is with the gas prices?

[exc911ence]

Regular just hit 84.9 here yesterday... why?

[Purrybonker]

I agree, it's just plain ridiculous... someone should launch an investigation into this. I'm sick and tired of paying these kinda prices for gas. At this rate it's darn near 1/4 the price of a diet cola or bottled water for gosh sake!! How does that make any sense?

Let's see - those darn oil company rip-off artists. All they do is:

* spend millions of dollars trying to find and then pump crude oil out of the ground.

* simply haul that oil to a refinery that cost them a few hundred million to build (or billion if they built it in the last decade).

* jump in a tanker and deliver the now-refined fuel to a network of service stations all over hell's half acre. And this in a safety/regulatory environment that is the most stringent in any area of retail marketing.

* sell the stuff in tiny quantities (relatively speaking) to john Q. public who hates buying the stuff at any price, yet who somehow invests in a vehicle that consumes that maximum quantity of the stuff (read SUV here), thereby granting him greater "griping rights" about the price of gas.

* collect taxes that amount to about half of the selling price of the fuel and remit those taxes to various levels of government.

Those greedy bustards! Compare their economics to that of those poor bottled water producers, for example. I mean those guys have to actually filter that stuff and everything before they can sell it us! And those poor, poor cola makers, why they have to spend millions upon millions of dollars in advertising to get us to willingly throw our money at them! Otherwise we might buy those no-name brands at 1/4 the price of names like COKE or PEPSI. Good thing they keep us on the straight and narrow with our own money.

It's also a good thing that lots of people buy a coke (particularily a slurpee type) when they fill up. That way the service station operator and/or oil company can actually earn a reasonable profit on the transaction.

Things have got to change!

[exc911ence]

Spoken like a true Albertan oil-baron! My problem is that the price stays at 75.9 for months and then jumps to 80.9 for a week and then 84.9! what causes this? Why do all of the stations do this at the same time if they are all supplied by different refiners? It reeks of price-fixing to me and I'm pretty sure that there's law against this sort of thing.

PS: If my car ran on CocaCola, I'd really start complaining! Imagine a bottle deposit on top of the price of a fill-up?

[Purrybonker]

Yeah, I've been known to hang around the inner sanctum of the odd oil company - but never banked enough to attain "baron" status.

The fuel distribution and retailing/marketing business is ridiculously stupid (for lack of a better word) from the perspective of evidencing sound business practises. That's basically why prices at the pumps bounce around so much.

As a handy example - those very few guys that actually refine gasoline are sooooo dumb that their "wholesale" sales people sell fuel in bulk quantities to "independents" at much lower prices than they sell to their own dealer network (because the wholesale market is very competitive). These same independents are then able to drop their street price below that of the refiner's own branded stations simply because their cost of supply is lower. Then the sales people that manage the service station side of those refiner's marketing businesses drop their price to compete with the independents. So those refiners frequently compete with themselves - wholesale marketers vs. retail marketers just down the hall from each other. Just one example of conditions that lead to "price-wars".

But the whole story is much more complex than that simple example. The vagarities of supply and demand and the timing and status of "swap" deals between fuel marketers are key components of price swings. Fuel is kind of a perishable product from a price-risk and storage limitation perspective. So that means that a particular oil company may have a particular need to move large quantities of certain types of fuel in certain markets from time-to-time. This also leads to temporary "price-wars".

Every oil company in Canada pinches itself once or twice per year to make sure that they really want to be in the retail fuel business. The only thing that keeps it attractive at all is the movement of gasoline buyers into the store to buy ancillary products. That's why all the oil companies are converting their sites to snazzy convenience store/bakery/coffee shop formats. Make $0.25 selling you a tank of gas - make $.75 selling you a coffee or a slurpee (frozen beverages are the highest margin item in a convenience store).

Trust me, when the price of gas "jumps up" - 99.99% of the time it's a movement back to the real market value (with a skinny margin) of the product. Just check the financial statements of any of those "major" oil & gas companies. Pretty scrawny profits in their retail fuel operations. Huge profits in upstream and midstream business with skyrocketing crude and natural gas prices. Buy shares now - sell them sometime soon.

No, really - trust me...

[exc911ence]

The gas/oil business sounds much like the aviation industry. How do you make a small fortune in aviation? Start out with a large fortune.

It is true that gas is way cheaper than other fluids (like bottled water, as you stated) but I guess the killer is that when you're thirsty, it costs you $2 to satisfy the thirst. When your car is thirsty, it costs $50+ to satisfy it. Funny that everyone thinks it would be great to have a car that ran on water but it would end up costing 4 times more to fill it! "My Porsche does not run on tap water"...

[joeclarke]

actually, I think it's very likely that the aviation industry is even dumber than the fuel industry. I mean those guys keep trying to respond to demand for commodity level pricing for what should primarily be a proprietary service given the variables of service, available destinations and schedules.

But then the public always gets what it wants... the cheapest price at any cost. Even when the cost ends up being declining quality of service and/or bankrupt providers not to mention out of work neighbours. Damn customers just don't seem to care about sustainability!

But then again, I know nothing about selling gas or flying planes.

[GWN7]

I thought to become a millionaire you were suppost to go into farming? and start of with several millions and work your way down

Oh $0.775 here today up 4 cents since last week

Hang on to any of the new Newfoundland quarters. If you have them, they may be worth much more than 25 cents. The Canadian Mint announced today that it is recalling all of the Newfoundland quarters that are part of its program featuring quarters from each province.

"We are recalling all the new Newfoundland quarters that were recently
issued," Canadian Mint Deputy Minister Jack Shackleford said Monday.
"This action is being taken after numerous reports that new quarters
will not work in parking meters, toll booths, vending machines, pay phones, or other coin-operated devices."

The quarters were issued in the order in which the various provinces
joined Confederation, and have been a tremendous success among coin collectors worldwide.

"The problem lies in the unique design of the Newfoundland quarter,
which was created by a team of Newfoundlanders," Shackleford said.
"Apparently, the duct tape holding the two dimes and the nickel together keeps jamming the coin-operated devices.

[911Rob]

Enjoyed that 2nd post by our oil baron Albertan friend,
that was a good read - hah ha.

As for the price of gas.... applies to everything these days.
and I mean everything!

I'm trying to retire and the only place I'm getting is tired?

[Mike M]

What a load of crap...does that explain why oil companies are making record profits? Does that explain the long weekend price increase that always happens?Does that explain why gas stations don't have to empty their tanks before they raise the price,since the gas in the tanks presumably cost them less?Does that explain why every station's price is EXACTLY the same?
Wake up...we are being gouged,plain and simple.They know,
and we know that we must buy gas.That gives them the ability to do whatever they want.The price went from 62 to 76 in Calgary,overnight.That's over 50 cents a gallon!!! If that happened in the US there would be a war.
It's simple,there's nothing on paper but it's price fixing and gouging,and it is illegal.

[Purrybonker]

Ok Mike - let's take a look at a completely different industry, just for comparison purposes...

I bought a new stereo receiver a few months ago. The first thing I did, once I decided what I wanted (right down to the model number) was to send an email to every seller in the province asking for a price. The responses ranged from $2200 to $1400. Now the lowest price was in Edmonton, and I didn't really want to go there (different story), so I have to admit that I "shopped" the Edmonton price around in Calgary a bit. Suprise, suprise... almost every Calgary retailer offered to match my "Edmonton price", so I ended up buying it locally.

Does this example reflect a competitive marketplace? Or does it reflect a marketplace where sellers will only act in a competitive manner if compelled to do so? In other words - Calgary buyers get "scammed" vs. Edmonton buyers unless they threaten to take their business to Edmonton.

In the gas business there is no negotiation. Sellers all have the same price because either: (1) the market is perfectly competitive or (2) the market is rigged through the illegal conspiracies of the participants. Tons and tons of "inquiries" have been conducted by politicians (at voter expense, BTW) to investigate the gas industry over ther years. Each and every inquiry has come back with the same answer.

The difference between gas and a stereo in the eyes of the consumer is that he's buying the latter because he wants to, the former because he has to. That's why he will willingly throw an absurd amount of money at something as ridiculous as a $2000 stereo, when a $150 stereo will do basically the same job, yet he will scream conspiracy when gas goes up $0.10/litre.

If this business is so darn lucrative what happened to names like Turbo, Gulf, Mohawk, Texaco etc, etc, etc over the last number of years? Isn't it likely that everyone would jump into the business to rake in those huge profits rather than the vast numbers of stations we see being closed every year?

You don't like price of gas - do something about your consumption. Same solution as dealing with any other utility. Quit looking for a grassy knoll - there ain't one.

[Mike M]

Well,since you obviously work in the oil industry,everything you say can be taken with a grain of salt.After all,you stand to benefit personally.That being said,your logic is clearly flawed.Yes,people can shop around for a car stereo,but you can't do that with a litre of fuel,can you.That's called price fixing and it is illegal.I would be happy if I could go to station "B" if I didn't like the price at station"A".Since the price is exactly the same,that isn't an option and that is the whole problem.
Did you ever consider the downstream effects of this kind of abuse on cosumers?Probably not,if you work in the oil business.
Consider the guy with a family who makes 10 bucks an hour. He must use his car to get to work.Now that it costs him more to fill his tank,something else has to give. One less movie?
One less dinner? One less pair of shoes? Who suffers? Everyone else,that's who.Everyone except the oil companies,who continue to post record earnings and profits. God help the guy,or union, that goes to the boss and tells him he needs a raise to pay for cost increases in everything.Sooner or later,his ability to pay will stop.Then what happens? It doesn't matter... as lond as the oil companies can keep convincing people that their product is in a competetive market that is "perfect".

[Purrybonker]

Mike says:

I would be happy if I could go to station "B" if I didn't like the price at station"A".Since the price is exactly the same,that isn't an option and that is the whole problem.

Sounds like a valid statement. But in your example, Mike - virtually everyone would go to station "B" - the good folk at station "A" might just as well lock their doors. Everyone thinks exactly like you when it comes to buying "necessities". They are going to get the cheapest price - come hell or high water. Not because we can't afford to pay more - it's just that the product is non-proprietary so why would anyone buy from "A" when "B" sells the same thing for less?

I would argue the opposite of your position regarding gasoline prices that are exactly the same. If station "A" could afford to stay in business with a higher price than station "B" - station "A" must be making one hell of a good profit margin on the small amount that he does sell. In that case, the bastards ARE gouging.

And Mike, in Alberta you have the Alberta Advantage don't forget. All those royalties on crude and natural gas and taxes at the pump that increase with every rise in crude/gas prices go to help everyone with great new roads, schools, universities and hospitals. Yeah, sure. That's where your gripes should be aimed - at Ralph. We would probably mind less about the price of gas at the pump if we could see the benefit in some of that money coming back to us in other ways.

[Mike M]

I assume you saw the front page of Saturday's Herald....

Hmmmm....all the big oil companies and refiners making "UNPRECEDENTED" profit.

There is no more to say.

[exc911ence]

Sorry about beating a dead horse but regular just hit 95.9 here yesterday... man that hurts!

[zehnd]

I heard Delta is now just over a 1.00/L

[Oracle]

Gas prices are ridiculous, demand hasn't changed drastically, it's just panic and vendors jump into any chance to charge more, and of course the government will keep their mouth shut since they get more $$$ in taxes..

Anyway this is for Calgary:
http://www.calgarygasprices.com/

I'm sure there are similar web sites for other provinces...

Bye
-J

[exc911ence]

Holy crap! We're paying 20 cents a liter MORE than your cheapest stations are charging?

[exc911ence]

Latest: 109.9 for 94 octane... egads!!!

[Purrybonker]

Yeah, I paid 102.9 for 94 at Sunoco in Hope last week. And I did it with a smile on my face. Nice to live in a land of 94 octane and warm winters - quitch yar gripin.

[zehnd]

Yeah, warm winters and snowy springs. Almost a foot of snow is Estevan today.