News Donger on Suicide Watch: Oil Nears $100 a Barrel

**Donger** · 09-02-2008, 01:39 PM

Quote:

Originally Posted by Hydrae

That has been my question for several weeks now. Since the price of crude dropped by about 30%, why hasn't my price at the pump dropped accordingly? We absolutely should be under $3 a gallon if the speculation market is what drives the price I am paying.

Because retail prices drop more slowly than they increase. Think of it this way:

When gasoline prices are dropping in response to crude dropping, the retailer is still selling gasoline that he bought when crude was higher. So, in order to not lose too much money on the inventory he has in his tanks, he drops his prices as slowly as possible.

Make sense?

Hydrae · 09-02-2008, 01:42 PM

Quote:

Originally Posted by Donger

Because retail prices drop more slowly than they increase. Think of it this way:

When gasoline prices are dropping in response to crude dropping, the retailer is still selling gasoline that he bought when crude was higher. So, in order to not lose too much money on the inventory he has in his tanks, he drops his prices as slowly as possible.

Make sense?

It would if the arguement for it going up as soon as the crude price goes up wasn't so that they can afford the next load. So the price goes up immediately to cover the next shipment but the price stays up to pay for what they have in the tank already.

**Donger** · 09-02-2008, 01:52 PM

Quote:

Originally Posted by Hydrae

It would if the arguement for it going up as soon as the crude price goes up wasn't so that they can afford the next load. So the price goes up immediately to cover the next shipment but the price stays up to pay for what they have in the tank already.

That's precisely what happens. If they see crude going up, they know that they have to raise prices immediately, because their next shipment is going to cost more.

It's the replacement cost.

And, the price isn't staying up. It has dropped.

**Lzen** · 09-02-2008, 02:00 PM

Quote:

Originally Posted by Donger

That's precisely what happens. If they see crude going up, they know that they have to raise prices immediately, because their next shipment is going to cost more.

Yes, because everyone knows that those Cstores are just skimping by from week to week.

Hydrae · 09-02-2008, 02:02 PM

Quote:

Originally Posted by Donger

That's precisely what happens. If they see crude going up, they know that they have to raise prices immediately, because their next shipment is going to cost more.

It's the replacement cost.

And, the price isn't staying up. It has dropped.

But when the price is dropping they are not charging the replacement cost, they are charging the current cost. It definitely feels like they are working both ends of the situation.

**Donger** · 09-02-2008, 02:04 PM

Quote:

Originally Posted by Hydrae

But when the price is dropping they are not charging the replacement cost, they are charging the current cost. It definitely feels like they are working both ends of the situation.

Absolutely, it is both.

"What did I pay for what is in my tank now? What do you I need to charge in order to not lose money?"

and

"What is the price of crude doing now? What should I be charging in order to cover my next purchase?"

RJ · 09-02-2008, 05:10 PM

Quote:

Originally Posted by Donger

That's precisely what happens. If they see crude going up, they know that they have to raise prices immediately, because their next shipment is going to cost more.

It's the replacement cost.

And, the price isn't staying up. It has dropped.

Yes, I see. If next week's gas is going to cost more than this week's gas I need to pay more for my gas this week so the station can pay for next week's shipment.......even though I don't want next week's gas and in fact just want to buy this week's gas. But if the price of crude drops then the price of next week's gas might go down, even though it's the same gas.

Do I have it right?

**Skip Towne** · 09-02-2008, 05:15 PM

Quote:

Originally Posted by RJ

Yes, I see. If next week's gas is going to cost more than this week's gas I need to pay more for my gas this week so the station can pay for next week's shipment.......even though I don't want next week's gas and in fact just want to buy this week's gas. But if the price of crude drops then the price of next week's gas might go down, even though it's the same gas.

Do I have it right?

You're confusing next week's gas with last week's gas. How can they keep setting record profits if things aren't confused?

RJ · 09-02-2008, 05:31 PM

Quote:

Originally Posted by Skip Towne

You're confusing next week's gas with last week's gas. How can they keep setting record profits if things aren't confused?

Why should I receive old, stale gas while paying the higher price of the nice, new, fresh gas? And is it fair that next week's customers will be able to pump the fresh gas only because I footed the bill? If it wasn't for me there wouldn't be any new gas cause the station wouldn't have been able to afford to buy it.

I feel like I'm being used here.

**Skip Towne** · 09-02-2008, 05:33 PM

Quote:

Originally Posted by RJ

Why should I receive old, stale gas while paying the higher price of the nice, new, fresh gas? And is it fair that next week's customers will be able to pump the fresh gas only because I footed the bill? If it wasn't for me there wouldn't be any new gas cause the station wouldn't have been able to afford to buy it.

I feel like I'm being used here.

You'll never be able to set record profits month after month. You don't understand the system.

**Donger** · 09-02-2008, 06:05 PM

Quote:

Originally Posted by RJ

Yes, I see. If next week's gas is going to cost more than this week's gas I need to pay more for my gas this week so the station can pay for next week's shipment.......even though I don't want next week's gas and in fact just want to buy this week's gas. But if the price of crude drops then the price of next week's gas might go down, even though it's the same gas.

Do I have it right?

You have it partially right. Hopefully, my other following posts will help clear it up for you.

**Bugeater** · 09-02-2008, 01:43 PM

Quote:

Originally Posted by Donger

Because retail prices drop more slowly than they increase. Think of it this way:

When gasoline prices are dropping in response to crude dropping, the retailer is still selling gasoline that he bought when crude was higher. So, in order to not lose too much money on the inventory he has in his tanks, he drops his prices as slowly as possible.

Make sense?

Sure is funny that when prices are going up, it's about the replacement cost, and when it's going down it's about what he paid for what is in the tank. Why don't you just call it what it really is?

**Donger** · 09-02-2008, 01:56 PM

Quote:

Originally Posted by GoBo

Sure is funny that when prices are going up, it's about the replacement cost, and when it's going down it's about what he paid for what is in the tank. Why don't you just call it what it really is?

I have explained it as best I can.

Calcountry · 09-16-2008, 02:16 PM

Quote:

Originally Posted by Donger

I have explained it as best I can.

Of course, there is the supply and demand for unleaded fuel. It is an entirely independent market from the Crude Market.

You have to have through put in Refineries for there to be a "supply" of gasoline, and right now it is kind of crimped due to the refineries being offline near Houston.

Frankly, I will be happy if the gas cracks 3 bucks a gallon. Dang oil shieks should have listened to Bush when he went begging them to pump more.

**Lzen** · 09-02-2008, 01:57 PM

Quote:

Originally Posted by GoBo

Sure is funny that when prices are going up, it's about the replacement cost, and when it's going down it's about what he paid for what is in the tank. Why don't you just call it what it really is?

Greed?