The places I’m familiar with operate on margin. My local station owns the product when it gets on a truck from the pipeline to be delivered to the station. The price he pays is determined by local basis and futures price on the board. The board price changes constantly. The price when his transport truck gets in the loading queue will likely be different 30 minutes (or however long the line is) later when it actually loads. I’m sure chains are handled differently. This guy is a one station family operation.
Your question assumes a difference between the price the market will bear and the "fair" price. Who determines the "fair" value of a product of good or service, if not the person who buys it?
I picked the brain of the station owner I’m referencing here this morning while he filled one of my tractors with fuel. The price he pays can change rapidly but usually the price posted by the distributor at 6:00 pm is in effect for 24 hours. Once a transport is loaded, that transaction must be paid in full within ten days or the account is frozen. So in effect, the distributor is taking some risk for the retailer (and you) by leaving the spot price unchanged for 24 hours. Of course the cost of this assumption of risk is covered by their basis which is part of their margin to ensure some profitability. In short, volatility of gasoline prices could be worse without these mitigations in the industry. If we don’t like volatility we could lock in prices ourselves with options or positions on the board. But then you would have increased risk. And most people don’t consume enough product to set up a true hedge. You would end up with a partially speculative position and if a lender is involved they aren’t going to like that.
That is a reasonable question. However, since the wholesale price--i.e. the price paid by the (respective) distributors--presumably drops also, it is really unclear to me if a retail price drop translates into lower profits for the gasoline retailers.
I am really not surprised. Taxes in California (and taxes make up the majority of the price in gasoline) are utterly jaw-dropping.
I assume that you are a conservative--as am I, also. (In fact, I have not voted for a Democrat for president within roughly the past 45 years. And I am just as consistent in my voting down-ballot, also.) But just how would you justify profiteering, anyway? Do you really see the consumer as the opponent of the seller, rather than as the natural complement to the seller?
It is really difficult for me to believe that a product--any product--has an inherent value that is greater on one day than it is on another day. Now, it may be more useful--more in demand--on one day than on another day. But that is an entirely different matter. Anyway, to charge more than is necessary to make a reasonable profit is typically known as price gouging. And for good reason.
Good and services have only the value assigned to them by the buyer at the time of purchase. "Reasonable" profit is defined by the seller, as he need not sell his goods and services for any less than he wants.
To claim such is to tacitly agree to subjectivity. And I am a devotee of pure objectivity--always. (Well, with the single exception of my love for my wife--and my accompanying belief that she is the finest woman in the world.) So, "the seller" is in total control here. The consumer is little more than a sheep, meekly being led to the slaughter. I see...
Indeed - value -is- subjective. You may be willing to pay $100 for something that has no worth to me, and vice versa. Of course not. The seller may want to make a $5 profit on a gallon of gas, but if the buyer will only pay $2, the seller makes $0 profit. "Market price", where the seller and buyer agree on said price, defines reasonable profit.
Actually I consider myself more of a libertarian. I am a registered independent, but more often vote for Republicans than Democrats. I can only ask, have your ever started a business? In doing so you risk your capital, invest time and work, and only profit if you provide goods and services that people want to pay for. Is a profit unjustified? Should not the market determine what price people pay for goods and services? If not the free market, how should profit be determined?
Well, not to me. With the single exception of my love for my wife--I believe that she is the best woman in the world; although I could not objectively prove that--I have built my life around total objectivity. And I really do not wish for anything to intrude upon that.
One caveat here: By "investors," do you really mean speculators? If so, I should probably state that I have absolutely no use for this group. (It strives for personal gain, at the expense of society in general; and this speculation produces neither goods nor services; so it is really anti-capitalistic.)
Well then, I am about half-correct here. No, I have not. But just why should that automatically disqualify me from having an opinion about business practices? And the majority of new businesses fail. That is certainly not news to me. Is it news to you? Of course not. I am very much in favor of "the free market," broadly speaking. But that is quite different from laissez-faire capitalism. We abandoned the latter--thankfully, in my opinion--when we established a minimum wage in 1938 (which is now exceeded by many state minimum wages). And I would prefer that we model our pricing upon the complementary model (in which the buyer and seller are each viewed as half of the mutually beneficial arrangement), rather than upon the competitive model (in which the buyer is seen as the natural opponent of the seller).
Speculators can do rotten things like try to destabilize currencies and economies with propaganda and then profit from crashes, true. But everyone who simply buys a stock, owns stocks in a 401k (or in this case futures) hoping it will go up is also a speculator, and that activity adds much-needed liquidity to our markets, why U.S. markets are the best in the world, so there is another side. Without speculation, capital markets don't function. That there is much difference between "investment" and "speculation" is a LW Complex hoax used to create and spread "Evil Wall Street" lie narratives.
Because stations raise and lower their prices based on the price of oil that day. If oil futures go up and they know that they will need to pay more in a month they raise the price now so that they will have the funds to pay for the gas in a month. Just yesterday it went up 5% in one day. that is 12 cents at gas at 2.40 now.
When I was of working age, I owned a 401(k) (as well as an IRA). But the belief that stocks would rise, over the long term (and that is all that really mattered) was not mere speculation. They always have. (True, there are some occasional blips in the short term--known as corrections, or even as a bear market--but the price of stock never decreases over the long term. Yes, an individual stock might do so--in fact, the company that it represents mike even become defunct--but mutual funds are quite safe.) If you seriously believe that I am left-wing, that is only because you truly do not know me. (The fact that I vote Republican at least 99 percent of the time could possibly be a tipoff here.)
Had no intent at all to imply you are or were LW, was referring to a specific narrative not you personally.
If you could raise the price on the commodity you are selling by 35 cents and people would still buy it regardless, would you?
Sure. Their cost of crude falls due to fluctuations in the market or due to weather improving or other cause, and they are able to drop the retail price while continuing to make approximately the same profit margin. Now that's theory. But try to track oil company profits to show the cause of the fluctuations and see how far you get. Sometimes when prices rise the profit margin rises too. Sometimes when prices fall the profit margin still rises. To prove it one way or the other a study of correlation would be needed. And I'm just not interested, but I think we all remember gasoline prices falling while the oil company profited.
