Sign in to follow this  
sixpack2639

Think there's price gouging on gas in your area?

Recommended Posts

I'm seeing something that I've not seen before.

Usually, the AAFES stations on the military bases sell gas at or above the local economy. That has always ticked me off because they don't have to pay things other businesses have to pay, like taxes and liability insurance.

However, during this latest madness, the stations have gone to $2.87-3.15 for regular, while the stations on base are selling the gas at the same time for about $2.65. If the AAFES stations are making a profit at 2.65, then the others are gouging at 3.15.

Joe

Share this post


Link to post
Share on other sites

You know, I never thought about checking the gas prices on base and we have 3 here. USMC Air Station Beaufort, USNH Beaufort, and USMCRD Parris Island. Will call my dad tomorrow and see if he knows what gas prices are on base. He's USMC Ret. Carl

Share this post


Link to post
Share on other sites

Our so-called Attorney General supposed to be looking at the gouging in our area. R.I. has always been corrupt in every aspect!

Share this post


Link to post
Share on other sites

Interesting article in the local paper about gas prices. They may have a corporate bias (it's been known to happen!) but they claim that although we get most of our oil from Canada here, and there are two local refineries, one that sells ALL its gas in Minnesota and one that sells a lot of it here and some in Iowa and Wisconsin, the local prices are still pretty much what they are everywhere else because of national price-setting. I tend to agree with that. The mess in the Gulf States is having a noticeable impact no matter where the refined gas originates. This makes sense in a large, interdependent network of corporations, including oil companies, refineries, distributors, and retailers among others.

Maybe you've noticed that, on threads discussing what people are paying for gasoline, the reported prices don't vary a huge amount, and there are very few reports of obvious price gouging. The fact is, no retailer can gouge for very long--people will just go elsewhere. If you want to cite retailers in general for "collusion" on pricing, you'd really have to call it a National collusion, which of course, is what a system of price-setting essentially is. But it's not illegal. You've got to remember that you're dealing with a commodity, which acts very differently in the market than a manufactured widget. They're even traded on totally different exchanges!

If you're thinking that the gas at your local station was refined way before Katrina hit, you're right. However, prices are always based on the replacement cost of the fuel. The short-term profits on the "cheap" gas in the storage tanks is supposed to soften some of the inevitable price spike down the road. Think if you sold apples and you knew you were going to have a bad year. If you had any apples stored from last year to sell (not likely but its just an example!), you can bet you'd jack up the price to what the market would bear on those apples, hoping to offset the lean times ahead. It's funny that people who rave about the wonderful "hand" of the free market, rant about it when it comes into play in the market where they have to buy goods. The unseen hand sometimes gives you the finger! tongue.gif

As for military bases, I have no idea. I would think that spreading around some of the losses of Katrina is good. If you don't make a direct donation toward rebuilding the infrastructure and economy down there, you make an indirect one at the pumps.

I don't like to pay high gas prices either, but when they are based on an unavoidable natural disaster it seems a little more palatable than when they're just based on poor planning, dependence on foreign oil, and unwillingness to conserve. Conservation is a way to have a personal impact on your wallet in the short-term, and also a long-term impact on the market. If demand goes down, supplies go up and the price will eventually come down some as a result. The cowboys that say "let's burn as much as we can" usually are the ones who can profit from it, or those that have been duped by them.

Incidents of outright price-gouging seem to be minimal in this latest instance. It's nothing like past events such as the impending Gulf War I, and the "gas crisis" of the '70s when individuals tried to profit on the buying public's panic. At $3.00 per gallon, gasoline is right now probably just approaching market rates, which the politicians have been fearful of for decades. You can bet that the oil companies set prices based on a lot of "input" from Washington. Notice how prices quickly rose after the last presidential election. I have no proof that they were kept artificially in check prior to the election, but look at the prices and see if there isn't an interesting correlation. Remember, too, that Bush came out strongly against tapping the strategic reserves after the election--the same reserves that had been fair game before the election. This isn't a Republican thing or a Democrat thing, it's just the reality of political gamesmanship as we know it.

Share this post


Link to post
Share on other sites

Spoke with dad today and he said gas prices on all 3 bases here are in line with the prices in town. $3.00 to $3.25 a gallon for regular unleaded. So I don't know how they are keeping the price down in San Antonio Reatta Man.

Share this post


Link to post
Share on other sites

The politicians in CT are rumbling about investigating gas gouging by the major oil companies and wholesales. I am no big fan of the oil companies, but I wonder how they think the oil companies are going to pay for platform repairs in the Gulf. It will be interesting how this will play out.

However, I do know something about insurance. While it will not get the headlines of the oil prices, wait to you see your next insurance bill. This is going to have quite an impact on future rates.

John

Share this post


Link to post
Share on other sites

Gas stations in Indianapolis have always gas gouged. The prices go up for the weekend and back down on Monday. That's gouging. Prices go up for major sporting events and back down afterwards. That's gouging. I've written the Governor, but that's like whistling in the wind.

Share this post


Link to post
Share on other sites

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">If you're thinking that the gas at your local station was refined way before Katrina hit, you're right. However, prices are always based on the replacement cost of the fuel. The short-term profits on the "cheap" gas in the storage tanks is supposed to soften some of the inevitable price spike down the road. Think if you sold apples and you knew you were going to have a bad year. If you had any apples stored from last year to sell (not likely but its just an example!), you can bet you'd jack up the price to what the market would bear on those apples, hoping to offset the lean times ahead. It's funny that people who rave about the wonderful "hand" of the free market, rant about it when it comes into play in the market where they have to buy goods. The unseen hand sometimes gives you the finger! tongue.gif</div></div>

OK, lets examine this argument for higher prices, AND lets compare apples to apples, shall we? Or in this case, "oil to oil".

You state "If you're thinking that the gas at your local station was refined way before Katrina hit, you're right. However, prices are always based on the replacement cost of the fuel." So the 4 price jumps in one 24 hour period totaling $0.50 we recently experienced are based on what the "replacement cost" will be. If this is the case, then how do you explain the industry standard answer that the price doesn't come down as fast because it takes months for the newer purchased cheaper fuel to get thru the refineries, pipelines, and eventually to the station? Up a $1 a barrel up $.05 at the pump...down a $1 abarrel, down $.02 at the pump. What gives?!?!

A local TV news report showed a gas station owner watching the price of a barrel of oil trading on the market on his laptop, and he was raising his price because the price of a barrel of oil just traded higher. But somehow when the price of a barrel drops, the price of gas does not drop. If it does drop, it does not drop at the same rate the price rises. C'mon, we're talking one commodity here, not comparing oil to apples...I'm comparing oil to oil!!

The oil companies and station owners are all involved in price fixing, price gouging, collusion, whatever you want to call it....AND IT'S WRONG!! Healthy price competition has gone out the window and big $$ profits are in every station owners eyes. I for one am damn tired of it!!

Oh, I know, lets blame supply and demand! OK, lets do that. The price of a barrel of oil rises, so supply is lowered and demand remains the same. The result, price goes up. Well, as the price goes up, demand will lessen. When the price of a barrel of oil falls, supply will increase. So lesser demand and greater supply, and the price again doesn't fall as fast as it went up! WTF?!?

All this BS from the Big Oil side of things makes my blood boil. I wish I could make my car run on methane gas. Then I'd just eat beans and fart my way to happiness!!

Future price, yea, the latest buzzwords meaning "Bend over baby and get ready for the ramming of your life!!" Oh, no vasoline allowed here...that's a petroleum based product you CAN'T afford!! shocked.gif

Share this post


Link to post
Share on other sites

Crude. VERY crude.

Let's leave the filthy references to sexual acts to Howard Stern and Democrats talking about President Bush, shall we?

Share this post


Link to post
Share on other sites

Wait! They're going to get this gas to level out at $3.00/gal and the people will say, "thank God! it's cheap now", just like when it leveled out at $2.00. They ought to choke on every cent!!!!!! mad.gifmad.gifmad.gif

Share this post


Link to post
Share on other sites

Gas here topped out at $3.25 a gallon and as of this evening is back down to $2.88 a gallon. Hopefully the downward trend here will continue but i'm not holding my breath!

Share this post


Link to post
Share on other sites

I usually do not get involved with any controversial matter on

this board or any other board, but I feel as a person involved

with the service station business for 30 years, I can add some

facts as pertaining to the sale of fuel in California.

If you think that I or other station dealers are in collusion

with the oil companies, think again. I, along with 22 dealers

sued our supplier on various issues. I have also testified

before the California Assembly regarding these issues, have had

articles published in the Los Angeles Times, and spoke out against

"big oil" on CNN and other major networks throughout the country.

These are the facts as I know them:

Oil company wholesale pricing to its own dealers can vary greatly

from station to station. This is called "zone pricing" and is legal

in California, although we have tried and failed getting legislation

passed. You cannot assume, therefore, that because someone must be

making a profit at $3.00 per gallon, that the other dealer is

gouging at $3.10. His or her wholesale buying price can be different.

Many service station rental programs are volume based. If you sell

less gas your rent goes up. How do you sell more fuel? Within your

marketplace, you must price based on your competition.

I have heard the theories on this board about gas being refined, the

tanker is not here yet, the crude oil is still in the ground, the tank

farm has lower priced fuel in its tanks, etc............

The microphone of the newscaster is what raises the price of fuel. It

is not that high-tech. When your local tv station says that because

of a refinery fire, natural disaster, war, etc., gas will probably go

up, the oil companies immediately respond and usually, within hours,

we the service station dealer will receive a price increase. It has

always been this way. Obviously, there are actual costs incurred by

the refiner, but the timing of these price increases are being

broadcasted by your local tv, satellite, or cable provider.

Example: Refinery fire at Chevron reported at 5pm.

This is what happens:

Chevron will raise wholesale price to its dealers by the next

morning.

The other oil companies, not be be left out, will raise the

price to their dealers at the same time (within hours or a day).

Dealers receive fuel every day or every other day, some twice a

day. If the dealer is the first on the street to raise his/her

price to the public they are perceived as "gouging". If they

choose to wait, as many of us do, we lose. If we raise our

price immediately, we sell less gas and our rent goes up and

we lose again.

Holiday weekends--the oil company raises its wholesale price to

us, we raise our price and we take the "heat" for it.

Fuel is sold through the majors, Arco, Shell, etc., and unbranded.

When the price increases, many unbranded dealers pay more for their

fuel than the majors do. The unbranded stations in my area are as

high, or higher, than the major dealers.

Speaking of profit, how much do you think is made by the dealer on

a gallon of fuel???? Its about 4 to 6 cents per gallon.

When the price goes up, and since many people, about 75% purchase

their fuel on credit card, the dealer pays higher credit card fees to

the oil company. Three percent of $3.00 per gallon fuel is a lot

more than three percent of $2.00 fuel.

I agree that these increases are hurting us all, but legislation must

be passed to eliminate zone pricing, and further controls must be

implemented. No one wants more government control, but there is a time

and a place for everything. Now is the time.

Marty

Share this post


Link to post
Share on other sites

I think that the gasoline suppliers, both wholesalers and retailers, have shown more restraint than they are getting credit for. I suspect that at $4.00 per gallon, or even $5.00 per gallon, every gallon of gasoline produced in this country would be purchased, at least over the short term. The demand for gasoline in America is not very elastic.

Would you sell your house for $200,000 knowing that you could get $250,000 or a car for $4,000 knowing you could get $5,000? Is your selling the house or car for the greater amount "price gouging" or just "good business"? Is someone selling gas for $3.20 per gallon when they could get $4.00 per gallon "gouging" or restraint?

Letting price and demand come into balance without government interference is called a free market. A lot of people are in favor of free markets (untill they start being squeezed); this was a big item in the Republican platform and a lot of voters bought into it and is one of the reasons that Geo. W. Bush is now President. Now that the free market is causing a bit of pain does not mean that it is not working; it just means that it is not now working in your favor right now. To favor free markets untill the price of something you need goes up uncomfortably and then complaining is being human but not being consistent.

Share this post


Link to post
Share on other sites

Another unbelievable story here from the investor point of view.

Now what was the wholesale cost of gas before and after Katrina? Did the author even check the wholesale price of gas before and after Katrina? How can the station owner be gouging if they are charging just a few cents above wholesale both before and after Katrina?

We're getting gouged and blame is being deflected all around.

Willie

Share this post


Link to post
Share on other sites

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> If you think that I or other station dealers are in collusion with the oil companies, think again. </div></div>

Marty, with all due respect this is a regional question, and the collusion here is a coordinated effort among suppliers with dealers (who are mostly corporate owned retail outlet managers anyway) used as pawns. The collusion scheme here in the mid-west (which hasn't been active for the last 2 weeks, probably for obvious publicity and legal scrutiny reasons) has been so well documented here as to be banal. It disappears as soon as you approach the PA line, but has been expanding north and west from here for years.

When your retail price is dictated to you on a regular basis by your supplier, and it's identically dictated by every other supplier to every other outlet under it's control, it will have reached you too. Then you can be the guy dropping his price 2 cents for himself and his friends 4-5 hours before a 30-25 cent increase <span style="font-style: italic">every week</span> while the rest of us guess. mad.gif

Share this post


Link to post
Share on other sites

Thank you for your reply.

A point of clarification regarding service station fuel

sales distribution.

Fuel is sold by:

Corporate owned and operated stations known as "company op".

Fuel pricing is set by the oil company.

Two party dealer. An individual buys the property, builds

the facility, and has a contract with a supplier such as Shell.

Three party dealer. An individual leases a facility from an

oil company, pays rent, and purchases fuel from an oil company.

You are correct that company operated stations have total control

and set the price. But independant dealers, as I have mentioned,

have received huge wholesale price increases and must pass it on

to the public. Company operated stations may have a high percentage

of the market in your area, but remember dealer stations coexist in

the very same marketplace, and furthermore, the distinction is

transparent to the public.

Every year the dealer network shrinks, and it has been dramatic. As

we decline in numbers, company operated units become more prevalent

with greater control.

At the time of the first Gulf War, I went on KABC news and discussed the

situation regarding dealers from my service station. Earlier that day,

the LA Times reported that several of the oil companies posted record

profits. My profits were nonexistent, the rent had skyrocketed and my

margin of profit on fuel was at its all time low. But customers had no

problem telling me that I was "making a killing" and where was my new

Mercedes.

I am the first to agree that this fuel pricing situation is terrible,

but many independant dealers are not to blame.

Marty

Share this post


Link to post
Share on other sites

I saw in the paper the other day that the oil companies made record profits in the last quarter before the hurricane. In the billions.

Share this post


Link to post
Share on other sites

Norb - So what? Are you against capitalism? Are you offended by other corporations making "record profits"? What if Pfizer made record profits? What if Wal Mart or General Electric did so? What if somehow General Motors could make record profits, much less any profit ever again? Why are oil profits so offensive? They produce a product that is in demand, that has a limited and damaged supply system. They should earn profit always and record profit when their business is threatened by natural disaster, government regulation or populist and wacky sentiment.

Oil extractors, refiners, distributors and retailers deserve profit - just like any other business.

Finally my gasoline costs about as much per gallon as my milk. Think about the production and distribution process of the two. Gasoline involves much more investment to produce than that gallon of milk. Gasoline is a bargain.

If you think oil companies are making record profits perhaps it is time for you to buy stock in Exxon-Mobil, Chevron, Conoco-Phillips, Valero, British Petroleum, etc. They are well run companies which produce, with great risk and investment, nice returns in dividends and capital gains for their owners.

I own V-8s. I hate paying so much for fuel. But I understand it and am willing to accept it until: we get around to drilling in Alaska, the Gulf, the Rockies, off California and Florida; building new refineries (how about on closed military bases?); eliminating all the multiple fuel grade geographic requirements for enviro purposes; ending tax breaks for corn based fuel; eliminating state and federal fuel taxation.

Riding my bicycle more and driving my V-8s less - Ranchero

Share this post


Link to post
Share on other sites

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body">I hate paying so much for fuel. But I understand it and am willing to accept it until: we get around to drilling in Alaska, the Gulf, the Rockies, off California and Florida; </div></div>

There isn't any significant oil in any of those places and you know it. This pretending game is just irksome.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> building new refineries (how about on closed military bases?); </div></div>

Gee, I wonder if they're not building any refineries because they know they're running out of stuff to refine? Or are rich oil CEO's too stupid to employ competant engineers and planners? Hmmm...

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> eliminating all the multiple fuel grade geographic requirements for enviro purposes; </div></div>

Who needs to breathe anyway? All that silly <span style="font-style: italic">cause & effect</span> science is too hard for "real Americans" to understand in the first place.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> ending tax breaks for corn based fuel; </div></div>

Well, even a flailing monkey will occasionally hit the strike zone. Although it should be said that if produced in a more realistic manner ethanol could make sense, and biofuels (especially soy-based ones) are almost certainly the future of most personal transportation in this country.

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> eliminating state and federal fuel taxation</div></div>

And just when reason was starting to creep in. speechless-smiley-008.gif

speechless-smiley-034.gif

Ranchero,

We all know by now that you own a pile of oil stocks, and the misery of others is your gain. You don't have to defend it, although you seem to insist on it. We know that we are genetically inferior creatures who don't derserve a good life, or a fat pile of investment capital, and are just too dim to understand that. You're welcome to your comfort...

...as obviously cold as it must be. speechless-smiley-014.gif

Share this post


Link to post
Share on other sites

Dave,

Here we go again---NOT!

You and I have had this discussion/arguement long before gas hit $3. The fact is, one day the 'experts' say the supply is low. A week later, they report supplies are OK, but suddenly the refinery capacity is 'not enough.'

Another fact that can't be argued away is the fact that between the EPA and Sierra Club do-gooders, there has not been ONE NEW REFINERY built in this entire nation in MORE THAN 30 YEARS.

If you want to pay a reasonable price, you must fix the supply AND refining problems. That means new drilling and new refineries--somewhere. We can't rely on Saudi Arabia building new refineries because currently it take 10 to 20 YEARS to get a new refinery through all the red tape these days.

FIX THE PROBLEMS AND NOT THE BLAME.

Share this post


Link to post
Share on other sites

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> Another fact that can't be argued away is the fact that between the EPA and Sierra Club do-gooders, there has not been ONE NEW REFINERY built in this entire nation in MORE THAN 30 YEARS. </div></div>

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> Gee, I wonder if they're not building any refineries because they know they're running out of stuff to refine? Or are rich oil CEO's too stupid to employ competant engineers and planners? Hmmm... </div></div>

No one reads any more. smirk.gif

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> FIX THE PROBLEMS AND NOT THE BLAME. </div></div>

Ever. crazy.gif

Share this post


Link to post
Share on other sites

Why build new refineries? The current ones are netting the big oil companies BILLIONS. Yes, with a B. The oil companies are taking the attitude that these billions of dollars ain't broke, so why fix it. I guess I can't blame them. They have a monopoly, price fixed to extract every dime they can from us pigs till we squeal then they back off a nickel.......and all the governments monopoly laws are doing NOTHING about it. If there were real competition amongst the oil companies, then I wouldn't see a BP, Sunoco, independent, Shell, 76, Chevron, Citgo, Sheetz, and ALL the others have the IDENTICAL price of $3.19 within an hour of each other. If that's competition, then WalMart better raise their prices, because the Federated department stores are charging more for some of the same items....or should Federated's stores reduce prices. Nah, lets all wish for BILLIONS in profits and have WalMart raise their prices. Everyone deservers to make BILLIONS of dollars like the oil companies do.

And remember next time you price shop for gas....that identical price everywhere is competition, not price fixing.

Are you of the body? -- Landrew

Share this post


Link to post
Share on other sites

<div class="ubbcode-block"><div class="ubbcode-header">Quote:</div><div class="ubbcode-body"> And remember next time you price shop for gas....that identical price everywhere is competition, not price fixing. </div></div>

Dan,

Your price fixing in Pittsburgh is at least consistent. Because PA has a little known law that mandates only one price change per 24 hour day at a given retail outlet, the kind of manipulations the corporate outlets are pulling here don't reach you. (In fact within about 20 miles of the PA line they become greatly muted.) I've described the fax-based collusion scheme here enough to not waste space with it here, but it's no fun believe me. Thankfully the windfall they're getting from the Katrina shortage is enough that they haven't (yet) resumed they're weekly 30 cent price jump game.

It was also a prime motivating force in dumping my truck for a Prius. There's nothing like 48 mpg in a mid-size car to make thumbing your nose so satisfying! grin.gif

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
Sign in to follow this