Fairness at the gas pump?

O

oil_trader

I used to trade oil in Tokyo. We traded the physical before that I traded in London for a company that will not name here. The company had the headquarters in Switzerland and despite the fact that had no oil leases and concessions of any producer company or country (nationalized) producer this company had long term contracts to market and distribute the oil, we worked with BP, Exxon etc..I know that the bulk of the oil Exxon sells does not cost them market price - they all have long term contracts below (usually what the spot price is). The owner is happy that he is guaranteed a certain price even if the spot price would fall below the agreed contact price. Right now some oil companies have still long term leases for ~30 USD a barrel.
Yet every time spot price moves the company changes the price at the pumps to gauge the consumer and everybody else companies, rich and poor alike.
What I am saying is that these pumps should not change their stupid prices every time the Crude futures move 10 USD up and down. The price for Exxon ir Shell typically does not change at all.
 
I'm pretty sure the oil companies are a "business"...

not charity :)

If I was running exxon

I'd price gouge the customers to the max if possible.

More money in my pocket for the people who hedge ahead :)
 
Exxon has a profit margin of about 10%. With gasoline trading at $1.62 per gallon (QU on the NYMEX), their profit is just 16 cents per gallon. On the other hand, gasoline taxes in the US average 42 cents.
 
You were missing my point. I am not anti-business. The idea is that prices at the consumer level could be managed better yet the profit levels could be maintained all the same.
For example in peak driving season we could get a break and prices could be higher a little in non-peak season to maintain a more even level for the consumer yet get the similar profit level, instead prices are manipulated as a political tool to squeeze the most out of the people who can least afford it. I know several owner operators (big rig) who are also 'businesses' and going broke left and right due to this sham.
I almost think that ignorant folks probably believe that gas station directly purchase unleaded gas futures and this causes the pumps to mimic futures prices to the tee. Gas stations could have the ticker tape showing energy products if you want to go that far.
 
Quote from oil_trader:

You were missing my point. I am not anti-business. The idea is that prices at the consumer level could be managed better yet the profit levels could be maintained all the same.
For example in peak driving season we could get a break and prices could be higher a little in non-peak season to maintain a more even level for the consumer yet get the similar profit level, instead prices are manipulated as a political tool to squeeze the most out of the people who can least afford it. I know several owner operators (big rig) who are also 'businesses' and going broke left and right due to this sham.
I almost think that ignorant folks probably believe that gas station directly purchase unleaded gas futures and this causes the pumps to mimic futures prices to the tee. Gas stations could have the ticker tape showing energy products if you want to go that far.
More...

The problem with lowering prices during the time of maximum demand is that you will exceed the refining capacity (we are already running a max capavity) at some point therby causing a shortage of gas and pumps go dry. Conversely if you raise prices during time of lower demand you build excess inventory which incurs a cost to the producer to store the excess.

I am ignorant of this but what is the storage life of gas. Doesn't it go bad after a while? This may or may not be a factor as well.
 
Quote from oil_trader:

For example in peak driving season we could get a break and prices could be higher a little in non-peak season
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So you propose higher prices when demand is low and lower prices when demand is high? This must be reverse economics.
 
You can use gasoline as old as 10 years - it may have some sediment in it which can be filtered.
Quote from Burtakus:

The problem with lowering prices during the time of maximum demand is that you will exceed the refining capacity (we are already running a max capavity) at some point therby causing a shortage of gas and pumps go dry. Conversely if you raise prices during time of lower demand you build excess inventory which incurs a cost to the producer to store the excess.

I am ignorant of this but what is the storage life of gas. Doesn't it go bad after a while? This may or may not be a factor as well.
More...
 
Quote from newbunch:

Exxon has a profit margin of about 10%. With gasoline trading at $1.62 per gallon (QU on the NYMEX), their profit is just 16 cents per gallon.

On the other hand, gasoline taxes in the US average 42 cents.
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Excellant points & banking margins are about the same 10%.

Wrote 2 senators pointing that out;
excellant place for some tax cuts.

XOM [not a stock tip] usually sells unleaded less $ than BP, in our area, some times less than independents;
& gives free measured tire air. XOM charges for air about 00 .50 /non gas customers


:cool:
 
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