[oiless]

$this->bbcode_second_pass_quote('MonteQuest', '
')
LOL! Yes, it means that often you are buying gasoline below the spot price.

[MonteQuest]

$this->bbcode_second_pass_quote('oiless', '')$this->bbcode_second_pass_quote('MonteQuest', '
')
LOL! Yes, it means that often you are buying gasoline below the spot price.

[Starvid]

$this->bbcode_second_pass_quote('Revi', 'R')ead the book "Oil on the Brain" by Lisa Margonelli. They don't make much money at all on the gasoline. They make most of their profit on the big gulps and chips and cigarettes. The price of a gallon is determined by market forces, yes, but the stores are only making pennies of profit per gallon. If it gets to be a hassle to sell gasoline, they will be out of the business in no time. I think that within 5 years there will be a lot of places where it's not economically feasible to sell gasoline. Why drive a tanker up a road for 100 miles to sell gas to people out in podunk, when you can sell it for a better price closer to bigger towns. I think that there will be a lot of little places that are not going to get gas.

That means either stock up, like a farm might have a tank of diesel, or do without. It won't make much sense to drive 100 miles to fill your tank, and then drive 100 miles back to where you live. You'd arrive with a half a tank, and you'd have to save the other half to fill up again. Cars are not long for this world.

[Revi]

I agree, that people can and will pay more for gasoline, but they won't like it. They will start to get belligerent. Cheap gas and TV are the bread and circus of the US. When the price of gas goes up people get really wound up. It's like the price of tortillas in Mexico.

[oiless]

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('oiless', '')$this->bbcode_second_pass_quote('MonteQuest', '
')
LOL! Yes, it means that often you are buying gasoline below the spot price.

[MonteQuest]

$this->bbcode_second_pass_quote('oiless', ' ')$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('oiless', '')$this->bbcode_second_pass_quote('MonteQuest', '
')
LOL! Yes, it means that often you are buying gasoline below the spot price.

[oiless]

I am aware of those competition bureau investigations Monte, (rightly or wrongly you'll have a hard time finding a Canadian motorist that believes them) however I still don't know of any Canadian laws (as you mentioned a couple of posts back) that regulate the profit margin of gasoline.

I repeat, there is no impetus for our government, or any of its bureaucracies, to regulate gasoline profit margins, as they charge tax as a percentage of price, not as a flat per litre tax. When pump prices are high it is a huge tax windfall, both federally and provincially. (Actually in parts of the GVRD there is a flat tax, a transit tax applied. I forget what it is exactly, 5 or 6 cents a litre I believe. This is in addition to federal and provincial taxes.)
When the discrepancies in prices and the wild jumps of 10-15 cents a litre day to day start to disturb the public the politicians stir about and commission an investigation. It's an annual ritual it seems.

I don't really think we are getting anywhere here, I am prepared to agree to disagree, unless you would like to continue this discussion.

[MonteQuest]

$this->bbcode_second_pass_quote('oiless', 'I') am aware of those competition bureau investigations Monte, (rightly or wrongly you'll have a hard time finding a Canadian motorist that believes them) however I still don't know of any Canadian laws (as you mentioned a couple of posts back) that regulate the profit margin of gasoline.

[oiless]

"Regulation of retail gasoline prices is under provincial jurisdiction."

I think maybe you misunderstand what this means. It means exactly what it says.
It doesn't say "provinces exercise their jurisdictional power to regulate retail gasoline prices".

The provinces that do exercise this power are Prince Edward Island, Newfoundland, Nova Scotia, New Brunswick, and Quebec.

"Each year numerous complaints are investigated."
People don't trust their governments or bureaucracies Monte, at the best of times. They trust them even less when there is a tax windfall to be had and the governments are seen as being tools of big business to start with.
You'd have a tough time finding a Canadian that sees any value in these investigations.

For instance each of these reports that I have read makes the claim that retail price follows increases in spot price up, lagging as much as possible, because no retailer wants to be first to raise. This flies in the face of what people see on the ground. A good example is Katrina. When New Orleans was hit Greater Vancouver area prices sored, there was no lag at all, they positively leaped as soon as the reports of the levee break came in.
This summer is the first time I have ever seen pump prices actually lag spot price increases. Everyone I know is wondering why. We're counting our blessings and feeling uneasy about it.

[MonteQuest]

Man, you have a serious case of the denials.

Gasoline is a commodity.

Supply/demand determines price.

Gasoline stations only make a per cents/gallon over the spot price.

End of story.

And gasoline companies make their biggest profits in a declining price environment, not a rising one.

Can you tell me why?

[Revi]

They make money when the price is up a bit, but the store owners only make money when we want to buy a big slurpy. They are selling off inventory. They'll make some money and that will be it.

[oiless]

$this->bbcode_second_pass_quote('', 'M')an, you have a serious case of the denials.

[MonteQuest]

$this->bbcode_second_pass_quote('oiless', '')$this->bbcode_second_pass_quote('', 'A')nd gasoline companies make their biggest profits in a declining price environment, not a rising one.

Can you tell me why?

[oiless]

$this->bbcode_second_pass_quote('MonteQuest', '
')
It's very true. Think it through. You are still selling at the higher price when your costs go down.

In a rising price environment, your costs have gone up, but the retail price has yet to follow suit.

[MonteQuest]

$this->bbcode_second_pass_quote('oiless', ' ')I see no evidence of the second. My eyes tell me that in my location when there is a potential blip in supply that raises the price of oil retail price follows suite within hours, not days, weeks, or months.

[oiless]

$this->bbcode_second_pass_quote('', 'N')ot talking about the price of oil nor gas stations, I am talking about production costs for the oil companies.

[MonteQuest]

$this->bbcode_second_pass_quote('oiless', '')$this->bbcode_second_pass_quote('', 'N')ot talking about the price of oil nor gas stations, I am talking about production costs for the oil companies.

[oiless]

Hmm... in Canada if you see a station that says Esso, Shell, Chevron, Petrocanada, Mohawk, etc., it's a franchise. Yes the owner/operator has some say in it's operation, but the franchisor has a lot of say, such as what products are carried in the store, how they're displayed, how often the bathrooms are cleaned, uniforms for the staff, and of course what gas price is displayed on the billboard.
As franchises without pricing autonomy from the parent company, I would consider them part of the retail arm of the company who's name they bear.

Independents tend to have names like Jim's gas, Paz Fuels, Rainbow gas, etc., and they are independent, in that they determine what products they carry, they shop the wholesalers for fuel, and they set the price, which is as much as the market will bear in their particular location. (Usually of course this ends up being what everyone else is selling for, except for the ones that are off in the sticks.)

[MonteQuest]

The cost of gasoline comes from these factors:

Crude oil 59%

Refining 10%

Distribution and marketing 11%

Taxes 20%

At a nickel add on at the pump, gas stations account for a little over 1% of the cost of gas at $3.25/gallon.

Some states have markup laws prohibiting stations from charging less than a certain percentage over invoice from the wholesaler.

So oil company profits or losses from gasoline come before the actual sale at the pump...with the exception of the 5% of gas stations they own where they make about a nickel on each gallon.

Myth: High gasoline prices are caused by price gouging
"In a rising gasoline price environment, oil companies tend to lose money at the petrol pump, because cost of supply is outstripping price of sales. In fact, spectacular profits for gasoline marketing (the service station) are made in rapidly falling price environments. In neither case do we believe there is systematic price manipulation on the part of the major oil companies."

http://energy.senate.gov/public/_files/ ... timony.pdf

So much for "gouging at the pump."

[MonteQuest]

And in closing, the price of gasoline at the pump is set by the market, not by someone.

How do you set the price of something sold at auction?