[Az-Geocaching] Gas Prices

[Gale]

That may explain why it goes up immediately, but why doesnt it also go down immediately?

Bill Nolan <bill at freeholder.com> wrote:Well, let me just comment on a couple of aspects of retailing. I have been
in retail and associated fields for 35 years.

Let's say I have a store that sells gizmos. I currently have 25 gizmos in
stock, and I paid $10 each for them. Since I am a small retailer, I sell
them for $19.95, which gives me 50% gross profit. That is considered pretty
standard for smaller or non-discount retailers. The big discount stores,
like Wal-Mart, work on more like 30% to 35% gross profit.

Anyway, let's suppose that I get a new price list from my supplier, and my
cost for gizmos has gone up to $15, because the dollar has fallen against
the yen, and gizmos are made in Japan.

Now, if you aren't knowledgeable about retailing, you may think that I will
need to raise my price as soon as I run out of the gizmos I have in stock,
but that's wrong. I actually need to raise my price right now.

Why? The $20 I get for gizmos represents the 50% I paid for them, and the
50% I need to run my business. If I sell my current inventory of 25 gizmos
for $20 each, I will realize $500 total. $250 of that is needed to run the
store, leaving $250 to buy more inventory. The problem is that $250 will
only buy about 17 gizmos at the new cost of $15 each, not the 25 I sold. If
I continue working like this, pretty soon I don't have enough inventory to
stay in business.

So, any business has to sell their current inventory for a price that is
based not on what the current inventory cost, but on what it will cost to
replace it.

How does this affect gas? If the price of crude goes up, refineries have to
immediately raise the price of their current inventory, which means
wholesalers and retailers have to do the same thing, so the new price hits
the gas station on the corner pretty quickly. A gas station can't afford to
sell their current inventory for less than it will cost to replace it, no
matter what it cost them to begin with.

I would like to pay less for gas, too, but that doesn't blind me to basic
business realities. Besides, we have the cheapest gas in the world.

Bill in Willcox

-----Original Message-----
From: az-geocaching-bounces at listserv.azgeocaching.com [mailto:az-geocaching-

It went from $1.99 to $2.08 for regular unleaded overnight here. If there
is still a myth that those living close to refineries getting lower prices
on fuel, it's a bunch of crap. We have 3 refineries in town, and we're
paying as much right now, if not more than places like Phoenix. 

I seem to remember in the past that when crude prices hit new highs it took
'several weeks' to see the impact on the refined fuel markets. But I've
since learned that 'several weeks' translates to approximately 3 days.



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Tsegi Mike and Desert Viking
 
Till a voice, as bad as Conscience, rang interminable changes
  On one everlasting Whisper day and night repeated -- so:
"Something hidden.  Go and find it. Go and look behind the Ranges --
  "Something lost behind the Ranges. Lost and waiting for you. Go!"

 

Rudyard Kipling ,   The Explorer  1898





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