[Az-Geocaching] Gas Prices

[AZcachemeister]

But if the dollar suddenly strengthens against the yen, and the price of 
gizmos drops, do you lower your price? Or do you hold out until the guy 
across town drops _/his/_ price? And if nobody drops the price?

Steve

Bill Nolan 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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