[Az-Geocaching] Gas Prices

[Andrew Ayre]

Every time the price goes up here it is also going up in Europe, where it is
already about $4-$5 per gallon. We'll see rioting and protesting over there
long before we see it over here.

Andy


  -----Original Message-----
  From: az-geocaching-bounces at listserv.azgeocaching.com
[mailto:az-geocaching-bounces at listserv.azgeocaching.com]On Behalf Of
SSpackeen at aol.com
  Sent: Thursday, March 10, 2005 11:07 AM
  To: listserv at azgeocaching.com
  Subject: Re: [Az-Geocaching] Gas Prices


  Bill that's a great lesson on retail economics.

  The problem is that, in anticipation of a price REDUCTION, the retailer
should IMMEDIATELY drop retail prices to the consumer.  We all know that
won't happen when prices are falling, so naturally we're tired of providing
the cash flow during the upswing!

  The blame for the price gouging doesn't land on the retailers anyway, but
on the producers.  That's where we need to put some regulatory price
controls in place to keep monopolistic pricing tactics from extracting
abnormally high profits during high travel season.

  In a message dated 3/10/2005 8:41:46 A.M. US Mountain Standard Time,
bill at freeholder.com writes:
    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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