Gas Prices Going UP!!

Todd Breakey · **Posted:** Wed Aug 31, 2005 3:18 pm

To put the whole gas price increase in perspective...My Dad delivers bags (airline lost luggage) in the evening using his own car (96 Pontiac Grand Prix). For tax reasons he keeps receipts for every fueling and detailed logs of the miles he drives. Two weeks ago he was spending about $20 EVERY night on gas (he drives all over NC delivering luggage), last night, while covering about the same distance, his cost was $50!!!!! Now keep in mind, he doesn't have a company credit card to purchase fuel, that cost comes out ofhis own pocket. At the rate we are going, he will be at a loss after he writes off his mileage!

Anyone know of a low stress job for a 58 year old retired airline employee? I think he is ready for a change.

Charlie Guthrie · **Joined:** Thu Aug 28, 2003 8:14 pm **Posts:** 832

http://www.raleighgasprices.com/index.aspx

Just in case anyone is interested in watching the price of gas in the area, this site is like a forum that allows consumers to post the going prices they are paying around raleigh. It could be worth $0.50/gal. to check here before going for gas. I was astounded to see the difference today. I usually do a calculation for "out of the way" costs vs. savings when it's time to fuel our SUV. When you get 16 MPG (on a good day) it doesn't take much of a detour to devour a $0.05 - $0.10 per gallon savings, but at higher diffenretial prices the math may actually work out.
Charlie G

steve remchak · **Posted:** Wed Aug 31, 2005 9:18 pm

some cost perspectives from my world. diesel fuel prices have doubled in the last 18 months. all my suppliers now add a fuel surcharge to my delivery costs. all of the goods i sell depend on petroleum in some way whether they are made from it or made by it. i can't stop driving/working to save capital. i can't pass my costs completely on to the end users. i must absorb these costs and hope i can tough it out until things stabilize.

and this i blame on the goverment. the administration that started out as the working man's party, small business's friend. tax breaks to generate the economy. so, what now W? must i pay the price for a good year or two?

i would gladly pay more if it were due to natural disasters. but i think we all know better.

Todd Breakey · **Posted:** Wed Aug 31, 2005 9:32 pm

We at the airport are in a pickle. If we keep jacking fuel prices to keep our margins, the customers don't buy fuel, therefore we don't make any money. However, if we drop prices and have MUCH less of a margin, the customers buy some fuel. We have seen a MAJOR drop in retail (non contract) fuel sales. Corporations (IBM, GSK, SAS, CarQuest, etc.) are still flying, they just aren't buying gas while they are on the road. Since they get volume discounts (which eat into the margins again) at their home base, they buy all their fuel there.

Talking with my GM and Regional Manager today I found out that our margins used to be 90 cents per gallon sold at retail. After giving a 25 - 50 cent discount for large volumes (>500 gallons) purchased, our margin was 40 - 65 cents. They are talking about ending volume and based customer discounts and going with a flat rate for fuel that would be more adjustable with the current situations. We'll see how that goes.

Just for everyones knowledge
Jet A - $ 4.38 plus taxes per gallon
AvGas 100LL - $4.50 plus taxes per gallon
These prices are before going to the flat rate pricing.

Rich Anderson · **Posted:** Thu Sep 01, 2005 7:04 am

I think the current situation bears comment. With gas supply in the state known to be in jeopardy, why was a price freeze not enacted until the situtation was over? All the announcement has done is cause panic and encourage gouging. They should have gotten rid of at least one.

And Les, at this point, the pump owner's margin is the one seeing the largest gain. I have no quantifiable figures and unfortunately as a national organization it would not make sense for me to determine the change just for NC, but, in this case, they are indeed the beneficiaries.

Ryan Holton · **Posted:** Thu Sep 01, 2005 7:32 am

Rich Anderson wrote:

I think the current situation bears comment. With gas supply in the state known to be in jeopardy, why was a price freeze not enacted until the situtation was over? All the announcement has done is cause panic and encourage gouging. They should have gotten rid of at least one.

And Les, at this point, the pump owner's margin is the one seeing the largest gain. I have no quantifiable figures and unfortunately as a national organization it would not make sense for me to determine the change just for NC, but, in this case, they are indeed the beneficiaries.

Rich, Im dissapointed in your "price freeze" statement. That is not how our economy works. Go to Google and type CalEdison and see what a "price freeze" on electricity does. In the end the consumers are the ones hurt.

If there would have been a price freeze people would go out and buy all the gas currently in the tanks at the stations. IMHO, a good number of stations wouldnt or couldnt refill, creating a bigger crisis than we have now. Most distributors got their last bit of gas on MONDAY. Noone knows when the next will arrive.

90% of the gas for North Carolina comes from 1 pipeline. Wanna guess where that pipe starts?

What it sucks big time this is classic supply and demand. The increased prices reduce demand due to lack of supply. Its not some government pay back to the gas companies. People love to spout that crap all the time but it just doesnt hold water, especially here.

Graham Jagger · **Joined:** Fri Aug 29, 2003 12:53 am **Posts:** 1718

Ryan I agree with your comment about the CalEdison. I realize we live in a Capitalist society and I'm all for it. I'm not a fan of government sticking their noses in everything and regulating. But, in some instances it has value.

Remember during Fran a number of businesses were gouging while others were being reasonable with the community. The business person needs to insure income and will raise prices accordingly. That's all well and good. But in the case of a natural disaster there needs to be some level of decency on both sides of the coin. Capitalism or not...

Regardless of pricing freeze or not do you think that peoples first instinct in this situation is not to run to the pumps and fill up? Look at the 1st post that started this thread... Did you happen to notice any lines at the gas pumps yesterday? Wanna guess what I did yesterday with all of our vehicles? Probably what you did too :wink:

It's human nature. Not to mention the media publicizing analysts predictions of gas getting to $4/gal. I usually place a limited amount of value in Wall Street analysts predictions. But in this case I agree. So topping off makes good sense in my mind. It just might be $4/gal by next week and gas rationing. You may not remember that from the 70's since you're still a pup. I remember waiting in line for hours for $2 worth of gas... It sucked...

I also agree with you that it is not a government conspiracy. It is the beggining of the aftermath of a major natural disaster. And all the rest of the supplies we use will also suffer price increases.

This whole situation becomes Catch-22. Goverment, oil companies, gas stations. Damned if you do and damned if you don't...

Rich Anderson · **Posted:** Thu Sep 01, 2005 8:19 am

Ryan Holton wrote:

Rich Anderson wrote:

I think the current situation bears comment. With gas supply in the state known to be in jeopardy, why was a price freeze not enacted until the situtation was over? All the announcement has done is cause panic and encourage gouging. They should have gotten rid of at least one.

And Les, at this point, the pump owner's margin is the one seeing the largest gain. I have no quantifiable figures and unfortunately as a national organization it would not make sense for me to determine the change just for NC, but, in this case, they are indeed the beneficiaries.

Rich, Im dissapointed in your "price freeze" statement. That is not how our economy works. Go to Google and type CalEdison and see what a "price freeze" on electricity does. In the end the consumers are the ones hurt.

I understand that is not the basis of our economy, and unlike CalEdison, this price freeze would be very short term. Once the supply situation is back to normal, the freeze is lifted. If the state has three days of gas left, holding prices at the current level for that period of time will not hurt station owners. Especially not compared to however many days of not having any gas. Consumers are already running out to buy gas, a freeze would do nothing to hinder or aid that. As soon as the governor said that we are in danger of having no gas, the rush to the stations was on. By not putting on a temporary freeze, all he did was invite markups. If the gas prices hit $3.50/gal by Saturday, (projected time of widespread empty gas stations) when the pipeline runs again, do you think it will drop back down to the previous level? One people have accepted $3+/gal, why not try and keep it that way?

Ryan Holton · **Posted:** Thu Sep 01, 2005 8:23 am

Graham Jagger wrote:

Ryan I agree with your comment about the CalEdison. I realize we live in a Capitalist society and I'm all for it. I'm not a fan of government sticking their noses in everything and regulating. But, in some instances it has value.

Remember during Fran a number of businesses were gouging while others were being reasonable with the community. The business person needs to insure income and will raise prices accordingly. That's all well and good. But in the case of a natural disaster there needs to be some level of decency on both sides of the coin. Capitalism or not...

Regardless of pricing freeze or not do you think that peoples first instinct in this situation is not to run to the pumps and fill up? Look at the 1st post that started this thread... Did you happen to notice any lines at the gas pumps yesterday? Wanna guess what I did yesterday with all of our vehicles? Probably what you did too :wink:

It's human nature. Not to mention the media publicizing analysts predictions of gas getting to $4/gal. I usually place a limited amount of value in Wall Street analysts predictions. But in this case I agree. So topping off makes good sense in my mind. It just might be $4/gal by next week and gas rationing. You may not remember that from the 70's since you're still a pup. I remember waiting in line for hours for $2 worth of gas... It sucked...

I also agree with you that it is not a government conspiracy. It is the beggining of the aftermath of a major natural disaster. And all the rest of the supplies we use will also suffer price increases.

This whole situation becomes Catch-22. Goverment, oil companies, gas stations. Damned if you do and damned if you don't...

Price controls by goverments are a bad idea 99% of the time, IMHO. I can ride CalEdison home on that argement. If the government wants to control a price of a item, the only way to do this is to control EVERY aspect of it. Sounds like the old USSR to me.

Now, protection from price gouging is a different animal. I agree that the scum that gouges the public ought to be drawn and quatered, especially during a disaster like this one.

Answer me this, you filled up all your cars yesterday because of the reports. If the price would have stayed at ~$2.50/gal and been froze there but it was reported that the next delivery of fuel is unknown. Would you have filled all your gas cans up? Maybe go to Wal Mart and buy a few more gas cans and fill 'em up too? This would have happened until there was ZERO supply. Again, IMHO.

Rich Anderson · **Posted:** Thu Sep 01, 2005 8:26 am

Ryan Holton wrote:

What it sucks big time this is classic supply and demand. The increased prices reduce demand due to lack of supply. Its not some government pay back to the gas companies. People love to spout that crap all the time but it just doesnt hold water, especially here.

That is not what I am saying, btw. But this is not classic supply and demand. Gasoline demand is to a great extent supply inelastic. We need the same amount of gas whether there are full gas station tanks or empty ones. Also, the supply situation is being affected by a natural disaster, not economic forces of profitability. While such things should be accounted for in any business model, downstream disruptions cannot be viewed solely as a economic supply issue as the functional model is not working. In times of drought, there is water rationing and prices are regulated. Why should not the same apply to fuel?

Rich Anderson · **Posted:** Thu Sep 01, 2005 8:37 am

Ryan Holton wrote:

Price controls by goverments are a bad idea 99% of the time, IMHO. I can ride CalEdison home on that argement. If the government wants to control a price of a item, the only way to do this is to control EVERY aspect of it. Sounds like the old USSR to me.

Price regulation is sticky issue and I agree it does more harm than good in most cases. However, I am not talking about that. I am talking about a very temporary measure that, in the wake of disaster. And they would not set the price, they would put a hold on it at current levels until the supply situation was resolved. The gas station owners were making enough money selling at that price before the announcement, the same holds true after the announcement.

Ryan Holton wrote:

Now, protection from price gouging is a different animal. I agree that the scum that gouges the public ought to be drawn and quatered, especially during a disaster like this one.

Well, since it is my job to watch these things, I took the scenic route to work today. There are stations that in the last 48 hours have gone up 50¢ a gallon. Is that gouging? I don't know, but I also saw some $3.29/gallon, however I didn't look at them earlier this week.

Ryan Holton wrote:

Answer me this, you filled up all your cars yesterday because of the reports. If the price would have stayed at ~$2.50/gal and been froze there but it was reported that the next delivery of fuel is unknown. Would you have filled all your gas cans up? Maybe go to Wal Mart and buy a few more gas cans and fill 'em up too? This would have happened until there was ZERO supply. Again, IMHO.

Fuel demand is not dictated by supply. I don't believe that the current change in prices will have any effect on the buying habits of people. Those who have determined that they are going to fill up will do so regardless of the cost. 50¢ a gallon won't do much to change that, but it will be a huge economic loss to the consumer for no good reason.

BTW, I filled up my plastic gas can yesterday as Pam is critical care personnel at the hospital and has to work, even if a state of emergency or similar is called.

jimpastorius · **Posted:** Thu Sep 01, 2005 8:38 am

Rich Anderson wrote:

In times of drought, there is water rationing and prices are regulated. Why should not the same apply to fuel?

I noticed how you slipped rationing into your equation.

Rich Anderson · **Posted:** Thu Sep 01, 2005 8:43 am

jimpastorius wrote:

Rich Anderson wrote:

In times of drought, there is water rationing and prices are regulated. Why should not the same apply to fuel?

I noticed how you slipped rationing into your equation.

What equation? I have never said fuel should be rationed. Rationing was used by way of comparison only. Don't put words in my mouth that aren't there. What I am saying is that in times of natural disasters that affect supply of a necessary commodity, government regulation of prices is not uncommon. In this case, they told everyone there is a supply problem, caused a rush to the gas stations, but forgot the price side of it. I am not calling for rationing. I am calling from the government to be responsible for its actions. If we want supply and demand to rule unchecked, then the announcement should never have been made as it created extra demand (in a short-term sense only). To me, it is a typical case of government half-assery.

Jason Mauldin · **Posted:** Thu Sep 01, 2005 8:46 am

Graham Jagger wrote:

But in this case I agree. So topping off makes good sense in my mind.

Topping off and people filling up 5 gallon tanks is part of the problem, and is a sure fire way to make sure that gas gets to $4/gal and will be rationed.

My tanks have not been topped off, and I won't fill them until they are down to a 1/4 tank just like I always do. If we run out, then I'll just use my sick days or convince my boss that I should work from home.

However, I have been taking measures to make sure that I get the best mileage out of my car at the moment.

Ryan, NPR said that NC is supplied by 2 pipelines? Not that it makes any difference since they are both without electricity.

An interesting thing is, as I was leaving Cary I noticed that the bus stops were well attended, unlike normal when there is no one to be seen. Too bad my 25 minute drive would turn into a +2hr trip if I used the bus.

jimpastorius · **Posted:** Thu Sep 01, 2005 8:54 am

Rich Anderson wrote:

jimpastorius wrote:

Rich Anderson wrote:

In times of drought, there is water rationing and prices are regulated. Why should not the same apply to fuel?

I noticed how you slipped rationing into your equation.

What equation? I have never said fuel should be rationed. Rationing was used by way of comparison only. Don't put words in my mouth that aren't there. What I am saying is that in times of natural disasters that affect supply of a necessary commodity, government regulation of prices is not uncommon. In this case, they told everyone there is a supply problem, caused a rush to the gas stations, but forgot the price side of it. I am not calling for rationing. I am calling from the government to be responsible for its actions. If we want supply and demand to rule unchecked, then the announcement should never have been made as it created extra demand (in a short-term sense only). To me, it is a typical case of government half-assery.

You compared the situation to water and drought. If you are going to introduce price controls, you must introduce controls that will limit demand. By your reasoning, we will simply run out of gasoline a lot sooner if you left the price @ $2.50 a gallon without decreasing demand in some way.

If supply is reduced, you must reduce demand. That is done in one of two ways, increasing the price of the goods or rationing the goods.

Choose your poison.

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