Gas is a zero dollar profit business

[Reggie Dunlop]

Originally Posted by fotze

I don't understand why environmentalists aren't rejoicing high oil prices? The people with the most wasteful lifestyles are getting burned the most. The biggest boost to alternative energy technology is high fossil fuel costs. With $125 oil, alternative energies are way more economically viable.

Heck, if someone ever got around to producing solar-powered hovercrafts on a large scale, count me in.

[Clarkey]

Originally Posted by dissentowner

I call B.S. again, airlines can have huge diffrence in rates to go to the same place, it is cheaper to fly Westjet then Air Canada by a pretty sum, there is a significant rate difference of more then a few cents in hotel rates, not every hotel has the exact same rate for their room do they??
Both cars and laundry detergents are also not the same price depending on the brand, not at all. I don't know how these examples strengthen your argument but you failed miserably!!!

Hotel rooms and airlines are not a homogeneous good like gasoline. Gas is for the most part an undifferentiated product (beyond regular, super and super duper). Hotels can vary in a multitude of ways, allowing for a greater range in prices and profit margins.

[Reggie Dunlop]

Originally Posted by fotze

There was that recent article about the calibration of the gas pumps. I had always wondered if that pump was accurate especially when you are getting those last few drops. I know it is hard and expensive to accurately measure low flow rates of fluids. I also know for a fact that the measurement of oil and gas production in the upstream industry is woefully under-regulated so I am guessing it is the same for the downstream retail side. I bet gas pumps over-measure the gas that goes in your car.

I read that too.

Link

[Clarkey]

Originally Posted by Reggie Dunlop

I would have to think ubiquity in any business tends to indicate a healthy sector. We all need groceries, right?

And I really don't see why mentioning that they being immigrants is particularly noteworthy, other than perhaps some of them came in as entrepreneurs.

All Torontonian's need groceries but not everyone has a car so there is a grocery store on every corner, but the margins are very thin. Not many are getting filthy stinkin rich off running a corner store.

The reason I mentioned immigrants is that they are often the only ones willing to put in 12 hours a day to make a minimal profit. The term immigrant does not make any reference to race if that is what you are implying.

[Cowboy89]

Originally Posted by Clarkey

All Torontonian's need groceries but not everyone has a car so there is a grocery store on every corner, but the margins are very thin. Not many are getting filthy stinkin rich off running a corner store.

The reason I mentioned immigrants is that they are often the only ones willing to put in 12 hours a day to make a minimal profit. The term immigrant does not make any reference to race if that is what you are implying.

Not only that many of these storeowners have their family work the store for no compensation other than room and board. This heavily lowers overhead.

[Reggie Dunlop]

Originally Posted by Clarkey

All Torontonian's need groceries but not everyone has a car so there is a grocery store on every corner, but the margins are very thin. Not many are getting filthy stinkin rich off running a corner store.

The reason I mentioned immigrants is that they are often the only ones willing to put in 12 hours a day to make a minimal profit. The term immigrant does not make any reference to race if that is what you are implying.

A lot of big grocery chains started out as mom and pop (with maybe a smart kid or grandkid down the road).

[Clarkey]

Originally Posted by Reggie Dunlop

A lot of big grocery chains started out as mom and pop (with maybe a smart kid or grandkid down the road).

Some, not a lot.

Look at Calgary, the competitive environment has forced most mom and pop shops out in place of franchises.

There's a cereal crop farm on every corner in Saskatchewan, doesn't mean they are rolling in the dough. Some farms are because they have diversified but most don't make much $.

[Reggie Dunlop]

Originally Posted by Clarkey

Some, not a lot.

I dunno about that. Even the big outfits like Walmart have humble beginnings.

Originally Posted by Clarkey

Look at Calgary, the competitive environment has forced most mom and pop shops out in place of franchises.

Families buy the franchise operations as well.

[Hakan]

Originally Posted by Flames in 07

What you say at first is true, but then you fall of the rails with the rest.

What you say in the first paragraph is true, but then you blur the retailer with the big vertically integrated in the second and third paragraph which is not true.

That's fine, you don't have to care about the individual franchise owners, but I don't get the reason. Imperial makes good money and therefore you say boo hoo to the franchise owner who does not have anything to do with those big earnings or share in them in any way.

That's like me saying, Banks make lots of money so I don't give a crap about the tellers.

Nothing fell off the rails actually. The point of the original poster and other people like you has been that selling gas isn't that lucrative because the retailers aren't making money.

My point is that the above mentioned point doesn't matter. I am not swayed into thinking that the gas retailers are actually little guys and because of which, gas prices are reasonable. The fact of the matter is that the supply chain is what matters in selling gas. The market is, for the most part, uncompetitive due to high degrees of vertical integration between 4 or 5 firms. They reap the benefits and then try to cry poor because the little retailers aren't making money. The only thing the retailers aren't getting is their cut of the vertically integrated firm's pie. That's not an issue that I care about. It's an internal issue to BP, Shell and Exxon.

Nobody forced these retailers to buy franchises and focusing on their business model is a straw man to deflect attention to what's really going on.

Moreover, there is a certain myth of the small mom and pop gas franchise owner. Most of the franchises are owned by holding companies who themselves own multiple franchises.

So, I'll ask, where did I fall off the rails again?

[Dan02]

Originally Posted by Flames in 07

That's actually not quite true. Refineries run different grades. This is an extreme ( but illustrative example) if you ran light sweet late last year you paid $50US/bbl more for AB crude than a refinery that runs heavy sour.

yes i over simplified, but the retailers never see any of the difference there so I am not sure what bringing that up has to do with anything.

[Hakan]

Originally Posted by fotze

I don't understand why environmentalists aren't rejoicing high oil prices? The people with the most wasteful lifestyles are getting burned the most. The biggest boost to alternative energy technology is high fossil fuel costs. With $125 oil, alternative energies are way more economically viable.

All good points in that post but I would just like to mention that, as an ardent environmentalist, I don't think I've met one other who has a problem with high gas prices.

Most, if not all, environmentalists I know want even higher gas prices.

I sure do.

[Reggie Dunlop]

Originally Posted by Hakan

Nobody forced these retailers to buy franchises and focusing on their business model is a straw man to deflect attention to what's really going on.

Bang on. These are fairly sophisticated networks. They don't miss a trick. Every aspect of the business is scrutinized to maximize profitabilty (as it should, quite frankly).

They're selling gas. That's what the sign says. Stands to reason they make money on it, even if industry double-speak says otherwise.

[604flames]

Originally Posted by Reggie Dunlop

Pretty ironic then that "Pay at the Pump" is a growing trend, to the point of being heavily advertised. They're giving customers the option of not setting foot in the store to begin with.

Since February BC gas stations are all pre-pay, thanks to the numbskull who killed that kid in Maple Ridge.

[HOOT]

Originally Posted by 604flames

Since February BC gas stations are all pre-pay, thanks to the numbskull who killed that kid in Maple Ridge.

I don't know anything about this story except what I heard from people...so if you have a link that would be awesome!

[ken0042]

A couple of points:

Regarding the pumps that are short changing customers; assuming you get the 1 in 20 that is shorting you, then the average shortage is 0.7% that it's shorting you. So on a $50 fill up you are only losing 35¢. Yes, still being shorted- but the articles I have read seem to want to shock you instead of showing that it is a minor amount.

And with the pay at the pump; for one thing I have found that at many stations it doesn't work and once again it is slow to get fixed. It is also a bit of a PITA unless you are buying a fixed amount. If you are filling up it has to authorize $75 or $100, then you fill, then it refunds the difference back to you. For me it's easier to just go into the store. The target market for the pay at pump is the guy who only has $20 to throw into the tank; and if he only has that much to spend on gas he is less likely to make an impulse purchse once inside.

[Ironhorse]

Originally Posted by ken0042

If you are filling up it has to authorize $75 or $100, then you fill, then it refunds the difference back to you. For me it's easier to just go into the store. The target market for the pay at pump is the guy who only has $20 to throw into the tank; and if he only has that much to spend on gas he is less likely to make an impulse purchse once inside.

Technically (on Credit Cards anyhow) it does a pre-authorize and only the amount you put in gets charged to your card, and only one transaction shows up. But you're right, it pre-authorizes 75 to 100+.

[Flames in 07]

Originally Posted by Hakan

Nothing fell off the rails actually. The point of the original poster and other people like you has been that selling gas isn't that lucrative because the retailers aren't making money.

My point is that the above mentioned point doesn't matter. I am not swayed into thinking that the gas retailers are actually little guys and because of which, gas prices are reasonable. The fact of the matter is that the supply chain is what matters in selling gas. The market is, for the most part, uncompetitive due to high degrees of vertical integration between 4 or 5 firms. They reap the benefits and then try to cry poor because the little retailers aren't making money. The only thing the retailers aren't getting is their cut of the vertically integrated firm's pie. That's not an issue that I care about. It's an internal issue to BP, Shell and Exxon.

Nobody forced these retailers to buy franchises and focusing on their business model is a straw man to deflect attention to what's really going on.

Moreover, there is a certain myth of the small mom and pop gas franchise owner. Most of the franchises are owned by holding companies who themselves own multiple franchises.

So, I'll ask, where did I fall off the rails again?

Your post summarizes quite nicely what falls off the rails, what you and Reggie and others do in every single post is confuse the gasoline retail business with the entire chain.

The retail end is highly competitive has little barrier to entry and is difficult to differentiate. Therefore there is no money in it.

Nobody here has said that large vertically integrated companies aren't making lots of money, in fact I think I have said it several times in this thread ... but retailers don't.

Large Integrated = Imperial
Retail = Joe the independant businessman.

I don't understand what you think is being deflected. The companies you reference make lots of money ... what's to deflect? But that fact is irrelevant to the topic.

For some reason you just can't differentiate between the two. I have tried to draw the picture as simply as I can over more than a dozen posts, to the point that I think a junior high student would understand ... I seriously don't know what else to tell you and the band of the naive.

[Flames in 07]

Originally Posted by Dan02

yes i over simplified, but the retailers never see any of the difference there so I am not sure what bringing that up has to do with anything.

I wouldn't say never. I brought it up because it's not true ... that's a good enough reason don't you think?