Thread: Interesting Observation

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.... Cindy and I were out and about this afternoon ........... and we noticed that while nearly all of the gas prices including Exxon, Texaco, Citgo, etc. were in the 2.649 to 2.65.9 range ........... BP stations were at 2.779 to 2.819 ............... and this price difference was consistent in all grades of gasoline, all over the Triad ................ they're definitely trying to get us to help pay for the cleanup ............... most around here are avoiding their stations

same going on here. bp is the most expensive but no one is going there.

The vast majority of the fuel stations all over the country are run by independent operators who control their own pricing, it is not, in fact cannot, be mandated by the supplier. In fact it's entirely possible there aren't any company run stations anywhere in the country. The supplier charges them for the fuel delivered, the operator marks it up. I suppose in the scenario you laid out that BP is charging more at the wholesale level, and the operators are trying to maintain a fixed margin, but that's not effective marketing. One way to perhaps verify if BP is the "culprit" is to see what's going on at AM/PM or Arco stations if you have them, they're also BP.

As for "most avoiding their stations" that's not really very effective either. Again, if folks are mad at BP they're taking it out on the local dealer, not the company, especially if they haven't changed their buying habits. If the total market buys, let's say 1 million gallons a day, and they cut the BP stations out of the selling loop, the area still needs a million gallons a day. The other suppliers aren't set up to take up as much "slack" for what had been going through the BP stations, so how do they get the extra fuel requirement? Yup, they go to the BP rack and buy the fuel from BP to sell through their stations. Not a very effective boycott I'm afraid. But it does hurt the local business guy.

I went into a BP station the other day and the guys working there were friendlier than I have ever seen. I almost thought they were going to wash my windows, check the oil, and give me a free glass with my gas purchase. I think they are trying (at least at that station) to counter the bad press and ill feelings since the oil mess.

Don

i do not personally boycott bp. i just go where the gas is the cheapest. every dollar counts these days.

All I can say is your doing better than us, gas is around $3.19 a gallon on average for regular unleaded. Our local BP is now a 76 so can't say that their prices are higher or lower. We mainly shop Chevron, mostly because the gas credit card is in their name, but also because of Techroline(spelling?) in the gas. That stuff did a miracle on the old Jeep cj7 emission control devices!

I think I pay 2.85 at the pump.. costs $20/ day to drive to work with my truck.. hopefully the beetle can do $40/ week

Here in Eastern Ontario we are paying the equivalent of $3.75 -$3.90US/gal at present. Helps that the CN$ is close to parity with the US$ right now. Diesel is lower at about $3.55/gal.

When the spill first happened I was all about adding BP to my personal boycott of Chavex's Venzulala products---

But the response by our boy from Illinois actually turned my support to BP---I also have seen that around here they are competitive or lower priced than the others---

3.13 per gal reg, in monterey ca.

The diesel flip is interesting. During the gas peaks a few years ago it cost more, but prior to that it was less than unleaded. Now it's cheaper again. Go figure!

Going along with what Bob said, there is a refinery in Memphis owned by Valero which produces vitually all of the gasoline consumed in the area. It doesn't matter what name is on the pump at the gas station it all comes from the same refinery.

Supply and demand and current market price are things that are in play here.

I found it interesting that a few years ago, it cost MORE to purchase Leaded gas than unleaded gas at the pumps. Since Lead is an additive, going without it should cost less, right? Wrong. All production was geared to making unleaded gas. Creating leaded gas was the abnormal process thus it cost more to create.

Now... I don't really buy the story about Diesel fuel. The same process has been used for years and the vehicle to gas fuel versus the vehicle to diesel fuel remains approximately the same. It didn't make sense that diesel fuel went above gas prices and now have moved near or slightly below gas prices. The oil companies control the prices by how much they produce and have in researves... thus supply and demand. They know this econmic principle very well.
J

Originally Posted by MRJB1929

Supply and demand and current market price are things that are in play here.

I found it interesting that a few years ago, it cost MORE to purchase Leaded gas than unleaded gas at the pumps. Since Lead is an additive, going without it should cost less, right? Wrong. All production was geared to making unleaded gas. Creating leaded gas was the abnormal process thus it cost more to create.

Now... I don't really buy the story about Diesel fuel. The same process has been used for years and the vehicle to gas fuel versus the vehicle to diesel fuel remains approximately the same. It didn't make sense that diesel fuel went above gas prices and now have moved near or slightly below gas prices. The oil companies control the prices by how much they produce and have in researves... thus supply and demand. They know this econmic principle very well.
J

Good observations on supply and demand plus the impact of production costs. You've got the diesel thing a little off though, but given what you display of economic knowledge maybe this will help.

A few years ago federal standards for sulphur in diesel fuel wer severely tightened, which meant that diesel fuel would need more processing than previously, thus raising costs. Also, with the economy of the time, many jurisdictions felt it a good time to tack on extra taxes that didn't hit the consumer as directly (diesel fuel is a small fraction of total fuel market at retail). Both those factors pushed diesel fuel prices above gasoline. Now, with economic slow down, diesel demand is down. This time of year there is also less demand for heating oil (alternate branding of diesel fuel). The amount of diesel yield versus gasoline in any given crude run at the refinery is not a constant, it varies with the type of crude in the supply stream. Using supply and demand principal, it would be realistic to say that diesel inventories are comparatively high right now so it's "on sale". The diesel fuel/heating oil market is less elastic than gasoline, so needs different incentives.

Well---on the diesel/gas===there are only so many gallons of stuff that can be made for so many gallons of stuff

And Diesel is very seasonal commodity--example---springtime--farmers fill there tanks and get into fields--contractors fill there tanks and all equipment and go to work--fall/winter-home heating oil ( of course for heating, we also use coal, natural gas, propane,butane so demand is not as concentrated as diesel demand)