All things STOCKS

[05_never_again]

Problem is his margins are much higher on fuel in the system. He's making a lot more money when it spikes.

Yeah, for a brief amount of time. Once he exhausts that supply, he's got to buy it at a much higher price. And then when prices decline, he's selling gas for a period of time potentially for less than what he paid for it, especially if the drop is sudden. The gas stations themselves aren't really the ones that benefit from this; it's the oil producers and to a lesser extent, the refiners (although to a large degree those are one and the same). It costs Chevron about $50 to get a barrel of oil out of the ground...they're able to sell that same barrel for $100 while their costs remain the same.

I mean, what's so surprising or eye rolling about a company behaving in a way that protects their margins...lol

 

[InVOLuntary]

Yeah, for a brief amount of time. Once he exhausts that supply, he's got to buy it at a much higher price. And then when prices decline, he's selling gas for a period of time potentially for less than what he paid for it, especially if the drop is sudden. The gas stations themselves aren't really the ones that benefit from this; it's the oil producers and to a lesser extent, the refiners (although to a large degree those are one and the same). It costs Chevron about $50 to get a barrel of oil out of the ground...they're able to sell that same barrel for $100 while their costs remain the same.

I mean, what's so surprising or eye rolling about a company behaving in a way that protects their margins...lol

Because they are not protecting their margins. They are making more money on both ends. The guy flat told me he sells it a higher margin when it goes up, before he's experience any price hike. He then holds the price until his lower priced fuel gets in the system and maybe a little longer. He's making much more than he would have had the price not gone up. I'm really puzzled how this is hard for you, lol.

 

[BigOrangeMojo]

Because they are not protecting their margins. They are making more money on both ends. The guy flat told me he sells it a higher margin when it goes up, before he's experience any price hike. He then holds the price until his lower priced fuel gets in the system and maybe a little longer. He's making much more than he would have had the price not gone up. I'm really puzzled how this is hard for you, lol.

Yeah, typical model is to add whatever markup is needed to the higher of replacement cost or actual cost. The volatility either way plus high margin in store purchases is where profits are made...

To be fair, the in-store high margin purchases decrease when gas goes up...

Obviously CVX is killing it right now