Best explanation of gas price “gouging” that I’ve ever seen
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September 16th, 2008 at 2:22 pm
When was the last time you saw a fire truck swing by Holiday to fill up its tank?
what they are saying it right to a degree but isn’t quite it either. they are raising the prices to cover a period of lower sales volume due to short supply. if you have a days worth of gas but two days worth of expenses you dont sell the gas at a price that covers just one day, need to sell that gas at a high enough price to cover both days. of course the stations with enough surplus don’t really need to do that but if they do it helps out all the independent station by not undercutting them and gives them a profit boost at the same time.
September 16th, 2008 at 2:32 pm
Yeah, but don’t forget that most gas stations never make a profit on the gas they sell anyway, they fund their payroll, rent, and other expenses by the stuff they sell inside the store.
Look, we know this is true by a simple test: have you ever heard of a gas station that only sells gas, nothing else? No, they’re either tied to a convenience store or a service station. Costco and Walmart gas stations are exceptions to this rule, but even they have a handful of candy bars, and besides, now that I’m here I might as well pop into the store and buy a few things.
And we already know what happens when we have price controls on gasoline. Just look at the gas lines in the 70s.
September 16th, 2008 at 5:12 pm
I’m hardly advocating price controls. I was just saying their explaination for why stations increased their prices was off.
You’d be wrong though if you think they make no profit on selling gas. we know this to be true by a simple test: do gas stations sell gas? if there was no profit from it no one would sell it. it is of course a very low margin item. Thats off set by the high sales volume and as you said the food/misc sales.
September 16th, 2008 at 5:34 pm
Really? I wrote that gas stations “never make a profit” on gas? Oh I guess I did. That’s too strong of a phrase, and I apologize but I’ve got a sore throat and am starting to feel sick as hell. My comment on price controls was just emphasizing why anti-gouging laws are a bad idea (since anti-gouging laws are basically like price controls that only come into play under certain circumstances.)