Join        Login             Stock Quote

Blame High Prices For The Gasoline Shortage

 November 12, 2012 10:47 AM

Uh, what? Higher prices created less product not more? My Econ 101 professor is rolling over in his grave (I don't know if he is actually dead but go with it).

Remember in the fun days of 2008 when gasoline was heading toward $5 per gallon? Remember back even further when there were four gas stations on many corners in populous areas? You toddler traders with only 10 years experience are too young for that, I suppose.

But in 2008, I blogged Where Have All the Gas Stations Gone. It was hard to understand why they were disappearing especially when their products were soaring. Reader comments were awesome - basically saying that gas station profits were steady while inventory costs went up. Credit Card companies took a percentage leaving the station owner with a few cents revenue out of which they had to pay expenses and taxes. A big chunk for the oil company, a big chunk for Uncle Sam and a little chunk for Amex. Chaff for the station owner.

[Related -Searching For Solid Support In The Face Of Global Headwinds]

Lower profit margins and unfavorable cash flow (pay for inventory now, get paid by customers in 30 days or more). Result - Your local Esso station (toddlers?) is now a Walgreens. Your local Sinclair station is now a Wells Fargo.

The station density became inadequate to serve the population.

And then there's Maude, er, Sandy. Li'l Miss hurricane blew out a good chunk of the gas stations in the Northeast. Remember, the number was already low so this was -and still is - a big problem.

[Related -Long-term Relationships and Credit Scores]

So, higher prices for gasoline in a fixed profit, not fixed profit percentage business and viola! Gas shortages.

Now, where is that hamster powered generator. Ain't no gas to fill up a real one to get the pumps working at gas stations sitting on thousands of gallons that they cannot pump. You cannot make this stuff up.

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageLong-term Relationships and Credit Scores

Unlike many commentators, I tend to think credit scores are a good read on...

article imageIn Defense Of Rolling Return Charts

Robeco’s Lukas Daalder has a bit of an issue with rolling-performance graphics. Bashing a recent chart of read on...

article imageThe S&P 500’s Worrisome Downturn In Drawdown

Last Friday I reviewed some of the bearish signals that were casting dark shadows across the US stock read on...

article imageADP: Private-Sector Employment Rises A Solid 200k In September

The pace of growth for private-sector employment picked up in September, according to this morning’s ADP read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.