Now may be the time to focus on Gas retailers as gougers
From The Washington Times
from 
JoeUser Forums
JoeUser Forums
An article in Today's (10/24/2005) Washington Times gives away some of the gasoline industries dirty secrets.
Those folks that got upset at their local gasoline retailers back when the prices shot up astronomically earlier in the year may remember some folks (like myself) trying to remind them that the price gouging that was happening most likely wasn't the fault of the retailers, at least not then. Well...... it might be time to start pointing fingers back at the retailers again, though many are using the earlier gouging by the refiners to claim losses that still need to be recouped for.
I'll clip part of the article here, but encourage everyone to read the entire thing. The print edition of the paper included a great graphic showing where the money and profits are going. I'm not sure it is in the online edition, but the article does a good job in it's several paragraphs.
Gas retailers slow to drop prices, reap big returns
By Brad Foss
ASSOCIATED PRESS
October 24, 2005
When pump prices skyrocketed after Hurricane Katrina, gasoline retailers were caught in an uncomfortable paradox -- they were accused of gouging at the same time their profits were being squeezed by runaway costs at the wholesale level.
Now the reverse is true. The outrage from consumers and Congress has died down just as gas stations across the country are reaping some of their best returns at the pump in years by passing along huge savings at the wholesale level as slowly as possible.
"We just had a two-week period there with our best margins in two years," said Bill Douglass, who sells Exxon- and Mobil-branded gasoline at 14 locations around Dallas and distributes fuel to 165 others.
Mr. Douglass and other retailers are benefiting from the spread between wholesale and retail prices, which now is nearly twice its normal size. Since the beginning of September, wholesale prices have fallen more than 40 percent, while retail prices have come down 11 percent, U.S. Department of Energy statistics show.
Nationwide, the average gross profit margin at the pump was 37.2 cents per gallon for the week ended Oct. 17, compared with 7.9 cents per gallon a year earlier, according to the Oil Price Information Service (OPIS) of Wall, N.J. OPIS said this sweet spot for retailers would only last "another week or two."
The lagging decline in retail prices is not accidental and the industry is not apologetic about it. It's important to "do some catching up," Mr. Douglass said, because after Katrina, when wholesale prices spiked, many retailers -- particularly those selling unbranded gasoline -- lost money on every $3 gallon of gasoline they sold.
Despite the extra profits they have enjoyed in recent weeks, retailers said the real windfall is being collected in other segments of the industry.
Companies such as Exxon Mobil Corp., Chevron Corp. and BP PLC, which extract oil from the ground, refine it into gasoline, diesel and heating oil and then sell these fuels on the wholesale market, are indeed making bundles these days. And while these so-called integrated oil companies also sell fuel at the retail level, that is a small and shrinking segment of their business.
Of all the places to buy gasoline in the United States, less than 10 percent are owned by companies that produce or refine oil, according to the Department of Energy. That is down 50 percent from 1998, reflecting a concerted effort to shed these less profitable assets.
Exxon Mobil, the world's largest publicly traded oil company, is expected next week to report an $8.9 billion third-quarter profit, a 56 percent increase from the year before. Similarly soaring profits are forecast for its rivals.
"That is where the money is going," said Don Stephenson, president of Cary Oil Co. Inc., a North Carolina company, which owns 11 gas stations and distributes fuel to hundreds of others.
... more at linked article (please read entire article if possible).
Those folks that got upset at their local gasoline retailers back when the prices shot up astronomically earlier in the year may remember some folks (like myself) trying to remind them that the price gouging that was happening most likely wasn't the fault of the retailers, at least not then. Well...... it might be time to start pointing fingers back at the retailers again, though many are using the earlier gouging by the refiners to claim losses that still need to be recouped for.
I'll clip part of the article here, but encourage everyone to read the entire thing. The print edition of the paper included a great graphic showing where the money and profits are going. I'm not sure it is in the online edition, but the article does a good job in it's several paragraphs.
Gas retailers slow to drop prices, reap big returns
By Brad Foss
ASSOCIATED PRESS
October 24, 2005
When pump prices skyrocketed after Hurricane Katrina, gasoline retailers were caught in an uncomfortable paradox -- they were accused of gouging at the same time their profits were being squeezed by runaway costs at the wholesale level.
Now the reverse is true. The outrage from consumers and Congress has died down just as gas stations across the country are reaping some of their best returns at the pump in years by passing along huge savings at the wholesale level as slowly as possible.
"We just had a two-week period there with our best margins in two years," said Bill Douglass, who sells Exxon- and Mobil-branded gasoline at 14 locations around Dallas and distributes fuel to 165 others.
Mr. Douglass and other retailers are benefiting from the spread between wholesale and retail prices, which now is nearly twice its normal size. Since the beginning of September, wholesale prices have fallen more than 40 percent, while retail prices have come down 11 percent, U.S. Department of Energy statistics show.
Nationwide, the average gross profit margin at the pump was 37.2 cents per gallon for the week ended Oct. 17, compared with 7.9 cents per gallon a year earlier, according to the Oil Price Information Service (OPIS) of Wall, N.J. OPIS said this sweet spot for retailers would only last "another week or two."
The lagging decline in retail prices is not accidental and the industry is not apologetic about it. It's important to "do some catching up," Mr. Douglass said, because after Katrina, when wholesale prices spiked, many retailers -- particularly those selling unbranded gasoline -- lost money on every $3 gallon of gasoline they sold.
Despite the extra profits they have enjoyed in recent weeks, retailers said the real windfall is being collected in other segments of the industry.
Companies such as Exxon Mobil Corp., Chevron Corp. and BP PLC, which extract oil from the ground, refine it into gasoline, diesel and heating oil and then sell these fuels on the wholesale market, are indeed making bundles these days. And while these so-called integrated oil companies also sell fuel at the retail level, that is a small and shrinking segment of their business.
Of all the places to buy gasoline in the United States, less than 10 percent are owned by companies that produce or refine oil, according to the Department of Energy. That is down 50 percent from 1998, reflecting a concerted effort to shed these less profitable assets.
Exxon Mobil, the world's largest publicly traded oil company, is expected next week to report an $8.9 billion third-quarter profit, a 56 percent increase from the year before. Similarly soaring profits are forecast for its rivals.
"That is where the money is going," said Don Stephenson, president of Cary Oil Co. Inc., a North Carolina company, which owns 11 gas stations and distributes fuel to hundreds of others.
... more at linked article (please read entire article if possible).