During the oil embargo in the 70s, gas stations would routinely run out of gas and have to shut down for a few days until their next delivery. That made sense because there was a shortage. In our current crisis, I haven’t seen any gas lines. I hear about gas lines sporadically, but those always seem to be at gas stations that are running promotions and charging much lower prices than their competitors.
I know that the powers-that-be are addressing the most crucial aspect of our energy policy, namely, demonizing their political opponents, but I haven’t heard anyone summarizing things by saying, “We currently require X barrels per day, but we can only get X-Z barrels per day.”
Don’t get me wrong – we’re going to run out of oil. Or rather, the cost of obtaining oil will eventually become so high that we’ll stop looking for that last, big oil field. But are we there yet?
So my question is: Is anyone experiencing actual shortages? I’ve tried to google various permutations of: {oil, supply, production, shortage, export, barrels}, but the results either referred to news stories before 2005 or referred to spearmint oil or coconut oil. I also got several links wherein representatives of Qatar and/or Saudi Arabia stated that they didn’t think there was an actual shortage.
Rather than remind me of the 70s, our current situation reminds me of the electricity crisis in California, which we later found out had been created out of whole cloth by Enron. (Okay, we didn’t and don’t have quite the electricity supplies we needed, but we only really had brown-outs when something broke).
I don’t know about being played by the oil companies, or the gas lines, but I have seen several stations that do not have gas on particular days. There are also several other stations that have been shut down for the last year. Some of them even have the signage showing the prices when they shut down. It kind of reminds me of the beginning scene of The Stand.
My location is Paris, Texas.
There is not and there has never been a shortage of gasoline. There is a shortage of cheap gasoline. If you are willing to pay the spot price you can obtain as much as you want.
In driving around LA and Orange counties, California, I haven’t come accross a single gas station that has been temporarily out of gas. (I seem to have a vague memory of one being out of diesel.)
Is this some weird Massuchusetts thing, or when I pay $4.75 a gallon is the station really only getting 8 to 12 cents? That doesn’t seem like a rational way of doing business, but even so, I can’t see what would stop them from adding a few more cents to cover credit card fees, especially if all their competitors are in the same boat.
In my opinion what’s driving gas stations out of business is not credit card fees but the pay at the pump option. They make, as previously mentioned, pennies on the gallon for fuel, but the stuff inside the store has triple digit margins. When they could count on people coming inside to pay for their fuel they could depend on a lot of impulse purchases.
Here’s another article on gas station economics. Although it’s a year old, it made it a little more clear where the money went. Also of interest was that retailers can make higher margins on no-name gas than on the big brands even while charging less at the pump.
I work at a gas station and the only time we’ve even come close to actually running out of gas was when one of my coworkers gave our supplier the wrong tank reading.
There is a “shortage” of every good and service, that is why we have prices for things. Prices help allocate these goods and services. When prices are kept artificially low by the government then we may run out of these goods and services. The reason we aren’t seeing gas lines today is that politicians have (so far) let gas prices rise without imposing controls.
Two out of the 4 close gas stations in my area are going out of business. The oil companies even with record profits won’t kick any money down the line. If they can not sell items like party store they have difficulty keeping the doors open. But they have plenty of low profit gas to sell.
How do you expect these companies to “kick money down the line”? If the gas stations aren’t owned by the oil companies (and I assume they are not), then why would one company give money to another? The price of gas is not set by oil companies but by supply and demand. If a competitor is selling gas for a certain price a gas station has to at least get close to that price to stay in business. That is because consumers like you will bitch and moan about its prices and not patronize it if it doesn’t. That’s how the market works. I know you like to lay all the blame at the feet of evil oil companies, but (like all your other attempts to “analyze” the oil market) your views have no basis in fact.
It’s the charging of a fixed percentage by the credit card companies, no matter what the price of gas is. For example:
At $2.00/gallon gas, a 2 percent credit card fee will be 4 cents. Subtracted from say a 10 cent per gallon profit, that leaves a net profit per gallon to the station owner of 6 cents.
At $4.00/gallon gas, the 2 percent credit card fee will be 8 cents. Thus, the net profit is down to 2 cents per gallon. If the profit margin before credit card fees was only 8 cents per gallon, well…
Gas station owners make a minuscule profit per gallon; like grocery stores (another low-margin business), they require high volume to generate an overall profit worth being in business for.
Once again, you fail to grasp the simplicities of what “supply and demand” means. It does not necessarily mean that once supply goes up that prices go down. Demand must be factored into the equation, as must future demand, future supply, and a variety of other things that affect both supply and demand. It’s not just a simple equation that you plug numbers into.
Mississippi right after Katrina does differ. As does any instance where somebody at the north pole research station decides they want to have 1000 gallons more fuel on hand at short notice. However, this doesn’t change the fact that under normal circumstances, such as most all of the cases under discussion, the problem isn’t that there’s not enough supply to meet demand at the current price.
Based on info from a friend of my father’s, who owns several gas stations but operates as a franchise from one of the major oil companies, the oil company sets the selling price (he is required to report the prices of other gas stations in the local area several times daily and is informed of any price changes for his gas in response). He gets a fixed amount per litre, regardless of the pump price. Credit card fees are based on the total pump price, and can eat severely into the fixed per-litre revenue that he earns. I assume the same business model is used for other US/Canadian franchise dealerships (which I believe form the majority of gas stations).
That’s not completely accurate. When wage and price controls went into effect in the 70’s there were gas shortages. You can’t force a business to lose money.