Actually, the profit margin is much lower and the pricing is a little more complicated.
Normally, a gas station makes a dime a gallon on the gas it sells … sort of. If the price they most recently paid is $1.00 a gallon, they would likely charge $1.10. Here where I live, gas is going around $1.43 a gallon, and since the station’s are getting so much flak over the prices, they’re only charging between six and seven cents over what they’re paying, which means they’re getting it for $1.36 or $1.37.
But all of that is (kind of) irrelevant. Say the price of gas goes up to $2.00 a gallon tomorrow. You’ll notice that every gas station in town raised their prices at the same time. Now, we all know that every gas station did not simultaneously run out of gas and suddenly have to restock at higher prices all at once. Therefore, they’ve still got the cheaper gas in their tanks, which they’re selling at the price of their next delivery.
But it’s even more complicated than that. Tank sizes vary according to location, traffic, etc. at each location, but let’s say your average station has 20,000 gallon tank. The local gas tanker only holds 8,000 gallons of gas, so it takes several shipments to fill the thing up, and they schedule routine shipments so that they never run low (again varying due to location, traffic, etc.). So let’s say the price of gas was $1.05 a gallon one week and, for argument’s sake, the gas station was completely bone dry when the delivery truck arrived. They put 8,000 gallons of gas in that week, filling the tank over a third of the way up. Let’s say the station sells 4,000 gallons a week and receives deliveries once a week. The next week, he gets another 8,000 gallons, but the retail price is now $1.15. He now has 12,000 gallons underground and he’s charging $1.15, but a third of the gas he’s selling should have been sold for $1.05, giving him a little extra profit on the old gas from the week before. He sells another 4,000 gallons the next week, gets another delivery, but now the retail price has gone up to $1.25. He still had 8,000 gallons underground with an average per gallon price of $1.12, but he’s selling it for $1.25 a gallon, even though the legitimate price should be $1.19. This continues and the profit margins increase, meaning that when the gas prices are going up, the gas station makes a greater profit on the gas it actually has in its tanks. Now, the exact opposite is true when the price of gas is falling, but you’ll notice on the news that they say it will take six weeks once OPEC ups production before we’ll see prices start to fall again. Sounds to me like they keep the price of gas inflated for a few weeks while they wait until they unload some of that more expensive gas they still have underground.
So what does any of this have to do with the original post? Actually, I’m not quite sure, except that it does provide a little more accurate information for the folks who can figure this out better than I can. To my way of thinking, you perhaps could “lock in” a price as long as there was a time limit, and do it in such a way that you would pay no more than the current price.
How’s this for a scheme. You know that you’re going to need 20 gallons of gas next week, but you’re worried the price will go up. Therefore, you buy the 20 gallons in advance at today’s price, since even if the price goes up, the station owner is pretty well assured of still having gas at the price you’re paying underground. If, however, the price goes down, you get 21 or 22 gallons or whatever the price today would have got you for the price you paid. Finally, the deal would run out in a week, and if you came in after that, you’d only get the amount you would receive today for the price you paid last week.
