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Oil falls below $50/barrel

deacphan said:
interesting to me that as oil goes down the market drops. just goes to show how much bigger of an impact the energy industry has than consumer spending.
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Oil has dropped 50% since June but the S&P 500 is up 2.5% since June.
 
Do gas stations have any leeway to sell gas vouchers by the gallon? It wouldn't be good business because they take on enough volatility as is but I'm curious.
 
No, they usually sell the gas on consignment from the distributor.
Edited to clarify: the gas station itself doesn't buy or own the gas. They just sell the distributor's gas and get basically a royalty of a few cents a gallon to sell it. Gas stations themselves don't make too much money on gas, the gas just gets people in to spend money on the overpriced beverages and other stuff.
 
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Gotcha. Thanks.
 
Which is crazy if you think about it. Whoever oil gets a premium for the gas sold in Santa Monica, California because the retailer carries the rent and the risk, and he has to "compete" with the prices at exit ramps out in the Valley. Retailer carries all of the risk yet the fungible product isn't even his. Kinda stinks for the guy that only gets paid a handler's fee.
 
Gas stations are a weird entity. I remember growing up, few gas stations had convenience stores. I haven't seen one without a convenience store in a long time. Last week, I saw two Shell stations across the street from each other, one with higher prices for diesel and premium. I assume they had different ownership, but that's still not something you see everyday.
 
So all the Republicans blaming Obama for high gas prices when it was at $4/gallon are giving him credit now, right? RIGHT?
 
jhmd2000 said:
Which is crazy if you think about it. Whoever oil gets a premium for the gas sold in Santa Monica, California because the retailer carries the rent and the risk, and he has to "compete" with the prices at exit ramps out in the Valley. Retailer carries all of the risk yet the fungible product isn't even his. Kinda stinks for the guy that only gets paid a handler's fee.
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Yes and no. Often times it is the distributor who picks the location, buys the land, installs the tanks/pumps and puts up the building. They then lease the entire package to the gas station operator with a consignment agreement for the gas itself. So yeah the retailer carries the operational risk, but the distributor carries the risk of the fixed costs. The distributor can get another retailer if the retailer sucks, but if the distributor chose a bad location to begin with then they risk all of their fixed costs.
 
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2&2 Slider To Leyritz said:
Yes and no. Often times it is the distributor who picks the location, buys the land, installs the tanks/pumps and puts up the building. They then lease the entire package to the gas station operator with a consignment agreement for the gas itself. So yeah the retailer carries the operational risk, but the distributor carries the risk of the fixed costs. The distributor can get another retailer if the retailer sucks, but if the distributor chose a bad location to begin with then they risk all of their fixed costs.
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That makes more sense. Thanks.
 
PhDeac said:
So is the distributor or retailer responsible for bringing in other businesses to the spot like adding a KK or Dunkin Donuts?
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Usually the distributor because they have more industry connections and capital to inject (because DD is going to require specific capital investment before granting the franchise to make sure it isn't going to tank), but I guess if you had a retailer who operated numerous locations then they might be able to do it too. But the retailers themselves are often just local families or (playing to the stereotypes) immigrants who are willing to work hard for a shot at the profits.
Also if the convenience store itself is going to be something national like a 7-11, then the distributor will set that up as well because they stand to make more money on volume if it is a recognizable 7-11 than Joe Blow's station. But they will still lease it to a local dude to operate, so long as that person is approved by 7-11.
 
MysteryMen said:
So all the Republicans blaming Obama for high gas prices when it was at $4/gallon are giving him credit now, right? RIGHT?
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Yes! From a friend of mine who actually went to Wake...

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