Tuesday, June 17, 2008

Fury as Britain’s greediest petrol station charges £1.99 a litre

Fury as Britain's greediest petrol station charges £1.99 a litre

Two things: 1. A higher price with less supply would indeed moderate demand in a sensible fashion would it not? 2. If the guy has half the petrol to sell in a week than he normally has - doesn't he have to sell it at twice the price to remain in business. Otherwise - he will go out of business and there will be less service stations.

Posted by whiteknight @ 09:26 AM (1277 views)
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17 thoughts on “Fury as Britain’s greediest petrol station charges £1.99 a litre

  • whiteknight says:

    Not only that – adjusting supply instead of crude rationning is more effective and less blunt.

    If i have a very important business meeting and am being paid good money to get there – then I will pay good money on the fuel.

    If i am limited to 10 GBP worth of fuel – i might not be able to get there.

    If i don’t have anything important to do – I will wait until the supply returns and the price drops and make sure i only store the absolutely necessary amount to my activities.

    If i dont like the price of the individual service station and think it is out of kilter then I will never buy fuel there again. There is not direct evidence this is the case here.

    Oh the wonders of a real free market in action. (not the kind of free-market that invoves the bailing out of certain factions, thereby locking up capital and expertise in the wrong places . How can you expect investors to discipline management when it doesn’t matter diddly whether they do so or not).

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  • Demand and supply makes a market; changing prices is the mechanism of market adjustment.

    If it’s not profiteering – and to be reasonable, in the case that sales volume is lower (due to rationed supply) – if TOTAL gross margin is higher, is the excess being given to charity?

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  • Whiteknight says:

    “adjusting supply instead of crude”

    “adjusting price instead of crude”

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  • whiteknight says:

    “adjusting supply instead of crude”

    “adjusting price instead of crude”

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  • No, I can’t see the problem with this either, if the local motorists had listened to the government saying don’t panic and then gone straight out and filled their tanks it wouldn’t effect them.

    As you quite rightly say Whiteknight, the guy has got to run a business and suppose the strike had been extended or another Bunsfield type disaster happened at the same time, he may have to make his fuel last 2-3 weeks.

    Who’s going to support his overhead then ?

    Quite sensible in my view and frankly a wake up call to general public.

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  • whiteknight says:

    To be honest if the price floated higher “fully freely” in response to supply shortages or perceived supply shortages then some of that rush to fill up would have been deterred naturally anyway.

    Quite right. This problem could indeed go on a few weeks. Who has told this guy when he is next getting fuel? ( i know nothing about this specific situation – i am merely making a general point about floating prices being bad).

    If there is going to be a chronic shortage – well that is due to prior mismanagement and bad planning – no need to compound it with further errors.

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  • whiteknight says:

    “about floating prices being good”

    OK. No posts until a good strong coffee has been drunk (at least while the commodity of coffee is still affordable to me).

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  • Re: If the guy has half the petrol to sell in a week than he normally has – doesn’t he have to sell it at twice the price to remain in business?

    Erm…no. If you normally buy in petrol at 90p per litre and sell it at £1 and the next week you can only get half your normal supply you would need to charge £1.10 to maintain the same revenue – ie double your profit margin to 20p from 10p – NOT double the whole price price.

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  • whiteknight says:

    buctootim: very good point. It’s double the margin. That’s right. Silly me. How could I have got that wrong.

    Not double the price. double the margin plus maybe a little contingency on the probability supply might be disrupted a little more in the following week?

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  • george monsoon says:

    Why is crude oil rising so sharply?
    Is this simply a case of supply and demand, or are we witnessing something more sinister?

    I recently read an article that stated oil was rising as a result of speculation, rather than a demand driven markup.
    If any kind soul has the facts, please could they explain it in leymans terms. I have difficulty with market speak, and a pathalogical hate of buzz words.

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  • June 17 (Bloomberg) — Crude oil declined for a third day amid concerns that slower economic growth will curb consumption of oil products.

    German investor confidence dropped to the lowest in more than 15 years in June as surging inflation dimmed the outlook for growth in Europe’s largest economy. The U.K. inflation rate rose to the highest since at least 1997 in May, putting pressure on the Bank of England to raise interest rates.

    “Worries about economic inflation on both sides of the pond are bearish for oil,” said Rob Laughlin, senior broker at MF Global Ltd. in London.

    Crude oil for July delivery fell as much as $1.50, or 1.1 percent, to $133.11 a barrel on the New York Mercantile Exchange, trading for $133.69 at 10:27 a.m. London time. Yesterday, the contract touched a record $139.89.

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  • George

    I think essentially the banks were making quite alot of money selling mortgages to one another until someone realised the mortgages weren’t going to get paid.

    This meant the banks lost alot of money.

    So they went to the governments (US and UK) and asked for money.

    The governments said ok.

    The banks took this money and not being able to sell mortgages anymore as they’d fully raped that restricted market they have now set about speculating on commodities.

    These commodities are things such as oil and food.

    If they over speculate and get it wrong it doesn’t matter because they’ll go back to the governments for more money.

    In the meantime they’ll take bonuses on any profit they did achieve.

    Hence why you get people like the ex chairman of Northern Rock on ‘garden leave’ playing cricket on £63k per month with a £2.5m pension pot to look forward to when he retires at 55. It’s our way of thanking him for virtually folding a business through bad management.

    So the soaring prices you’re currently experiencing are the banks rebalancing their books.

    Count yourself lucky you live in a country that can actually afford these prices – people in other parts of the world are actually starving to death because of this.

    Hence my post at No.5. We might not like expensive fuel but our sacrifice is cancelling the weekly take away or sky premium channels. Others on this planet aren’t so fortunate.

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  • A garage somewhere in the South West did this during the 2000 fuel crisis.

    They went out of business when things returned to normality – what goes around comes around.

    Regards,

    Q

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  • george monsoon says:

    str 2007 –

    I can relate to that. My real concern is with inflation in general and the lies being generated to cover the truth. 3.3% my A£$e!
    I did a calcualtion based upon receipts, bills and other outgoings from April last year. I am currently spending 28% more on living costs than I did in April 2007!!

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  • mark wadsworth says:

    George Monsoon.

    Mining and extraction companies have different kinds of ‘reserves’, crudely speaking “how much is there” and “how much could we extract profitably at current prices”

    The first figure is fixed (although subject to vast margin of error) and the second figure of course goes up with rising prices and vice versa.

    See a most interesting explanation of the terms by the blogoshpere’s favourite miner.

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  • 10. george monsoon said…

    “If any kind soul has the facts, please could they explain it in leymans terms. I have difficulty with market speak, and a pathalogical hate of buzz words.”

    FACTS? now there’s a challenge! try this if you will.

    Lindsey Williams talks about his first hand knowledge of Alaskan oil reserves larger than any on earth. And he talks about how the oil companies and U.S. government won’t send it through the pipeline for U.S. citizens to use. free ‘The New American’

    http://video.google.com/videoplay?docid=3340274697167011147

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  • George
    That is a big uplift.
    Have you got a brief overview of your situation and a summary of what went up.
    IE
    Family of 4 in 3 bed semi value £250k 50% repayment mortgage
    2 petrol cars ave mpg35 doing 20k per annum total
    Food
    Utilities
    Fuel
    Mortgage costs
    etc.

    Not being nosey just interested to see a real life example.
    I don’t know anyone who’s actually saved all their receipts and added it up properly.
    We all know we’re paying more – but to be honest I’m sure most of us are just guessing at how much more.
    I think 28% would be a huge shock to most people.

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