Hi Patrick and list,
I'm a bit behind on my mail but I think you may find this interesting if
you're "not really"an accounting or economics kinda guy or gal... I think
you will understand more than you realize:
There are two major types of Generally Accepted Accounting Principles (GAAP)
in allowed: FIFO (first in first out) and LIFO (last in first out).
this is a measure of cost against sale price for any goods. A retailer just
loves to sell you the oldest goods at the highest price (assuming goods
become more expensive over time, this would be Last In First Out (LIFO) on
the income side and First in First Out (FIFO) on the expense side. Mixing
of the accounting styles is strictly forbidden by tax law and GAAP. So....
We are dealing with unadulterated GREED here. The retail side says, "it's
summer (or something else)...it's time for a price hike! And the Oligopoly
(a market controlled by "few" players as opposed to monopoly which is one
player as opposed to free competition which is many players with no barriers
to entry) goes along with it. Prices rise everywhere, and the oil in the
"system" just became 10% more valuable.
All this means is that, when sold, there is that much more profit to "pay
tax" on.
Of course, we know oil companies sponsor many major world class sporting
events, arts, culture, science, etc., and that is removed from income before
the "profit" is calculated. Somebody in that company writes the budget, and
therefore somebody knows what the anticipated revenues should be AT ANY
POINT IN THE YEAR.
One interesting point to make about our recent consumption squaks on this
list is this: We are a small minority among gas consumers. Generally, fuel
consumption is 10% higher in the "severe conditions" such as sleet or snow.
Cars use more energy to warm up, etc. If, (and only if) more people drive
consistent mileage (no sports car people here, just "Joe lunchbucket", OK?),
would it not seem reasonable that with less demand that the price should be
higher in the summer?!?!?
Now the counterpoint, just to be even. Argue that given a forecast demand
for the year, the SUMMER prices are correct. Perhaps winter prices are
lower on purpose, either to adjust our demand (higher) or to reduce income
for the purposes of tax (shoudda sponsored VTR <G>). The oil execs might
argue they are "reducing winter price" not "Raising summer price".
See ho easy it is to spin "facts"? And I don;t even get paid to do this.
But, my University economics statistics, marketing, and accounting courses
tell me that "what is, is, because of who has the power at that time".
I have just completed my Certified Financial Planner designation. As such,
I "might" council ALL of you to go buy shares in the "oil companies" and
then be happy when profits rise!
There. See. There IS an answer. (Damn, that makes me wish my Honda was a
gas guzzler)
Dave T
Winnipeg
-----Original Message-----
From: Bowen, Patrick A. RP2 <jak0pab@jak10.med.navy.mil>
To: Scott Hall <sch8489@garnet.acns.fsu.edu>; Joe Curry <spitlist@gte.net>
Cc: JDean <jdean@designdimension.com>; spitfires@autox.team.net
<spitfires@autox.team.net>
Date: April 12, 1999 11:29 AM
Subject: Re: FW: PRICE OF GAS
>
>Scott, if I may answer your questions. (please read I do not agree with
>how this works, but it is how it works) The cost of Gasoline, as well as
>many products, is not pushed by how much it cost the reseller to purchase
>it but how much it will cost the reseller to purchase the replacement for
>it. It is irrelevant if he bought the gas at $1.00 a gallon if he knows
>the next time he refills that it will cost him $1.20 a gallon than that is
>what he will charge. As for why our gas is so much cheaper than other
>countries, believe it or not, it has little to do with taxation as much as
>it does the fact that our government tightly controls the "mixture of
>gasoline that we use. The government says that for every gallon of gas so
>much will be from alaska, gulf of mexico, middle east and so on. They
>control this mixture to ensure high quality grades and to control the
>market. In all honesty Texas has huge amounts of oil beneath it still, why
>are we not using it? Texas does not fit into the governments equation and
>they actually pay people in Texas to cap off and fill in their wells. Add
>this and the fact that the industrial process of refining which accounts
>for the largest cost of the gas is much cheaper here than it is elsewhere
>in the world.
>
>Here is the average breakdown of a gallon of gas being sold for $1.69 - .45
>for Crude, .42 Tax, .10 reseller, .72 refining.
>
>Sorry for the Economic lesson, had to take a few too many classes in
college.
>
>Patrick
>
>At 02:17 AM 4/11/99 -0400, Scott Hall wrote:
>>
>>thank god, I was beginning to think I was the only one that noticed this.
>>how come every time I tun on the morning radio and hear of a newly
>>announced (as in just happened today, not a few weeks ago) opec price
>>hike, the prices at the pumps jump that same day or the next? does the
>>crude get pumped directly to an underground refinery beneath my gas
>>station in 4 hours? and why, when I hear of an opec price drop, it takes
>>more than a month (or longer, if ever) to see the prices fall?
>>
>>and, though I'm not sure if it was on this list or not, someone said wrt
>>other countries paying ~$5.00 US/gal for gas: 'so what, just because they
>>tax themselves into oblivion doesn't mean we have to', let me add: AMEN.
>>yes they pay more there. yes america is possibly the lowest taxed and
>>greatest country to live in. but by no means does that mean that it
>>couldn't and shouldn't be much, MUCH better. it's because we keep telling
>>ourselves how great we have it that we're willing to overlook incremental
>>tax hikes. soon, we'll be up there with european countries. then what?
>>
>>oops, I should stop now. my soapbox isn't rated for rants of more than 3
>>minutes. and here comes than damn nurse with my meds again. back, BACK,
>>I say! no! no sponge bath!
>>
>>scott
>>
>
>Patrick Bowen
>'79 Spitfire
>Jacksonville FL
>
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