Diesel consumers: your price drops are here!
Sunday 10 Aug 2008 | Posted By Patrick | Predictions
I think you’ll agree with me on this one- Diesel consumers have LONG awaited the price drops that gasoline has seen. Since gasoline has dropped mid-July, diesel HAS followed its drop on the wholesale market, BUT for some reason, those price drops really never made it to large chain retailers. Even as I write this, some of the SAME BRANDED stations have diesel prices ranging from $4.39 to a whopping and unreasonable $4.69! Its a rarity for Grand Rapids to see this sort of range for gasoline (Have I ever see gasoline price ranges of 30-cents on non-hike days?) Even this station pictured below had sold diesel for as much as $4.79 just days earlier… what is going on? I’d say there is some gouging here, but hey, the Attorney General’s office of this State seems to turn a blind eye to “gouging” (at least when I called a few weeks ago!)- but WHY? Who has donated money to him?
Diesel continues to trade lower. Stations in nearby Indiana have diesel as cheap as $4.19… the price drops should continue! SHOP AROUND is the best advice I can give you.
Just down the street at BP, take a look what diesel runs!
Loading ...
Just like Premium, Diesel is a pretty slow mover for most stores. Of the stations that we supply Diesel to, most of them sell between 1,500 - 4,000 gallons per month. So, most of the time they only get 1 delivery per month, which could make their actual profit much less than what it looks like.
Unlike Premium that gets stuck with a 16-20 cent spread over Regular regardless of what we paid, Diesel can be priced to make a profit. But that being said, stations do tend to forget about Diesel prices from time to time. The combination of low sales and prices that don’t move very often, make it easy to stop looking at other station’s Diesel prices.
As for the AG not taking “gouging” serious, there isn’t anything that he can do, because Michigan doesn’t have a law to define what is considered gouging. He can’t enforce a law that doesn’t exist. The State Congress tried to make a law a few years ago, but it failed because they were stupid and wanted to use a vague definition like the US Congress did in their failed attempt.
I am all for a clearly defined law that makes it obvious for any station to figure out when they would be in violation. If there is an actual law in place, it prevents politicians and the media from being able to make the baseless accusations that they can get away with today. So, if someone wants to make a law that says we can’t markup gas more than 10%, 35 cents, or my favorite: more than the State’s profit (at $3.799 my markup is .093 and the State is making .394!!); then I would gladly support it.
But, for them to pass a law that defines gouging as “unconscionably excessive” like the US Congress was attempting, is just wrong. How in the world would any station owner know when their profit crossed the imaginary “unconscionably excessive” line? The only reason for making a law like that is so that they can decide after the fact if someone is guilty of accidentally breaking the law, instead of preventing it from happening.
I kind of wished that they would’ve passed it, just to see it backfire during the first product shortage. Because when you give someone the choice between turning off their gas pumps or risking a $500,000 fine and a year in jail, I can guarantee that half the stations in the US will shut down. It would be completely impossible for the remaining stations to keep product in their tanks. This would quickly turn a small shortage into a major problem. I assume that given the choice between paying an “unconscionably excessive” price for a couple days or walking, most people would rather have the option to drive.