The gouging law that the Feds tried to pass defined it as “charging an unconscionably excessive amount.” What the hell does that mean? 30 cents, 50 cents, $2 markup?

The problem is that no one wants to pass a law with a clearly defined line that stations can’t cross that would prevent “gouging” from ever happening. Instead, they would prefer to pass a confusing law that lets them punish people for unknowingly breaking the law. Then they get to have press conferences to pretend to be a hero.

I’d like to know if there is something inherently immoral about a company profiting off a fortunate situation? Exxon is making 8% profit. The corner gas station makes 15-20¢ per gallon. At least they are providing us with a useful and necessary product. In fact, here’s a great quote from Exxon’s CEO when he was interviewed on ABC a few weeks back:

“I saw someone characterize our profits the other day in terms of $1,400 in profit per second,” Tillerson told Gibson.

“Well, they also need to understand we paid $4,000 a second in taxes, and we spent $15,000 a second in cost. We spend $1 billion a day just running our business. So this is a business where large numbers are just characteristic of it.”

If we want to talk profiteering/gouging, let’s look at some of the other industries, like banking. I bank with LMCU. When I used Chase’s ATM to withdraw $20 the other day, LMCU hit me with a $2 fee and Chase charged me $3 for the privilege. That’s a whopping 25% for letting me have my own money! And their ATM’s have been in place for years – you would think their fees would go down as they recoup the cost of installing them but they keep going up instead. Something tells me we’re not going to see Granholm or Cox going after the banks (or the gas stations.)

None of this is to say I want to pay any more for gas than I have too. I’m our family’s sole wage-earner – my wife is a stay at home mom – we’re definitely not rolling in cash over here. But no one has actually come up with a definition for gouging/profiteering other than “prices higher than the other day and waah, waah, I want them lower.”

But, they did go up about 18 cents Friday night. Retail margins for Diesel were also on the high side before the hurricanes, so you might not see an increase at the pump. In my opinion, there isn’t any reason for stations to be above $4. 259 or below $4.189 today. Unless their cost is higher than what ours is today.

I’m not going to go into everything, but I wanted to say a few things. I’ve posted about the whole thing with everyone going up at once a million times (I think one was last week if you want to look) and don’t feel like doing it again right now. But, every single time prices have went up has been because of retail prices being near or below cost. Speedway proved on Friday why it doesn’t work why other people go up first. I also explained a week or so ago that you can’t compare Detroit prices to the rest of the State.

I’m not sure why you think there isn’t a shortage, but there is. You can’t shut down 25% of production without causing a shortage. The only question is how long it will last. If the info Patrick was finding on the lack of refinery status is correct, then it shouldn’t take very long to smooth things out.

Stations raised prices based on wholesale price increases of 40+ cents in a few days. The panic came from irresponsible radio stations spreading rumors of $5.299 – $6.009 in towns that were really in the $3.899 – $3.999 range. If you didn’t see lines, its because the rumors didn’t make it there. By 3 on Friday, every gas pump in my town had at least 10 cars in line.

My company is both a distributor and a retailer, and as a distributor (just like everyone else) all we do is pass on the changes we get from the oil companies along with our markup. I can assure you that the distributor’s profit is even smaller than the retailer.

Here is a couple links to info on Diesel prices:
http://www.eia.doe.gov/bookshelf/brochures/diesel/index.html
http://answers.yahoo.com/question/index?qid=20080723141656AABb9KZ

Second, government doesn’t care about us. Don’t hold your breath for Cox to take action. I live in the Detroit area and work in Lansing. Routinely, the price of gas goes up on Thursday afternoon in Lansing, but not around Detroit. I’ve pointed that out, with specific examples, to both the AG’s office and the Department of Agriculture, which is supposed to regulate those things. Neither agency responded to emails.

Third, there’s no shortage of gasoline, so why the price hike? If stations didn’t raise the price, consumers wouldn’t panic and start a over-buying. (Why do they do that anyway? It’s not like the end of the world is right around the corner. And most typical price hikes are 20-30 cents anyway, so how is this any different?) In the Detroit area, I’ve not seen any lines at stations, but the price is up 30-60 cents per gallon. If the supply is still there and the demand is the same, profiteering is the only explanation. Next week, when supply might be down because of the refinery interruptions, a increased prices might make sense, but not now. Any bets we see another jump in prices next week, too?

Fourth, I usually blame the oil companies for the obscene price hikes, and then the distributors. I’m sympathetic that station operators have a very small margin in the overall price of gas. I believe that’s part of why all filling stations in a given area have the same price–it’s set by the oil companies and/or distributors. How come no one can ever prove collusion here? Does all gas in Lansing suddenly jump a quarter on Thursday afternoon, regardless of brand? Why is that?

But, when individual stations (or brands) are noticeably different from others, then the profiteer is obviously the operator. Kind of like the Exxon station charging $4.199 per gallon yesterday, compared to the Mobil across the street at $3.999. In theory, they’re the same company, getting their supply from the same wholesaler at the same price! Yet one is 20 cents per gallon higher. The $6.55 BP station in the picture is in the “rape your neighbor” category. Where was this station so we can all never go there. I don’t care if their sign “malfunctioned.”

@Occasus
It’s not a supply and demand issue yet. It’s profiteering, plain and simple. I can see a dime or so because of Gustav, but nothing from Ike should affect our gas prices until next week. The only real issue is at what point(s) the profiteering is taking place.

Also, this is Michigan, where former Gov. Engler vetoed legislation to support mass transit in the last minutes before he left office, the two-faced fat pig! So, Detroit is the only major city in the US without any public transit beyond an incompetent bus system. Even frickin’ LA, with it’s massive freeway system and love of cars has rapid transit! The bus is not a legitimate option for most people. And, in case you haven’t noticed, the housing market is severely depressed, especially in Michigan. So moving closer to work is not a likely probability for most people. Is your head in some kind of hole in the sand, you ostrich?

@Figures
Yeah, the politicians are in Lansing. That’s why I’m surprised they don’t see the same funny business every Thursday afternoon the rest of us see.

@retailer
Do you have a source for your information on sending diesel fuel to Europe in exchange for gasoline? That’s the first time I’ve heard that as an explanation for high diesel costs. I’m intrigued.

It is possible that their sign was messed up. We had problems with one a couple weeks ago and and it was putting random numbers up when we sent the price, luckily we were only changing the last digit.

It is also possible that they were posting a high enough price to stop demand. On Friday we had to raise our prices from $3.899 to $3.999 at 4pm to attempt to stop stores from running out. But our lines went from 15 cars deep to 10 after. Stores that were at $4.199 weren’t empty either. I could see someone that was getting low posting a high price to make sure that they still had something to sell the next day.

I agree with the State that you need to have a receipt, taking a picture of the sign or even the pump (we’ve had displays go bad and get stuck on the wrong price) doesn’t prove anything. Regardless of if it was intentional or not, that station shouldn’t be punished if they were really selling gas for $3.999. If that was the correct price, that’s another story. But there still isn’t a gouging law that the State could enforce.

You don’t have to buy 10 gallons to get a receipt to prove the price. Just a drop of gas will give you a receipt with the price per gal on it.

Glenn is correct about wholesalers and retailers not having any control over what price that we pay the oil companies for. We have no choice but to pass on any increases that we get.

John: Diesel wholesale prices have already been artificially inflated due to the huge demand in Europe. They use a lot higher percentage of Diesel over gas in a lot of places compared to the US. The refineries have very little adjustment in how much of each product that they can make from a barrel of crude.

So we ship them diesel and they ship us gas. But the demand has been so strong over there that the oil companies can make a ton of money for any diesel that gets shipped over. So, they want to make good profit on anything they decide to leave here. Right now, nothing is getting shipped over to Europe, so there is some extra diesel. But, we did get an increase on Friday (I think it was 15 cents). So, retail prices will be going up some more.