Fuel Prices

A buddy of mine that has a 1000 gallon tank called today. The wholesale
price of 100LL right now is $3.15 so we are going to wait a few weeks as
prices are coming down.



Ross Richardson wrote:
We just got a new load of fuel yesterday and the price jumped from $2.94
per gallon to $3.52 per gallon for 100LL. I will have to pull the MP
back a little more.

I've not studied the mogas market specifically, but most markets are
based on speculation, not current conditions. That basically means that
any benefit associated with the effects of Katrina are already built
into the price of gas. Its just like the stock market. When a company
announces a great new money making opportunity, you don't have to wait
for it to pay off in order to see the stock price go up, the stock
prices goes up right away on the expection (as long as investors see it
as realistic). This is call the "perfect market theory". As long as
everyone has the same knowledge base of information (something the SEC
tries to assure) markets will automatically price based on that fugure
information, not the current situation.

So, in short, I"m saying that any benefit of the end of Katrina to gas
prices has probably already been reflected in the market. It would be
interesting to see what fuel futures are selling for right now.

-Robert

"Maule Driver" wrote in message
om...
Matt Barrow wrote:
"Maule Driver" wrote in message
It's nice if your local supply keeps the price based on what they paid
rather than what they's have to pay to replace it. Our guys are doing
the former and I thanks them.

He might not have enough cash to replace it, gallon-for-gallon (unless
he's
really loaded which is unlikely) if the price spikes continue.

Then where would you be?

That's why it's 'nice' and I'm 'thankful'. If I was running the store,
I'd be charging current replacement price. But in this case, it's not
exactly a store, rather it's a community tank they are running like
they'd want it run for themselves.

That's what is so great about 'community' and being 'nice'.

It's great until it explodes in your face.

By the
same token, one of 'them' is parking in my hangar because he is a
neighbor and his new hangar is under construction. And I'm holding up
on some workshop construction in same hangar until he has a place to
hangar his plane.

Community.

Benevolence and being "neigborly".

"George Patterson" wrote in message
news:mS_Te.369$252.270@trndny05...
Matt Barrow wrote:

He might not have enough cash to replace it, gallon-for-gallon (unless
he's
really loaded which is unlikely) if the price spikes continue.

He may also run into another problem, though my crystal ball says he
won't. If
you buy a tank of gas at a peak price and index your price to the price
you
paid, you may be stuck with that tank if the price then drops. This
happened at
Lakewood airport two years ago.

If you paid peak for the new tank, but charged your customers pre-peak
prices, you're dead.

"Maule Driver" would love that, I guess.


--
Matt
---------------------
Matthew W. Barrow
Site-Fill Homes, LLC.
Montrose, CO

"Gig 601XL Builder" wr.giacona@coxDOTnet wrote in message
news:Yu%Te.27417$7f5.7148@okepread01...

"George Patterson" wrote in message
news:mS_Te.369$252.270@trndny05...
Matt Barrow wrote:

He might not have enough cash to replace it, gallon-for-gallon (unless
he's
really loaded which is unlikely) if the price spikes continue.

He may also run into another problem, though my crystal ball says he
won't. If you buy a tank of gas at a peak price and index your price to
the price you paid, you may be stuck with that tank if the price then
drops. This happened at Lakewood airport two years ago.



I've seen that happen. The best bet in a fluctuating market is to by as
little as you can while the price is high and as much as you can when it
is
lower. Since we don't know what the OP's tank and supplier situation this
may not be an option.

And if prices continue to escalate?

The problem we're discussing is charging pre-peak prices when you know your
replacement cost is going up substantially.


--
Matt
---------------------
Matthew W. Barrow
Site-Fill Homes, LLC.
Montrose, CO

"Gig 601XL Builder" wr.giacona@coxDOTnet wrote in message
news:Yu%Te.27417$7f5.7148@okepread01...


I've seen that happen. The best bet in a fluctuating market is to by as
little as you can while the price is high and as much as you can when it
is
lower. Since we don't know what the OP's tank and supplier situation this
may not be an option.


The best bet is to charge enough to cover your replacement, and if prices
decline, you can adjust your prices accordingly.


--
Matt
---------------------
Matthew W. Barrow
Site-Fill Homes, LLC.
Montrose, CO

Dan Youngquist wrote:

It's nice that they want to be nice, but if/when the price drops,
they're going to be in big trouble. No one is going to line up to buy
the expensive fuel they bought at the top of the market, and they'll
have to sell it at a loss. Whether the price is rising or falling, the
only way for the seller to come out even is to price according to
current replacement cost. They need to make a little extra money when
the price is rising, because they _will_ lose money when the price
drops. The narrower the profit margin, the more it hurts.

If they charge based on replacement, and if prices DO decline, they can
adjust downward their current costs (higher) against previously lower costs.
If they price current fuel lower, they completely remove any capacity to
move prices down.

It's simply a matter of thinking more than a day ahead, something so many
people miss.


--
Matt
---------------------
Matthew W. Barrow
Site-Fill Homes, LLC.
Montrose, CO

"Newps" wrote in message
...
A buddy of mine that has a 1000 gallon tank called today. The wholesale
price of 100LL right now is $3.15 so we are going to wait a few weeks as
prices are coming down.

How much reserve does he have, enough to wait out the dropping prices?


--
Matt
---------------------
Matthew W. Barrow
Site-Fill Homes, LLC.
Montrose, CO

"Robert M. Gary" wrote in message
oups.com...
I've not studied the mogas market specifically, but most markets are
based on speculation, not current conditions. That basically means that
any benefit associated with the effects of Katrina are already built
into the price of gas.

Speculation is based on trends forecasting, not disasters.

Its just like the stock market. When a company
announces a great new money making opportunity, you don't have to wait
for it to pay off in order to see the stock price go up, the stock
prices goes up right away on the expection (as long as investors see it
as realistic). This is call the "perfect market theory". As long as
everyone has the same knowledge base of information (something the SEC
tries to assure) markets will automatically price based on that fugure
information, not the current situation.

"Perfect Market Theory" has been debunked so many times over so many years
I'm surprised anyone still holds with it. Hell, von Mises debunked it back
in the 1920's.


--
Matt
---------------------
Matthew W. Barrow
Site-Fill Homes, LLC.
Montrose, CO

Matt Barrow wrote:
"Newps" wrote in message
...

A buddy of mine that has a 1000 gallon tank called today. The wholesale
price of 100LL right now is $3.15 so we are going to wait a few weeks as
prices are coming down.


How much reserve does he have, enough to wait out the dropping prices?


He's just a private owner with a Cessna 172 that he keeps on his 25
acres. He has a 1000 gallon tank to make refuelling less of a hassle.
If he runs out he'll just fly into town here and get gas.