Fuel prices rise in SEQ...supply and demand or profiteering ?

That is absolutely correct, and would be a good example of the fundamental economics equation of demand/supply/price at work.

It would also have meant that we would be seeing investment in alternative energy sources, something that is almost non-existant at current oil prices.


Cheers

Landy, perhaps. But at what point does supply and demand become profiteering?

I don't think the refinery in SA (Port Stanvac) will be reopened as this is to be the site for the desalination site being built.

"But at what point does supply and demand become profiteering?"

Good question Jim, the level of profit being declared by companies when its all washed out is not reflecting excessive pricing of fuel at the retail level.
So where is the definition of "Profiteering"actually occurring??
At the retail price or on the bottom line of the P & L after all the costs are washed out???
In this instance Caltex cannot be accused of "Profiteering" as its losing money hand over fist despite the retail prices being charged.

Actually it's $39.55 ATM.

John, good point but the other companies were selling lower before the refinery shut down. So unless they were all getting fuel from the Caltex refinery.....

That would be a reasonable excuse if that was the case , thing is the prices rose before any such delivery.

As discussed in thread No 64416 the oil companies buy from the closest refinery to save transport costs.

The Caltex refinery would be simply supplying all servos in the area.

Axel, How do you know that to be the case??

How ? Shortage of fuel at local servo , no delivery yet price rises , the old cry of supply and demand / market forces does not wash very well ,, explain how taxis have just been given a fare increase when the cost of fuel has decreased ,,,,

So the weekly discount cycle had nothing to do with it??

The possibility that the servo had stock being sold at discount prices due to lack of demand and now that a shortage is in effect the servo ups the price to cover the discount losses of the previous period??

The oil business is just not that simple and is subjected to so many variable influences that its difficult to base any judgment on a single days price fluctuations.

Thats why the ACCC monitor prices over the longer term to watch the average and track it against crude prices and exchange rates to provide a clearer price perspective.

John your a dreamer , yours+landys+jumbos catchcry of supply and demand/market forces does not wash with the general public ,,, example A: taxis fare increase due to higher fuel costs ?
B; Fuel surcharge by airlines due to higher fuel costs?


Ok now John tell us all why these two instances have not been adjusted with the lower fuel prices , or how a fuel company can dictate the price of its product AFTER it no longer owns that product IE: the fuel in the servos storage tank that has been paid for.
One of the biggest discount schemes in Australia is perpetuated by the main stream breweries , yet they have no controll over the final price that any publican wishes to charge for any product , they [the supplier] dosnt care if the pub sells 1ctn at $5 profit or 10ctns at .50c profit as they have no legal control over the goods once paid for ,,, tell us why a fuel company should be any different.

It is a big country and we need fuel . They are ripping us off and there is nothing anyone can do about it .

Fuel companies cannot dictate retail price to independently owned retailers, that is illegal.

Fuel companies can, however, set prices for fuel in servos that they own, much in the same way that breweries can set beer prices in pubs that they own.

Not sure if I can put it any simpler than that.

Axel, I’m assuming you are like most and show no brand loyalty when purchasing fuel, but simply opt for the cheapest that you can find conveniently located to you.

Imagine two retail outlets side by side and let’s call the first one Caltex and it had a delivery a few days ago at a higher price, the other, we’ll call it BP, had one yesterday but at a lower price. So this means that BP can sell its fuel at a lower price than Caltex, but still turn a profit.

The Caltex bloke either matches the price and sells at a loss (remember it paid more for its delivery) or it keeps the price the same and sells none – remember the BP has cheaper fuel, why would you pay more from the Caltex bloke next door.

In this instance one of two things will happen, the Caltex outlet will get pricing support from Caltex, thus enabling a reduction in price or BP will match his price higher with the Caltex.

This isn’t rocket science, if it didn’t happen you wouldn’t have anyone willing to sell fuel – the consequence of which would mean your Fourbie would be sitting on blocks at home.

As for the Taxi industry and airlines, I’m sure there are many other costs involved other than fuel, but I’m no expert there and I’ll let them argue their own case.

Regards, and good luck out there…..

They can also engage in supplying their own fuel outlets at a price below that of smaller operators. Later on, they can raise the price back to the non "discount" price, and of course any smaller outlets left will follow to recoup some profit.
Let's have a look at the weekly price fluctuations. How come every servos fuel tanks are empty by say, Monday, when they all receive a tanker at once ? Amazing. The new stuff is bought and sold at a premium until by say Thursday the demand has once again slumped? But there have been no new deliveries at a lower price.
How many other businesses could engage in this kind of artificial variation and get away with it ?
Would it not be more honest to advertise cheap fuel on certain days?
What about the so called 8c a litre that Qld motorists are supposed to receive? I have never seen such a price difference between SEQ and, say , Sydney. So where's it going ?
You can excuse almost any behaviour of this kind by using the supply and demand theory, methinks :))

Breweries that own hotels however cannot increase the price of stock already held which is what fuel companies do on a regular basis , I have NEVER EVER said that the price of fuel is overly dear in Australia ,, the problem is the price fluctuation on an essential item that effects each and every process of living ,, as I asked above Jumbo "have You decreased the price of your products to reflect the cheaper fuel costs ? "'Pink pigs still flying overhead.

Footloose….

Simply, consumer behaviour towards purchasing fuel has commoditised it. You don't care who makes it, supplies it, or sells it. You just want the cheapest price.

On this basis the price will fluctuate continuously, it has nothing to do with how much or little is in the tanks.

Mind you, here is an alternative. Let’s say you are only able to buy fuel at your local retail fuel outlet, based on postcodes. The tanker delivers fuel and the operator posts his price which he sells it at until he runs out and gets a new load. Regardless of what others are selling it for, this is the price you pay. Would you be willing to do this, or would you prefer to go to the cheapest all the time?

Unfortunately such a proposition doesn’t take account of the fact you may be away from home and need to fill up elsewhere – see what a minefield it becomes.

Landy, brand loyalty comes at a "price" that at a guess 99% of the fuel buying public now cannot afford to follow for the simple fact that the price variation has been manipulated to such an extent that the brainwashing has worked , IE: .04c a lt off the pump price with a brand voucher + another .04c off pump price IF you spend $5 in store on an item that is marked up 50% on normal retail price anywhere else ,,, and why would there be brand loyalty when the same tanker delivers fuel to different branded servos albeit at different prices.

Most companies will increase the selling price of stock already held when advised that they will be subject to a price rise on the next order.
If you don't shift up immediately to cover the increased price you will not be able to replace stock to the current level....In short you are losing money.
The converse principle applies, if you have paid a higher price for the stock and the price falls you either hold your price to cover what it owes you or you cut it and loose money on the return.

Like so many others, Axel your so one eyed about the effect of market forces its a waste of time trying to provide you with the facts of the matter as they are.

The retail and refining end of the oil business commands razor thin margins so prices will always remain volatile to try and maintain an average price margin.
The Hotel and Liquor industry (As one example) has better margins than petrol so it will always maintain a stabler price point.

None of the Oil majors are owned by any one individual, they are publicly traded and owned by many thousands of individuals like you and I either directly or indirectly.
(Just have a look at the portfolio of your super fund, I would hazard to guess that Caltex will be one company owned by the fund)
If the industry was ripping us off to the extent that huge /vast profits are being made as you keep implying, then where is the money???
Its not reflected in the accounts and dividends to the extent that you may think.

Do your own research, its all out there to inform you if only you care to open your eyes and look and learn.

Axel

You've discounted the facts constantly, despite clear and consie explanations being given. I have no problem with that, except how about you now give us your remedy to correct the situation. I've asked you before and do so again now. What is your remedy?

Remember, opinions are like dollar coins, not worth much.....some facts and workable solutions!

Cheers

I was once advised

"Never argue with a fool, they'll drag you down to their level and defeat you with experience"

On that note, farewell.

"The retail and refining end of the oil business commands razor thin margins".
Because of the Supply and Demand Principal ? LOL

I had a mate who owned a servo in a country town. Those "razor thin margins" enabled him to pay off a 1million dollar loan over 15 years.
Some razor !
Sure he had to work his butt off. But who doesn't ? Certainly it was risky but what isn't ? He loves the petroleum business. As he said, "love the smell of diesel...it smells like money."

I am not suggesting that all operators do as well, merely that it's been done.
I have also heard stories of servo operators going broke. The stories usually involved the big fuel suppliers in some way.

BUT is it any wonder that the public are sceptical when fuel pricing is such a murky business?
For years we whinged that some CEO's were being overpaid, and now it becomes clear that in many cases they were. And, in some cases, still are.
Our gut feelings told us that despite being better off than ever, some were heaps better off than others.
We KNEW that Wall St was corrupt and that insider trading was the tip of the iceberg...we just didn't realize how big that iceberg was!
For years we complained about the lack of transparency in Govt dealings, and we were right.
For years we complained about crime, corruption and business and Govt...and look what has come out of that.

And now we are being asked to believe that all is well with the fuel industry?
Anyone having difficulties swallowing ?? :)))

Landy FACTS .1. Price of fuel in Australia goes up and down like a yoyo. 2. Price of fuel affects each and every body in Australia. 3. Current price drop is not concurrent with the excuses given when price increases.[ public told constantly by oil companies that each $1 increase of barrel price = .01c at pump ,IE; barrel was $147 pump was$1.50 odd] . Fact 4 . Govt income from fuel only varies from gst on total price not literage excise . 5 Basic regulation can solve the fluctuation just as it does for a myriad of other essential products..

Fact 6 . evey time there is a disscussion on fuel price/supply you bring forth the mantra of supply = demand = market forces ,, how about the fact that Greed has put the world into a depression ,, greed by oil companies , it costs NO more or LESS to get the barrel of oil to the end user on a daily or weekly or even monthly basis ,, so ended the FACTS.

Footy,

Workable solutions, rhectoric wwill fix nothing!

The only workable solution that I can think of off the top is more transparent Government regulation.

Footy ,Landy wont come into that , hates the thought of a fuel watch , could affect his profits,

Hi Axel

Plenty have argued that FuelWatch is anti-competitive, including an independent and unaligned government Senator. The Chief Executive of Woolworth’s has highlighted that the most profitable state for Woolworth’s fuel sales is West Australia due to FuelWatch. The head of the Independent Service Station owners Association has argued that FuelWatch would sound the death-knell for independent service stations and I have no affiliation that will affect me one way or the other with respect to government regulation other than the price I pay for fuel at the pump! My blog on the subject follows...

Similar to Footloose, your comments contain plenty of rhetoric, but no solutions. You can continue to pick the facts apart – that’s fine, but if you don’t like the current system tell us what you want. And yes we can all argue that greed is the root of all evil – but how do you want to fix it?

On greed….the rest of the world may very well use the same arguments against Australia when it comes to the price we receive for coal, wheat, iron ore, uranium, copper and the list goes on. After all coal is just a lump of fossil fuel that until recently was yielding around AU$200 per ton versus about AU$25 per ton a few years back and the cost of getting it out of the ground probably hasn’t changed significantly.

Australia’s prosperity was built on the back of a merino a couple of centuries ago and has continued because we are a country rich in the resources that the world wants and due to the prices we can extract from the rest of the world for them. Are you suggesting we all lower our standard of living and sell off the backyard cheaply? – I’m sure that will be a popular suggestion.

Be careful of what you wish for!

FuelWatch - So just who will be better off?

With less greed wouldn't the whole planet benefit? If we lowered our prices for raw materials then their products would become cheaper...philosophically speaking of course.
I think one has to differentiate between being greedy and wanting a "fair" return.
An old price setting mantra seems to have been "squeeze em till they yell enough". Perhaps that's what we're doing.
Not just the oil guys. The banks, the multinationals etc.
I'm sorry but the free market system appeared to have failed us.
Less Govt regulation has failed us.
And while failing most of us, a few individuals have profited enormously.
But Communism failed also. Hmm.....
What about using the Macdonalds dollar system where the price is the same in everyone's currency? Just adjust for freight costs. Now there's a totally non capitalist idea! LOL

Landy enough is enough , you cant seem to grasp the point , no one would give 2 seconds thought to the price of fuel if the price was consistant , because of the fluctuation every single item that you use / buy / eat and consume varies in price ,, the mantra that you subscribe to of supply and demand + market forces for fuel is flawed for that reason , no one cares if the price of an item rises due to a natural/seasonal process of supply ,oil is a product that has NO natural/seasonal supply issues , the powers that be turn a tap ON/OFF for no other reason than increased profit.

Well I'm not sure about that (grapsing the point!)....I guess I just want to know how you are going to make the price "consistant".

I understand fully the impact of changing prices, but how do you fix it? Because as I see it if we say get nicked we are no longer willing to pay the price you want for your oil; they say fine and tell us to run our cars on something else we can supply ourselves and they sell there oil to someone else at the price the market is willing to bear.

Meanwhile, we are called a bunch of hypocrites as we demand full price for our commodities.

Happy to call it quits....again!

Cheers, The Landy and my offer for a beer stands....cheers

Fishing he may be , still hasnt answered if he has dropped his prices in line with the drop in his fuel costs. ,,

Axel,

LOL it's getting to the point now where posters are even sweating on battery prices dropping. Now there's an item you buy regularly, auto batteries :)))

Well Gramps, you see it's all a matter of supply and demand.

Oh and dont forget "market forces" ,

LOL the good bit is you two will be bitching about fuel prices and ripoffs until the day you finally kark it. It won't change, in your eyes anyway :)))

Al, that doesn't necessarily make any of us "wrong", it merely shows which side of the fence we're standing on :))

The Jim that Al was referring to was Footloose.

Now when you answer my question as to how you got on with CASA (that I asked ages ago), I'll do you the courtesy of responding to you.

Jim ( Footy ),

Did'nt mention anything about right or wrong just an observation regarding the futility of the discussion. If this Forum banned posts about fuel prices it'd lose half it's traffic LOL

Al, I though about posting, asking that the thread stopped but the guys were having too much "fun". As was I, I suspect.
But I do wish they'd all play nice. (I want to feel the Luuuve;)
Frankly, the post was a serious attempt at eliciting some info and viewpoints. I achieved that and in the process probably bored everyone to death (as usual I hear you say).
Make no mistake, I respect everyone's viewpoint, even if I have played devils advocate from time to time.

Now Footy, you know me better than that. Consider the possums blended somewhat.

Was $76 a ctn of 24 at Rabbit flat r/house end of May this year ,, made his Diesel at $2.51 a lt look real cheap ,lol,,

$54 a carton ? Heck, that will eat up Keven's Xmas present to the locals at a great rate of knots :))
(And like many other self funded fools I didn't get a foot in the door...as usual ..Xmas? Bah, Humbug! :)))

Axel

At $76 a carton, maybe I'll just buy you a tank of diesel instead of a beer, I'd be cheaper ;)

Landy