TeeJaw Blog

Gas Station Price Sign From 1955

Posted in Government and Politics by TeeJaw on Monday, January 9, 2012, 9: 26 AM

This is the way price signs at all gas stations should read:

The retailer was making out a lot better in 1955 than today. The amount per gallon to the retailer is not much higher now than then, and 4 cents out of a total 20 cents per gallon is a 20% markup. That’s not profit because the retailer must pay its overhead out of that before realizing any profit. Even if the retail markup has doubled to 8 cents per gallon today, when the price is $3.00 the retailer’s share has declined to 2.6% per gallon. A retailer whose share of the total price tripled from 4 cents in 1995 to 12 cents today, and that would put that retailer on the high end of retail markup, would still only be getting 4% of the total price. The overhead for just the gasoline portion of the business could easily take all of that.

Gasoline is a loss leader today and that is why gas is sold almost exclusively at convenience stores. The profit from such a business is to be had from sales inside, not those outside. That’s why 1955-style gas stations no longer exist.

One thing is for sure. The government still gets the lion’s share of profit out of gasoline at any price level.


Who’s Making A Killing In Gasoline Sales?

Posted in Government and Politics by TeeJaw on Friday, April 29, 2011, 7: 45 PM

Well, let’s see. ExxonMobile maybe? Here’s what they say on the ExxonMobile Perspectives Blog….wait, what is this blog? It’s a blog by ExxonMobile that, as they themselves say it, “offers our company’s views on the issues, policies, technologies and trends that are shaping the energy industry.” This is refreshing. ExxonMobile is not going to hide under their board room table in abject fright of brutish politicians. They’re going to say what they think. It’s about time. Companies like ExxonMobile, which are not part of Obama’s crony capitalism clique [such as GE, BP, and At&T to name just a few] are standing up for themselves instead of making fools of themselves trying to appease gangster government.

For every gallon of gasoline, diesel or finished products [ExxonMobile] manufactured and sold in the United States in the last three months of 2010, [it] earned a little more than 2 cents per gallon. That’s not a typo. Two cents.

Two cents a gallon. That’s about what the gasoline retailers earn on each gallon of gasoline sold. Retailers complain of how little they make on gas sales, but Exxon makes no more than they do. That makes the retailers look like they’re doing well. After all, building and maintaining refineries costs about a million times more than buildng and running a convenience store.

So who is making a killing on gasoline sales? Here’s a clue:

Voila! It’s state governments that are making a killing with an average profit of 48 cent per gallon. That’s right, state governments are raking in a higher profit per gallon than any other economic player in the entire chain of exploration, development, extraction, refining, transporting and retailing, an endeavor by dozens of economic entities and individuals that through their combined cooperation transform crude oil a mile or more beneath the surface of the earth into gasoline in your tank. Who’s in second place? The Federal government with about 23 cents a gallon in taxes.

So Obama can’t reduce these prices by cutting so-called subsidies to the oil and gas industry [most of what Obama calls “subsidies” for oil and gas are just ordinary and necessary business expense the companies pay themselves and deduct from their gross income to determine their taxable income. The real subsidies go to such wasteful things as ethanol, wind farms, solar energy and other “green energy” boondoggles.] But he and other governments could reduce prices by giving up some of their own lavish profits.

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