Northeast Fuel Prices

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Ugenetoo
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Northeast Fuel Prices

Here in North Maine, gas prices are at around $2.25/gal, which has steadily come down since crude oil started tanking about a month ago.
On road diesel hovers somewhere around $3.10/gal, dropping a mere $.20/gal, while gas has dropped over a dollar/gal.
Heating oil has only dropped the corresponding $.20/gal along with on road diesel, averaging $2.85/gal.
JohnW.
Please explain to me why this is not taking advantage of a captive market, i.e. price gouging.

Cheech
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I think it is a matter of

I think it is a matter of wanting to sell off existing owned inventories at the higher price. In my area a September delivery I got is still 20 cents less than the current cash price. Simply put, WE, not the dealers are going to eat the price decrease.

Economike
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Oil refiners try to

Oil refiners try to anticipate demand for various oil products. When crude becomes gasoline, that means less heating oil on the market, and so on.

Predicting demand isn't an exact science. For instance, following an unusual cold snap heating oil prices rise even though many oil suppliers are competing to sell oil.

JackStrawFromWichita
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I wonder if the heating oil

I wonder if the heating oil issue has to do with what happened last year.

People got complacent and figured they could wait until a few days before they ran out to order and just bought the 100-gallon minimum. Then we had a lot of snow in December slowing deliveries down and a really deep/long artic air cold snap in January resulting in a heating oil delivery “crisis”.

So, made this year people filled up in advance driving up early demand.

I note the forecasts for Friday, Saturday and Sunday in Portland has highs hitting 40+ and the longer-term forecasts don’t show any artic air blasts in the next two weeks. If so, demand could fall way off and prices tank…

Bruce Libby
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A thank you to Ugenetoo for

A thank you to Ugenetoo for posting something directly related to Maine .
Lowest gas price I have seen has been at Cumberland Farms store at Brunswick, Cooks Corner , 2.07 a gallon !

Matt
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What’s wrong with price

What’s wrong with price gouging?

If you don’t like the price of oil, heat your house some other way. It’s a free country.

Economike
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Wow. I find myself agreeing

Wow. I find myself agreeing with Matt! (Does that make Matt a dink by association?)

The problem with "price gouging" is that it's indistinguishable from profit-seeking. If I had the last generator for sale during a power outage why shouldn't I sell it to the highest bidder? How can I otherwise know who needs it most?

And - also agreeing with Matt here - there's a similar problem with "captive market." Sure, lots of people need to buy heating oil, but many others can find ways to subsitute. Everyone needs food too, but I don't hear people complaining that profit-seeking Hannaford engages in price-gouging.

Al Amoling
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"but I don't hear people

"but I don't hear people complaining that profit-seeking Hannaford engages in price-gouging." I haven't complained about their gouging for years since I started shopping at Market Basket.

Ugenetoo
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Personally, I have changed

Personally, I have changed heating sources to the point where I can pick and choose what I buy for heat, and right now am burning pellets.
While remotely feasible, it's pretty hard to get a 500 HP tractor trailer started with either pellets or firewood.
These trucks have no choice, and in the end, the good old consumer gets to pay the bill, especially the disadvantaged that are forced to pay the extra $.40 or so for straight kerosene.l.
A $1 differential between gasoline and diesel is nothing more than price gouging in my book.
Inventories be damned.... if we were on a crude price upswing, gas prices, along with diesel would be climbing at the same rate, as it always has.
How hard can it be for the four sea transfer companies to get together and set these prices?
We all know they do it.

Ugenetoo
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Dollar General is taking a

Dollar General is taking a good chunk out of Can'tafford's gouging practices.
Reportedly, one of the owners of an associate store was heard saying that they were going to have to do some "price restructuring".LOL
I am all over the state during a month's time, and see what prices are.
I like Market Basket, as well, but don't get down there enough.
Shaws is my go to store for just about everything.
Save A Lot has good sales, but no produce to speak of, and no seafood worth buying

Matt
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Oil companies are profit

Oil companies are profit-seeking businesses. They can charge whatever they want for their products. If you don’t like it, walk. Or don’t buy the stuff that’s moved OTR with trucks.

Economike
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Oil companies are profit

Oil companies are profit-seeking businesses. They can charge whatever they want for their products.

Well, OK, they can quote any price they want. But if they're going to make a profit, they'll have to charge a competitve price, won't they?

Unless, as ugenetoo claims we all know, the big oil carriers conspire to set prices.

.

BlueJay
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Unless, as ugenetoo claims we

Unless, as ugenetoo claims we all know, the big oil carriers conspire to set prices.

For what other reason do the cartels exist?

Ugenetoo
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There is no competition.

There is no competition.
The Maine oil dealers Association lobbies the legislature on behalf of a small handful of big bulk oil distributors to keep them in the drivers seat when it comes to setting prices.
Government, as usual is not carrying out their prime directive as outlined in the constitution, which is to keep people from stealing from each other, probably because someone or other in the legislature is getting greased.
If you don't believe these companies set prices among themselves, tell me why gas prices are always, and I mean always, $.10 higher in my town than 15 miles south of here.
It sure isn't the station that is making that extra ten cents.
There's nothing wrong with making a profit, but when situations exist that should be contributing to prices going down, and yet they don't go down, don't tell me that isn't price gouging.

Economike
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So, Ugenetoo, which entity is

So, Ugenetoo, which entity is your price-gouging villian? Is it the Maine Oil Dealers or the big high-seas oil carriers?

It's not difficult to imagine a scenario in which retail gas prices are always a dime higher in your town. For instance, is your town on the Canadian border?

It's easy to find examples of imperfect competition, because no markets are perfectly competitive. But to say "There is no competition" is to ignore reality. Do you really think that oil dealers can charge any exorbitant price?

Bruce Libby
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A related question ,is there

A related question ,is there any oil company owned gas stations left other than Irving in Maine ? Producers and vendors both.

Ugenetoo
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Not near the border.

Not near the border.
The Maine Oil Dealers Association IS the major bulk oil distributors, of which there are about five.
Petroleum is delivered to Maine in Bangor, by barge to Colebrook Energy in Hampden.
Oil is delivered to Searsport at Sprague Energy.
Oil is delivered to S. Portland at Sprague Energy.
Oil is also delivered by tanker truck and rail cars, all ,(oil, trucks, and railroad) owned by Irving from St. John NB.
Additionally a small amount of oil is hauled from Portsmouth, NH, and the Boston area.
All this petroleum is handled by about five companies that in turn either sell it at retail in their own stations and delivery systems or wholesale it to smaller distributors or stations.
Five companies control the price of oil in Maine.
People have a certain amount of flexibility when it comes to using gasoline as they can choose to not travel as much when the prices are high contributing in a certain amount of downward pressure on prices.
Gasoline is distributed at retail by a large number of stations, which also contributes to competition.
When it comes to transportation fuel, however, that wood, those potatoes, and any other products made or sold in Maine, have to move.
These five companies are well aware of that.
Transportation fuel has an affect on heating fuel, as they are essentially the same product except for the "winter blend" used for transportation fuel, both on and off road, so, high diesel prices at the pump translate to high heating oil prices at the home tank.
We are being gouged, folks, and more than likely, your legislators are in on the deal, whether they know it or not.

Ugenetoo
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Bruce

Bruce
Here are a few:

Dead River Co,
Circle K, owned by Couche-Tard, a Quebec based convenience store operator, in partnership with Irving Oil.
Dysarts Part owner in Colebrook Energy.
DOCs Daigle Oil Co. Part owner in Colebrook Energy.

Matt
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Ironic. Couchtard was Bruce’s

Ironic. Couchtard was Bruce’s nickname in high school.

BlueJay
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. . .,is there any oil

. . .,is there any oil company owned gas stations left other than Irving in Maine ? Producers and vendors both.

Isn't CN Brown an independently owned company? Big Apple stations are all over southern and central Maine, as far north as Greenville, but I don't know how much farther north than that.

Toolsmith
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And now we know who was a

And now we know who was a schoolyard bully... and still hasn't grown up.

Ugenetoo
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Toolsmith

Toolsmith
It's been said that into each life, a little rain must fall......

Bluejay
That's right.
CN Brown....Big Apple
AE Robinson has 10 stores

I don't know all the principals in Colebrook, or Sprague Energy, but I suspect the five or six major players that I'm aware of, all share ownership.

Economike
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It's intuitive that fewer

It's intuitive that fewer competitors within a market increases the likelihood of implicit collusion. It doesn't follow that there is "no competition."

Bruce Libby
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Thank you folks for the

Thank you folks for the answer to my question.

Matt I will gladly be a couchtard vs. being an asshole Smegma POS.

Ugenetoo
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Economike

Economike
So, what would they implicitly collude to do but eliminate competition?
The way you're dancing around this subject, it appears you might be a petroleum company bean counter.

Economike
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Ugenetoo -

Ugenetoo -

Of course "collusion" implies cooperation in raising prices higher than would prevail in perfect competition.

However, imperfect competition is not "no competition."

Ask yourself, What keeps oil dealers from raising raises to four or ten dollars per gallon? They could if there were "no competition."

Here's another puzzle for you. Gas prices are higher in Maine towns along the Canadian border. Is that because border-town gas stations are less competitive? Why or why not?

Ugenetoo
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Gas prices are higher along

Gas prices are higher along the Canadian border because these big suppliers charge more for the product when delivered to the dispensers.

One only has to talk to an indie dealer to find out the why.
Those guys are not making any more money on a gallon of gas than the dealers farther away from the border.

The reason people will buy that higher priced product is because petroleum prices are considerably higher in the Provinces.
it's a great deal for the Canadians to come here to fill up and buy a few gallons of half priced milk.
Not so much for the people that actually live there.

Economike
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Got it!

Got it!

So would you say that there's "no competition" in Maine generally and "less than no competition" in Calais and Fort Kent?

Ugenetoo
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I would say that there is

I would say that there is pretty good chance that a small number of companies are colluding to keep prices, especially diesel and heating oil prices, higher than they should be in a down market.

johnw
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Over a decade ago Gray,Gray

Over a decade ago Gray,Gray and Gray a prestigious CPA and business advisory firm was telling oil companies that they needed a $.50 gallon margin over cost and transportation to survive. Over a decade ago!
Many companies, for many years operated on less believing they could survive on volume, but heating oil consumption in Maine has decreased over 300 million gallons since 2000.The pie hasn't gotten any bigger....
Most companies for example absorbed the cost to credit card transaction, which average about 2% so on a $2.50 per gallon sale it's $.05.
Trucks have gone from around $95,000 to about $145000an LP bobtail for around $165,000 heavy truck mechanics about $85 per hour , that's if you can find one that isn't swamped. Tires,parts and fuel up ,up and away.
On the LP side the cost of steel tanks has literally doubled in the last five years.That 120 gallon tank on the side of your house is just about $500 excluding the regulator and cooper lines , blocks and pigtail..... The amount of training required to field a competent technician has increased and CEPT classes have quadrupled in price. That LP service truck with a crane they are driving, $110,000 or more just a regular service truck with a lift gate $65,000. Transport trucks $200,000+++
The cost of insuring rolling stock anything with wheels and hazmat on it has absolutely exploded, insurance companies simply don't want to take on the risk of large spills or accidents involving CDL drivers and hazardous material. How much do you think the recent accident , spill and ensuing fire in Belgrade will cost??Hundreds of thousands and if the oil company is found at fault, their rates skyrocket.
The cost of upgrades to bulk storage facilities to meet ever in creasing environmental regulations has been staggering for many companies. The cost of cleaning up even a small spill can run into the thousands and big spills tens of thousands.
And then there is labor..... what to f do people think happens when the minimum goes up ? That CDL drivers are just going to sit there and not demand more money? The average pedal truck driver in Maine is probably making around $18 and hour plus benefits....In southern Maine it's closer to $22.
These guy are in high demand not just by oil companies but everyone who is hauling freight.
And let's face it the oil business is a seasonal business , there's about four -five months when there's plenty of business but the other seven …. And it's not like years ago when you could just lay drivers off , you need to keep those core drivers on the payroll year round and that takes money...And the stringent qualifications for drivers makes them at even more of a premium....Their wages aren't going to get cheaper.
And those lovely customer service people and office managers aren't working for free either .
So outside of Portland and Brewer where oil peddels don't have to own and maintain a bulk plant , the number of dealers has decreased . They couldn't survive the overhead, simple economics. Their customers flowed
to the survivors , bigger companies with more viability, so naturally there are fewer choices.
So all of that said and I could say a lot more oil and Lp are still the best choice for most people here in Maine to heat there homes.
As the glut of oil and Lp grows I fully expect the retail market to drop unless something unforeseen happens like the northern tier of the country dropping into an extended deep freeze and demand exploding.I can assure those who believe that price fixing is something that goes on between the companies that they are sadly misinformed .
If the dream of the green energy crowd come to fruition , consumers will look back on the days of $3 a gallon or les oil with fond memories, they will look back on having choices for fuel providers when they get pissed off at CMP /Ibordella or Unitil ,with fond memories as well.
There still plenty of family owned oil companies around some big , some medium and plenty of small ones ….still keeping people warm still providing good paying jobs , still paying taxes, still fighting the battles in the legislator to give consumers choices.
And you know profit is not a dirty word …..people shouldn't be in business for the exercise , that's the socialist mantra...
As many here are fond of saying "what's a fair share?" in the same vein what is a fair profit for anyone who invests the time,energy, capital and is willing to take on the risks and headaches of being in the petroleum business...…? How much?

Ugenetoo
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I fully understand all of

I fully understand all of that,.
My question to you is why has on road diesel fuel stayed steady at $3 to $3.25/ a gallon on a down crude market when gasoline has dropped by $.75/gal?

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