Brilliant article and it should be required reading (with exams at the end) for all politicians, eco-warriors, etc. before they are allowed to opine on the subject in any way. As a life long participant in the oil and gas business, I simply cannot understand how those in power or those aspiring thereto have allowed themselves to be distracted from the fundamentals of the industry that supports modern life worldwide
Just learned of this stack. Well written compressive piece.
As for the mystery extra margin I have a hard time believing the professor is serious.
The refining margins are easy to see and they ebb and flow, the reduced number of players in the production of California spec fuels is obvious, but so are the significant and pervasive rules and regulations to opening/running fuel service stations.
From infrastructure and personnel regulations to local jurisdictions making it harder to operate. This leaves those with locations in similar positions with captive consumers. After the explosion the operators all recognized they could charge more lose some marginal amount of sales volume yet make significantly more money. Politicians can’t attack the “little guy “ , but the professor surely can research the obvious.
The lack of street competition has created a market where those operating can command much higher margins. Plus if, for example, someone is operating a site in Santa Monica the real estate cost, taxes and insurance are going to force them to charge a higher margin to make the business successful.
Average street margins have widened massively since 2015. Driving hordes of consumers looking for lower priced fuel, So much so that Costco has become the largest reseller of fuel while making upwards of 10x what they previously made, the loss-leading product has become a boon to their overall bottom line—mainly from California operations.
I’m not angry at the station operators. I’m upset at the bureaucrats that think there’s some realm of possibility Californians can walk, bike or take public transportation to the extent the bureaucrats fantasize about. The public service class are all trained in central planning and by definition competition is harmful, when it’s absolutely essential to forcing prices down.
Rather than tax the business man out of business they should deregulate the business man out of business, and in this creative destruction process help the consumer especially those in the lowest economic rungs just trying to live a purpose filled and simple life!
Coming from someone who's been involved with the California petroleum industry since 2002, this article was extremely comprehensive and accurate, not to mention well-written as well. Great job!
Brilliant article and it should be required reading (with exams at the end) for all politicians, eco-warriors, etc. before they are allowed to opine on the subject in any way. As a life long participant in the oil and gas business, I simply cannot understand how those in power or those aspiring thereto have allowed themselves to be distracted from the fundamentals of the industry that supports modern life worldwide
Just learned of this stack. Well written compressive piece.
As for the mystery extra margin I have a hard time believing the professor is serious.
The refining margins are easy to see and they ebb and flow, the reduced number of players in the production of California spec fuels is obvious, but so are the significant and pervasive rules and regulations to opening/running fuel service stations.
From infrastructure and personnel regulations to local jurisdictions making it harder to operate. This leaves those with locations in similar positions with captive consumers. After the explosion the operators all recognized they could charge more lose some marginal amount of sales volume yet make significantly more money. Politicians can’t attack the “little guy “ , but the professor surely can research the obvious.
The lack of street competition has created a market where those operating can command much higher margins. Plus if, for example, someone is operating a site in Santa Monica the real estate cost, taxes and insurance are going to force them to charge a higher margin to make the business successful.
Average street margins have widened massively since 2015. Driving hordes of consumers looking for lower priced fuel, So much so that Costco has become the largest reseller of fuel while making upwards of 10x what they previously made, the loss-leading product has become a boon to their overall bottom line—mainly from California operations.
I’m not angry at the station operators. I’m upset at the bureaucrats that think there’s some realm of possibility Californians can walk, bike or take public transportation to the extent the bureaucrats fantasize about. The public service class are all trained in central planning and by definition competition is harmful, when it’s absolutely essential to forcing prices down.
Rather than tax the business man out of business they should deregulate the business man out of business, and in this creative destruction process help the consumer especially those in the lowest economic rungs just trying to live a purpose filled and simple life!
Awesome analysis of the situation- really well written and thoughtful.
That’s easy for you to say, Mr. Green Leaping. Just kidding.
Incredible deep dive! Thank you.
Coming from someone who's been involved with the California petroleum industry since 2002, this article was extremely comprehensive and accurate, not to mention well-written as well. Great job!