On Thu, 28 Feb 2008 07:26:01 -0500, Wayne.B
wrote:

On Wed, 27 Feb 2008 22:02:46 -0800 (PST), Chuck Gould
wrote:

(Anybody daring to start an independent station will be unable to
purchase refined products at a favorable rate)

Nonsense. Refined products are openly traded on the commodity
exchanges. Go buy some, all it takes is the infrastructure to store
and transport the products.

Chuck's statement is partially true.

In Putnam, there are two independant full service stations - gas to
tires to engine repair and everything inbetween. In years past,
they've purchased their gas and diesel from the same distributor that
services Xtra Mart and Cumberland Farms. You paid a couple of cents
more for their gas, but they had smaller tanks and to use a tired
phrase, their gas was "fresher".

Now, they have to buy on the spot market which leads to higher costs
and pricing. They also have to purchase quantities for delivery based
on both of their needs - they are cooperating to meet the minimum
delivery requirements of the distributors.

It's the minimum delivery requirements that kill's them because of the
nature of their business - they don't have a consistent volume to
correctly predict when they will need gas to service their customers.

Another big issue in this that a lot of people miss is JIT (just in
time) inventory controls. The entire energy sector is based on JIT
delivery - which means that larger organizations which can track
volume (even to the hour) can schedule deliveries efficiently which
gives them an advantage over the independant. You would think that
this would be economically advantageous, but it's not favorable to
mediation of pricing because iventory is constantly being turned over
at such a pace that there are no ready reserves. That's the real
issue to me. When you have inventory reserve, that automatically
creates a down pressure on pricing - with no reserve, pricing
increases become almost automatic depending on demand.

Having said that, around here there are several independant operators
who have the system worked - Hi-Lo, Jack's and Hoodie's. Their prices
fluctuate seemingly hour-by-hour, but in general, they are 5 to six
cents cheaper than box stores, sometimes even more. All are run by
Mexican immigrants. :)