Jeramie Posted April 4, 2006 Report Share Posted April 4, 2006 And that alone is a dangerous statement. I was at a local gas station pumping $38 of unleaded in my new car (2.47 a gallon) and I had a brain storm. I have no real intention of persuing it but it might make good conversation. Co-Ops are a cheap way to get utilities. A nearby town amazes me. My wife cousin and her husband payed $110 last month for their Electric, trash, water, cable internet, etc. That was literally everything. My Electric bill alone was over $200. It got me to thining, if we can have a co-op for services like that... what would keep us from having a Co-Op for oil, gas, etc? From what I hear we are buying refined products and having it shipped here ready to sale. If someone were to assemble a co-op with several communities and gas stations set up like Sams Club (Card carrying members) I bet you could really hack the price of gas for that club. I know that gas prices are regulated and are supposet to be within a certain % of one another but there may be a loop hole to a wholesale buyer using the product for their purposes (aka: Co-Op.). If you could get 20k+ people to pool together money for the product they could potentialy buy it far cheaper then pump prices. They infact would be paying wholesale import prices. Do you realize how much money our local oil companies are pocketing over our suffering from pricing? They are reporting record income and we are having to scrape bottom to fill up our transportation! Imagine how a co-op would change that entire market! Ok.... Converse... Quote Link to comment Share on other sites More sharing options...
bfletch7441 Posted April 4, 2006 Report Share Posted April 4, 2006 Re: I got to thinking this morning... That's a great idea, but a nightmare on the logistics of getting it set up. I'd buy in though if it meant cheaper gas prices. Ben Quote Link to comment Share on other sites More sharing options...
Guest Andrea Posted April 4, 2006 Report Share Posted April 4, 2006 Re: I got to thinking this morning... Sounds like that would work. Now you just need to talk to the right people. Gas is $2.69 here and only going to go up as the temps get warmer. Quote Link to comment Share on other sites More sharing options...
Guest Finn Posted April 4, 2006 Report Share Posted April 4, 2006 Re: I got to thinking this morning... I'd like to live near my family and just buy together with them to save a little. These prices are unreal! Quote Link to comment Share on other sites More sharing options...
Tominator Posted April 4, 2006 Report Share Posted April 4, 2006 Re: I got to thinking this morning... Why would a big oil company sell their gasoline cheap to you just because you're a co-op? I think the capital investment to set up a little co-op, especially the refining cost, would be too exhorbitant. I'll bet Rhino could give you a good argument too. Quote Link to comment Share on other sites More sharing options...
Guest Andrea Posted April 4, 2006 Report Share Posted April 4, 2006 Re: I got to thinking this morning... Well, have you ever noticed the difference in prices of the "little guy's " gas prices as opposed to say Chevron stores?? The big name gas stations get to sell their fuel at lower costs because they are buying so much. The "little guy" owns 1 store...so his cost is higher....therefore he must sell his gas at a higher price. The little guy makes very little on his sell of gasoline. Especially if the customer is paying with a credit card. But in order to attract customers to his store he HAS to sell gasoline. I heard all this on newsradio back when the gas prices started going thru the roof last year. Quote Link to comment Share on other sites More sharing options...
wtnhunt Posted April 4, 2006 Report Share Posted April 4, 2006 Re: I got to thinking this morning... Interesting idea Jeramie. Would be great if it could work, but am afraid it never would due to logisitics and the reason Chris mentions. [ QUOTE ] Well, have you ever noticed the difference in prices of the "little guy's " gas prices as opposed to say Chevron stores?? [/ QUOTE ] I have noticed here that chevron continues to have some of the highest prices along with amoco. Generally speaking, wal mart, krogers, and sams club here sell gas cheaper than their competitors. Quote Link to comment Share on other sites More sharing options...
Jeramie Posted April 4, 2006 Author Report Share Posted April 4, 2006 Re: I got to thinking this morning... [ QUOTE ] Why would a big oil company sell their gasoline cheap to you just because you're a co-op? I think the capital investment to set up a little co-op, especially the refining cost, would be too exhorbitant. I'll bet Rhino could give you a good argument too. [/ QUOTE ] I bet some of the overseas producers would sale if there were enough people involved. Its not that you would be getting it "Cheap." You would be paying market value but there would be no markup on this end (minus expenses). This would basically be a consumer based oil company! They are literally pooling assets together and purchasing oil the same way some companies do (I assume). Then its sold at Cost back to the members, minus the expenses. The middle man is gone and everyone saves. I understand this would take a large involvment by consumers (at first) but in the end it would work like Sams. You can buy gas here but you have to be a card carrying member. It has nothing to do with buying it cheaper then producers over here. Youre bascially buying it for the same money, youre just taking out the middle man. Again, this isnt something thats even realistic to me. I just cant help but wonder if something like this would work!? Quote Link to comment Share on other sites More sharing options...
Guest Andrea Posted April 4, 2006 Report Share Posted April 4, 2006 Re: I got to thinking this morning... Probably the only that WOULD work is a major boycott by the whole country. But no one is gonna do that either. Quote Link to comment Share on other sites More sharing options...
buckee Posted April 4, 2006 Report Share Posted April 4, 2006 Re: I got to thinking this morning... We have a co=op here and I have been seriously thinking about joining it. The prices are a bit lower than the pumps, but not much. The big difference is that at the end of the year, you get a percentage kick-back on every $100 you spend. Quote Link to comment Share on other sites More sharing options...
bfletch7441 Posted April 4, 2006 Report Share Posted April 4, 2006 Re: I got to thinking this morning... Looks like the Venezuelan President want's to do something about rising oil prices and the ever lacking economy in Venezuela: http://www.guardian.co.uk/venezuela/story/0,,1745707,00.html Ben Quote Link to comment Share on other sites More sharing options...
Canadian_Goose Posted April 4, 2006 Report Share Posted April 4, 2006 Re: I got to thinking this morning... If you cut out the middle man, all you are really doing is cutting out the guy who owns the gas station. Up those guys do not make that much money on gas, (4% mark up i believe). What we need to do is jack up our exports that these countries who are selling us oil, can't do without. Then we'll see how they like it. Quote Link to comment Share on other sites More sharing options...
Tominator Posted April 4, 2006 Report Share Posted April 4, 2006 Re: I got to thinking this morning... [ QUOTE ] This would basically be a consumer based oil company! They are literally pooling assets together and purchasing oil the same way some companies do (I assume). Then its sold at Cost back to the members, minus the expenses. The middle man is gone and everyone saves. [/ QUOTE ] Yeah, but oil cost is a world away from gasoline cost. Refining is the key. It's expensive to refine. I could see your co-op working if they would refine themselves. Quote Link to comment Share on other sites More sharing options...
Jeramie Posted April 4, 2006 Author Report Share Posted April 4, 2006 Re: I got to thinking this morning... According to one of the guys that works here (I now work for an industry fueled by oil), we are buying pre-refined product right now and haveing it shipped over. Thats why our refineries are only operating to a low percentage. If that is the case, that means that refined oil products are already available for import! It would take some looking into but if he is up to par (and he's been in this industry a long time) then its very plausable. Quote Link to comment Share on other sites More sharing options...
Rhino Posted April 4, 2006 Report Share Posted April 4, 2006 Re: I got to thinking this morning... The service stations where you buy your gasoline are franchises owned by individuals or other companies. I knew a guy here (he passed away about 5 years ago) that owned a lot of the Amoco stations in central Mississippi. These guys generally make somewhere between a 5 cents a gallon to 10 cents a gallon over their cost. The average retailer's profit is about $0.08/gallon. Gasoline, crude oil, and natural gas has been traded as a commodity thanks to Jimmy Carter. It used to be just subjust to the rules of supply and demand. Remember to thank a Democrat for that one. It's traded just like cotton, soybeans, cattle, gold, etc. The price is controlled by that market more and the factors that control it, not by the oil companies. Crude oil purchaser's prices fluctuate based on the futures market prices. Generally they are a $3 to $6 less than the futures price depending upon the location of the oil well. Every gallon of gasoline you buy has both a federal tax and a state tax already built into the price. We US citizens actually pay far less in government taxes than almost all other countries. The US federal tax is about $0.20/gallon. State gasoline taxes range from a low of $0.08 (Alaska) to a high of $0.4577/gallon (New York). There are also some cities that add in up to $0.20/gallon in local taxes. The taxes imposed on gasoline by many other countries are in the $3 to $4 per gallon range. A friend of mine recently came back from a trip to Europe and said he'd never complain about gasoline prices here again. He paid in the $7/gallon range over there. If you didn't already know, there haven't been any new refineries built in the USA since the mid 70's. Why? Because the environmental rules where changed that made it so expensive to build them nobody will. The older refineries were grandfathered in along with any improvements made to them. Actually our existing refineries are operating at as high a percentage of efficiency as possible these days to meet demand. I'm not sure where jeramie heard they are operating at a low percentage. What's refined from a barrel of crude oil (42 gallons)? Well you get about 19 1/2 gallons of gasoline after its refined. Other products include fuel oil, jet fuel, lubricants, kerosene, asphalt, and petrochemical feedstocks to make plastics. I won't even go into finding your own source of crude oil. A friend once asked me about investing in the oil & gas exploration business. I gave him the same advice given to me many years ago about how much you're willing to invest. That is...put as much money in your hand that you're willing to risk...drive down the highway and turn it loose...if you can do that and not feel too bad about loosing all of it, you can risk that much. Basically, drilling for new oil & gas reserves is high stakes gambling with a tax writeoff. It's a better opportunity than many others available out there to make a lot of money but it's hard to make a living and real easy to loose your shorts. There are far more loosers than winners in that part of the business. Basically, I've been pretty lucky in this part of the business and far less inclined to take risk now like I used to. I know many others that lost their shorts. Far more than those that even did just OK. If I knew then what I know now, I'd of taken a different path. Obviously a co-op could not afford to buy (nor want to) a refinery. That would leave you with securing a source of gasoline from an existing refinery at a price that fluctuates with the market conditions controlled by the commodities market. I found where the average cost to the retailer is also about $0.08/gallon. That's included in their cost. Basically the only savings I can see from a co-op would be the $0.08/gallon that the retailer makes unless the co-op can operate at less than the average retailer's cost of $0.08/gallon. If a co-op can save say another $0.02/gallon then you just might be able to save about $0.10 a gallon over what you pay at the pumps. Better keep great records though because the state and federal governments will be auditing the co-op to make sure they get all the taxes due to them. Any penalties for improper payment will sure make a dent in any savings. My guess is that's about what buckee would save as part of the co-op in Canada. Only thing is buckee's percentage of savings is worse due to Canadian government taxes. From a percentage of savings standpoint, a co-op makes better sense here than in Canada. That is if your satisfied saving about $0.10/gallon. Quote Link to comment Share on other sites More sharing options...
stevebeilgard Posted April 5, 2006 Report Share Posted April 5, 2006 Re: I got to thinking this morning... i've been a member of our farmers co op here for 35 years. gas is 2 cents higher. go figgure Quote Link to comment Share on other sites More sharing options...
Rhino Posted April 5, 2006 Report Share Posted April 5, 2006 Re: I got to thinking this morning... [ QUOTE ] i've been a member of our farmers co op here for 35 years. gas is 2 cents higher. go figgure [/ QUOTE ] I bet you are too Steve. Quote Link to comment Share on other sites More sharing options...
Tominator Posted April 5, 2006 Report Share Posted April 5, 2006 Re: I got to thinking this morning... See, told you Rhino would have a better answer. LOL. I'd say that question was right in Alan's wheelhouse, wouldn't you agree, hmmmmmmmmm? Quote Link to comment Share on other sites More sharing options...
Rhino Posted April 5, 2006 Report Share Posted April 5, 2006 Re: I got to thinking this morning... That answer winded me. Quote Link to comment Share on other sites More sharing options...
Jeramie Posted April 5, 2006 Author Report Share Posted April 5, 2006 Re: I got to thinking this morning... Lol, but thats exactly what I was looking for! Great answer bud! Btw, the information about the refinery comes from an inside source here at the office. We design and manufacture burners. A lot of these guys have been doing this all their life and they are pretty much in the know. One was telling me recently that we werent doing as much as we could to refine oil. We had a major rush in January on burners and he seems to think that many are planning to step up production....... Again thanks! That was good info! Quote Link to comment Share on other sites More sharing options...
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