b0b
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The revolution will not be televised.
Posts: 7803
Location: Battle Creek, Michigan
Joined: Oct 15 th, 2005
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Re: Interesting News Article Thread
Reply #39 - Jan 30th, 2006 at 12:04pm
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I'm not defending the oil industry (far from it!), but the thing to remember is that we really don't know enough about their financial status to take any concrete stance.
Let's say I make widgets. I can manufacture 100 widgets per year, and they cost me $1,000 to produce. I charge a simple markup of 10% on my widgets, meaning I market them for $1,100 and pocket $100 as profit.
Well, the raw material for my widgets (let's call it widgetanium) goes through the roof, so I have to charge more for them. Let's assume I can still only make 100 per year and I'm still selling complete out of stock. I now have to pay $2,000 to manufacture a widget. If I keep my 10% markup, I now sell my widgets for $2,200 and get to pocket $200 as profit. Is that wrong?
I don't think it's unfair of the gasoline producers to keep a static percentage of their wholesale cost of oil as profit. In other words, if they pay $1.00 to manufacture a gallon of gas, and want 10% profit, they can charge the gas station $1.10 to buy their gas. Likewise, if they pay $2.00 to manufacture a gallon of gas, I have no problem with them keeping their 10% margin and charging the gas station $2.20 to buy a gallon of their gas.
Likewise, I don't have a problem with the gas station doing the same thing. If they want an x% margin, all the more power to them. That's the law of supply and demand, right?
Sure, it sucks to get gouged at the pump, but that's capitalism folks.
-b0b (...doesn't like paying it either.)
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