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Thread: $5 a Gallon Gas
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01-21-2021, 11:25 AM #1Regular 1st Stringer
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$5 a Gallon Gas
Thanks Joe.
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01-21-2021, 11:57 AM #2Hall Of Fame Poster
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Re: $5 a Gallon Gas
But wildfires, flooding and hurricanes will stop. $5 per gallon is a small price to pay
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01-21-2021, 02:49 PM #4
Re: $5 a Gallon Gas
Since this is the Arkansas posting site ....can we post any source for this or is it propaganda ?
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Re: $5 a Gallon Gas
I know you're an economics guy so just want your insight here.
I've been telling people for almost a year now to buy Exxon. I've been buying it since the March dip and have quite a bit with an average price point of like $38. It's at about $48 now, and including the 10% dividend, I am quite happy.
However, I think my real profit is to come in the next few years. Even at $48 it is still half of its historic high; it's only about 60% of pre-pandemic levels.
I believe that Joe Biden is going to cripple American energy production, and I believe he is going to light the Middle East on fire, and I think Exxon is going to go back to recrod profits, just as they were in the aughts under similar circumstances.
Many people dispute this, telling me "that isn't how economics works." That under such circumstances Exxon will become less profitable.
So, what do you think?
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Re: $5 a Gallon Gas
I was fortunate that my contract with my electric supplier expired 2 weeks ago, so I was able to lock in a 3 year contract extension with them at a set price. so it's Biden proof. Gasoline, on the other hand, not so much.
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Re: $5 a Gallon Gas
Of course, higher base equilibrium pricing results in a greater ability to increase margins naturally due to the price point and thorough inflated pricing due to a high value commodity. Essentially the higher price point of an item artificial profit margins can be created. This is what is called the name brand effect.
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01-22-2021, 11:41 AM #11Hall Of Fame Poster
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Re: $5 a Gallon Gas
Sure sure, but the concept if an inflated price based on equilibrium remains the same.
The difference n price of if x is 100x more today versus last year, there is a greater ability to inflate the prices beyond that.
Think of it like this, a pencil may cost 10 cents to the consumer, lets use it for simplicity sake.
Production per unit/pencil may be 2 cents, distribution, convexity and shelving 5 cents per, so it may be essentially 1-2 cents per unit sold in profit. The small sale per unit point makes it hard to jump the price from 10 to 100c/$1 (excluding inflation).
If you extrapolate this out, the larger the unit per price, you will of course see a larger unit per profit. As the profit margin increase as does price (high demand lower supply) the ambiguity of the margins are greater but are ideally set by market conditions.
I hope this makes sense, I try my best to break it down to the easiest way possible to understand, I'm by no means perfect at this but if any more explanation is needed im happy to help.
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