People mad at high gas prices are mad about a reduction in gas prices | Hour 2

What's going on? Thank you so much for listening to this podcast. It is heard live every day from noon to three on WBT radio in Charlotte. And if you want exclusive content like invitations to events, the weekly live stream, my daily show prep with all the links, become a patron, go to the Pete calendar show.com. Make sure you hit the subscribe button, get every episode for free, right to your smartphone or tablet. And again, thank you so much for your support. All right. So to continue on with the, uh, gas tax suspension signed into law today by governor Josh Stein, Minnie Cooper. Um, he did this, uh, as a campaign event for one Jamie Ager, who is running, uh, for Congress out in the 11th district in Western North Carolina. And they did the signing at Jamie Ager's farm called Hickory Nut Gap. And, um, They talked about how this is not enough. We need to do more about affordability, blah, blah, blah, blah, blah. Now, I got a great message here. Oh, where did it go? It was from Daryl. Where did it go? Where did you go, Daryl? There it is. Daryl pointed out, ask Jamie Ager the price of a pound of ground beef from his Hickory Nut Gap Farms store. $ 13 for 80% lean grass-fed. Yeah, that's the sale price, by the way. The regular price for a pound of beef at Hickory Nut Gap is $ 14 a pound. And the average price of beef in the state of North Carolina is anywhere from $ 9 to $ 12 a pound. But tell me how you're going to make everything more affordable for the working man. Mr. Millionaire, dynasty family, you know, political dynasty family, eggers. Tell me again, like you, you have the solutions. You can make this happen. You know, all about the toils of not being able to afford a $ 14 pound of, of, of meat. Ozzy said, we were talking earlier about the, you know, when, when people will be able to see when you're going to start seeing the, The price on gas come down because the tax, the North Carolina tax, one of the highest in the country, 41 cents per gallon. And the legislature passed this. It passed like almost unanimously through both houses, both chambers, the house and the Senate, both approved this all Democrats, except for one in the house voted for it to suspend the gas tax until November 30th. And, I've been trying to explain to people the business model of your local gas station because people don't understand how the gas station model works. The fuel that's in the ground, right, when the big tanker truck shows up and they put the gas into the tanks underground, that was purchased before the tanker arrived, okay? Okay. Usually, the franchise owners, these local owners, and they're local owners. These are people who usually, and that's not to say in every case, but by and large, there's a local owner of the gas station, and they've entered into a contract, for example. They enter into a contract with the pipeline company. the Colonial Pipeline, and the other one is called the Plantation Pipeline. Those are the two pipelines that service our region. We need more. We need more pipelines because remember when one of them got cyber-attacked a couple of years ago and it took down the pipeline? Like, that's a problem. We want redundancy. We want more pipelines. We can't build them because of Democrats, okay? So they constrain... through litigation, through environmental regulation, through opposition, voting stuff down, right? They constantly are fighting against all fossil fuel energy production and distribution. Now they're claiming that they care about the price of the fossil energy markets. They don't. They do not. And if you are mad about the price of gas being too high, I suspect it is not very logical to empower the people who want the gas prices high. Okay? It doesn't make any sense. So when the gas station has to fill up the tank of gas under the ground, right, they don't want it to run out, so they're buying ahead of time. They enter into a contract, and those contracts guarantee delivery to them And if supplies get constrained, like if there's a pipeline cyber attack, and all of a sudden they can't get gas, then those gas stations that have the contracts, they get first dibs. Now, there are some gas stations, a lot of them actually up in western North Carolina, they buy on the spot market. They will buy based on... So they don't have a contract. They'll just go and buy... you know, one load, one delivery at a time because they're basically watching the margins and they're trying to buy it, you know, the cheapest way they can buy it, whatever. But what that means is if there's a disruption, you're going to be lower on the list because you don't have a contract. They're going to serve you last. And that's why a lot of the gas stations up in the mountains run out of gas during disruptions. Okay. You're buying, so you got the contract side of it. Then you've got the gas stations and They're buying the next load, the next delivery. That's what Ozzy is saying here. Ozzy says he means when the supply chain price goes up, gas stations immediately change the price even though their current inventory was bought at a cheaper price. Right, because they're buying the next delivery. That's the point. And the profit margin of three cents a gallon is so low that if the prices go up 10 cents a gallon, they're not going to be able to afford to buy the next delivery without running losses. They're buying the next shipment. And so when prices go up quickly, they have to charge, they have to raise their prices because they're buying that price. They're buying the next delivery. The stuff that's already in the ground, yes, was purchased, but that was purchased prior to that last delivery. You got to go back. You know, if you're buying gas every month, let's say the first of every month you're buying gas. And so the. Gas price is $ 3 a gallon in, we'll say, August. August 1, it's $ 3 a gallon. You buy your gas. You're now... get your shipment, goes into the ground. Oh my gosh. But mid-August, the prices on the world market start going up and they go up dramatically. What are you going to do? You have to raise your price because your next shipment is going to be at the higher price. You're buying the next shipment. The price that you're seeing for the gas that's in the ground, you're seeing a month prior. Does that make sense? Because you bought that shipment before the gas was delivered. I hope I'm explaining this well. To me, it makes perfect sense. But people think like, oh, gas in the ground bought at this price. Yeah, but it was bought at that price prior to. You're always looking ahead into the futures market, right? All right. Let me go back to some of these texts here. Michael says a lot of these texts are related to the way Brett Jensen explained the economic model of gas stations. I did not hear that. Yeah. Like they make their money on the people that, that go into the store. Why do you think they advertise all the stuff that's for sale inside? They got all the pictures of, you know, buy two hot dogs for, you know, $ 4 or something like that. Like it's all an inducement to get you to come inside. That's where the markups are. Um, Stuart says price gouging is not part of the free market system. If you're willing to pay that amount, then it's not price gouging. Yeah. I don't know. I don't know why somebody texted about price gouging. That's not that that's not happening. And I, and I don't believe there is a thing called price gouging. Um, BB says I started with E.D. Woody at his SO station in 1968 at age 16, got out of East high school, went to work for 75 cents an hour, We made 5 cents a gallon off gas that sold for about 30 cents per gallon. My sweat sent the current brother owners of Woody's to college. Okay? You sound bitter. I hate gas stations like Circle K that charge you 10 cents less if they allow you to tie into your bank account else 10 cents for cash and or debit card. Okay? Well, then don't use it. Don't go there. There are some gas stations I don't go to. I will say like the Harris Teeter deal with the fuel perks, like that's a great deal. I'd do that. And why is that? They want you to go into the store because that's where they make their better margins. The holidays will be here before you know it, and so now is the time to create precious and priceless family heirlooms that will last for generations. Take your old photos, slides, films, and tapes to create a video in Mint Hill. There, they'll turn those memories into the story of your lives, memories from past family events captured forever to pass down to future generations. 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The legislature came in and voted to suspend it through November 30th to give relief at the tax pumps. This is a political stunt. Yeah, okay, fine. Yeah, okay. You'll get no argument from me. I'm still paying 41 cents less a gallon for the next two months. I'm okay with that. And because of this, then we are also into the business model of gas stations. because a lot of people don't understand how the gas station business model works. And so they ascribe all sorts of nefarious motives and they think they're getting screwed over by that local owner of. The gas station and everything. Um, and so I've been walking through some of the, how the, these gas stations operate, where their profits are. They're not at the gas pump. They're inside the, the building. Um, Danny says, I worked at the last full service station in Asheville when I was younger. Also, my stepdaughter is in the management chain in the truck stop world. From our experience, the station absolutely has no control over the price. They are required to sell for the price they are told by the franchise company's distributor. That's the contracts I was talking to you about. Any variance without permission gets them in trouble with the franchise company and the distributors. Right. And why is that? Is because everybody's buying the same gas. All these gas stations are buying the same gas. There's actually, there are rules. Well, there were, but when I was researching all of this stuff in, you know, 25 years ago and was doing stories on this, like they have, they have the contracts, but like if, if you have a gas station and I build one right across the street from you and I open up my gas station, I'm allowed, I think it's a two week promotional period where I can sell the gas at a discount, basically take a loss on the gas. I can do that because the, um, because it's a, it's a promotional period and I want to get people to start making a habit to come to my shop, right? To my station. But, they, what they don't want to see happen is like people undercutting each other in order to get more people in. So it's like, we're going like, this is what you got to sell for as part of the contract. And so there, yeah, the gas stations don't have this control that people think they do to just be, uh, setting up the, um, setting up their, their boards out front and, and gouging people left and right. They don't have that kind of control. Cal says, it isn't the local gas stations that are ripping customers. Off, it's the oil companies. The U.S. oil companies export much more than they import. Right, why is that? Why is that? It's because the global demand. Again, this is a global commodity. It's traded on the international level. And you have people that are making predictions on the price based on current events. It's speculation. And you have the OPEC cartel, which does have an impact, right, where they don't want the price of a barrel of oil to go below $ 60. The U.S. oil companies export much more than they import, right? Well, then you're also getting into refinery capacity. We export that oil because we can't do anything with it. We can get it out of the ground, but the refinery capacity that we're running at is like, I went over these numbers last week. We're running at like 99%. There's not any more refinery capacity. So no Saudi oil refinery. So no Saudi oil wouldn't hurt us. It used to be illegal for oil companies to export oil, but president Trump lifted that ban in his first term. If they couldn't export oil and gas, then we would need to import. Then we wouldn't need to import any middle East oil, but the domestic oil companies are making record profits because they are producing low and selling high. Yeah, that is an overly simplistic view of it. Cal, um, Gas price competition in action here in Fort Mill. A new gas station just opened and was offering ridiculously low prices. What did the QT across the street do? They matched it even though it was about 40 cents lower than anyone else. Right. And this is one of the things. You are allowed to match the promotional. If somebody is across the street from you or within a certain vicinity and they've got a sign with promotional rates, you can match their promotional rates. Remember that, too. All right, real quick. Every government number gets revised, right? Every projection gets walked back. Gold does not file corrections like GovCo. Revelation Gold Group helps families hold physical gold and silver, including in a tax-advantaged gold IRA. It's real. It's in your name. And 10 minutes tells you if your retirement account qualifies. If you want to learn more, go to calendarmetals.com. That's calendarmetals.com. There is a link in the podcast description. Or if you want to talk to somebody, you can call 888-465-3049. All right, let me jump over and chat with Steve. Hello, Steve. Welcome to the program. Hello, Pete. Hey, what's up? We're a question a lot of people may not understand, but when the driver drops the load, the convenience store has to pay for it or he gets financed. And they tell him what to jack the price up to finance that gasoline. So a lot of people don't understand that as well. So he's expected to pay for the load immediately. Or he can pay cash. Yeah, he can pay cash or he's financed. Right. But, you know, you are right when you say that the old-fashioned gas station used to make a few cents on the gallon because that's all they were was a gas station and maybe one or two-bay repair shop. The convenience stores now, they make their money on the stuff you buy inside. Yeah. Maybe a cent, two cents, 2%, 3% on gas, if that. I mean, so different than a restaurant. I mean, if a restaurant sees two, three cents on the dollar, they're doing great. But a lot of people don't understand how the gas stations and all that works. But I agree with some of your callers, and I understand the world market. If we're producing it here, I mean, how about help us out a little bit? But a lot of people don't understand what's made from oil, linoleum, plastics, and on the car, sheet metal. plastic for the food industry, your vinyl siding, there's a lot made from oil products. And no, you're never going to get rid of all the oil and fossil fuels. I don't care what Joe or anyone else says. It's not going to happen. Right. And the bottleneck in the refining process is a huge problem. And I went over this last week. We're running. somewhere between 96% to 98% that capacity. So we can pump all the oil that we can find, but if we can't refine it down to gasoline and all of the other things like you're talking about, then we have to export it. Well, and a lot of people don't understand that out of a 55-gallon drum, you do not get 55 gallons of gas. You've got diesel, heating oil, you've got I mean, Vaseline, you've got all the other products that are made from that. But like you said, it's a refining capacity problem. And California is a prime example of shutting everything down. And our diesel refineries we've shut down over the past few years. And what we've done is that as Americans, we've allowed our politicians to slit our own throats. Right. All in the name of trying to save the environment, which... That's another topic. Yeah, no, it is tied together. Again, it's like the same people that are now wailing about the price of things being too high are the same people that have been, like you said, slitting our own throats on the energy production side and the distribution and refining capacity. All of that stuff, it all leads to the higher price of everything because energy is a base input in all. Of that production. And manufacturing. I mean, think about the manufacturing. I mean, you either have a nuclear plant, gas-fired plant. I mean, I think Duke's building, what, a gas-fired power plant out west, out in the mountains? 800 megawatts? How many acres and hundreds and thousands of acres does it take for solar cells for that same? We just don't have the land capacity for solar cells and windmills. I hate it for you guys who want to go green. It's just not there yet. And we don't have the battery technology yet. And when we do, there'll be electric cars. But we're not there yet. Right. And the transmission technology. Of this energy over long distances is a problem, right? You got to build them pretty close to where you're going to be using it. Transformers? Yeah. I mean, it's the same thing. If I take a drop cord, I plug it in an outlet to run my saw out in my building. And the longer the drop cord is, I have voltage drop. So I need a transformer to transform that power back up to 120 volts. Um, same thing, which is why you got transformers to transform the power down to go inside your house or up to go long distances. Yeah. Yeah. It's a lot of people just really need to educate themselves and take the emotion out of it. No, Steve. No, we're Americans. What are you talking about, man? Yeah, I know. We can, we can barely read and write. All right. I appreciate the call, buddy. Have a great weekend. You have a good one. All right. See ya. Um, from Stanley, um, To the texter who complained gas stations had increased prices on their current inventory, even though they hadn't purchased any new product at the higher prices, the prices all businesses sell their current inventory for is based on what it's going to cost them to replace it. This person has surely never owned a business, right? The low price you see today, or let me say it this way, the low price you paid yesterday at the pump that then jumps up today, uh, is because the low price you paid yesterday was based on refilling the tanks a week ago. That's what they paid a week ago. That's what they were seeing. That's what they were paying that next shipment. And that's the thing. You can't run your tanks dry. You can't run out of product because then people will be like, oh, well, we don't ever know if you're going to have full gas tanks when we come there. So we're not going to come right. So you have to have a consistent supply of, You always have to have the tanks full so you can sell the product. And so, yeah, you're paying to replace it. Jennifer says people are going to be mad when they have to go back to paying the tax again after seeing what a difference it makes. Yeah, and I've heard this criticism as well. Like, oh, wait until it jumps back up. Everyone's going to be mad. Like, oh, yeah, okay, so we shouldn't do it. Let's not enjoy two months of lower gas prices in North Carolina. Let's not enjoy that because it's going to go back up again. At some point. Now, look, I'm all for if people want to have a discussion about, you know, redoing the gas tax formula in North Carolina about how that money is used to fund road projects and all of that. I'm open to that discussion. I understand people have opinions on toll. Lanes, right? So let's not even include that into the mix. But if you want to have a conversation about, what, taking some income taxes, you want to do that? Taxes off of your vehicles. Or how about vehicle miles traveled? You want to do that? How do you want to fund the roads? Sales taxes? That's regressive. So are gas taxes. That's a sales tax, right? So, like, where do you want to get this money from? Again, it's a balloon. You can squeeze it however you want to squeeze it, but you're going to have to pay for the roads somehow. How do you want to pay for it? Okay. Let me see here. KST says eventually when beef costs soar too high, wonder if we'll see it priced per ounce, $ 3 an ounce for a hamburger will fleetingly sound pretty cheap until you realize it's $ 48 a pound. Um, yes. Jeff says, uh, you charge at the replacement rate. That is correct. I thought that farmers use non highway tax fuel anyway. Yeah. So there's the red dye diesel, uh, and Stein already, uh, already rescinded the rules around that like a week ago. And that was part of this also, the diesel and the red dye. That's part of this resolution as well. Replacement costs, says Bill. As always, I'm totally picking up what you're throwing down about gas, says Jeff with a G. Thank you. I throw it down. Brenda wants to know why it takes so long to restart refineries. I don't know. But that's also coming. When they have to convert over the refineries, they got to convert to processing home heating oil. This mainly affects like the Northeast. So the refineries that are producing a lot of gas because people are traveling more in the summer and all of that, and you got jet fuel, which is like the most profitable, then you get diesel and you got all. These different product lines. One of them is the home heating oil. And so you have to then, they start taking refineries offline to change them over to process the home heating oil. So you end up with downtime. And then come the wintertime, you've got less gas being refined. Yeah, it's a problem. It's the refinery bottleneck. That is a problem. And I talked about it a week ago. Are we in Festivus? Is this the airing of the grievances? Is that. The reason I ask, because I'm getting. A lot of just general complaints about your local gas station. Something that, you know, like on the text line, people are, people, I have some grievances against you, local gas station. Stewart says there are some gas stations that notoriously do not give a receipt at the pump. Some of us are required to get receipts, so they get us to come inside that way, exactly the reason you're talking about, so we might buy something. There's one in Huntersville I have complained about several times, so I just stopped going there. By the way, that station is brand new. Their pump should be working fine. I don't know what the deal is with the receipts. I don't get the receipts, so I never, yeah, I don't go in to get receipts. I don't know. Rick says the pay at the pump is bad business model for the convenience store. Why do they have them at all? Um, again, I don't know. I suspect that they know how to run their business better than I do. So I would suspect that if everybody had to go into get or to pay, to pay for their gas ahead of time, because I remember having to do that. You'd have to pay before you pumped. I remember that. And you would have lines, uh, you would have to stand in the gas station and wait in line for five or 10 minutes. Before you could get gas. So, I mean, I think people like, and then you probably have to hire another person, somebody to just work the gas pump register and somebody to work the register for everything else. Right. Maybe. So maybe it's a personnel offset. I don't know. Every, every, sorry. Jeff S. Says, ever try to stop pumping your gas right on the full dollar amount? Yes, I do it every time. It seems to always roll over to. 01. Oh, I don't get that. You just got to hold it very lightly. You can always stop correctly on everything but 00. Just saying, the pennies add up. Okay. Iron Rhino says... What you're saying makes absolutely no sense. Then where is the price break for when the gas is purchased at a lower price? Where is the break at the pump? Where is the price break for when the gas is purchased at a lower price? Well, the price comes down. When they're buying the next delivery at a lower price, then the price of their gas then drops down. That's how that, yeah, but it, it like, it, it doesn't like, usually the price spikes on the oil, on the global markets. And then that's why the prices go up very quickly. They drop more slowly because all of the, the jittery, uh, you know, brokers and traders and all of that, like they generally don't, they're, they're generally not like, Oh, whew, thank goodness. Sell, sell, sell. Now it's going way down. You know, like that, it usually spikes due to anxiety and world events that are shocks. And then it, it declines gradually. So the price comes down over time. Anyway, um, Pete, you are missing a teaching opportunity. You could take all the profit away from the gas station owners and you would save three cents a gallon. You could take all the socialism taxes out of the equation and save 41 cents a gallon. So who's the real criminal says Charles. Dave says, Pete, you absolutely nailed it on US refinery capacity. We have closed roughly half of our refineries over the past 20 years. That's true. I went over those numbers last week. It's a difficult business to make a profit in. Dick and Nancy says, yes, gas chain. like Love's give a 10 cent per gallon every day to loyalty card members. Yeah, there are all sorts of loyalty programs that you can run. That will offset your prices. Sorry, let me go over to Jim. Hello, Jim. Welcome to the show. Hey, Pete. I used to work in the refinery industry. One thing I noticed as I traveled around these refineries is that the regulation that they were under was so oppressive that it would make the companies not want to invest. They were very cautious about doing any investment or expansion because they never knew what the regulations were going to be. This was particularly bad in California. And if you think about Los Angeles area, they literally have oil bubbling out of the ground, and that was one of the first places they put refineries. And then Los Angeles grew up around some of these refineries, and then the regulators made it their avowed business to try to drive them out of business. And there was an ExxonMobil refinery that was started out in the outskirts in the rural areas. The city grew up around it. And if they had a puff of emissions that wasn't allowed, you know, they were all over them with fines. And, you know, I talked to the people there, and they said it's nearly impossible to run this refinery. And they eventually sold it to somebody else, and then they shut it down, like they're shutting down most of the refineries in California. Yeah, California now imports oil and gas. It's crazy. Well, guess where all the investment for new refineries went? China? China. India, China, and the Middle East. So India's opened up some of the largest refineries in the world, and now they don't have the oil. They import the oil, they refine it, and they sell the refined products, which is where all the value in the high-paying jobs is. And so we're getting refined products from India that we used to make here, and we used to pay people on average $ 100, 000 a year for their jobs. And now all those jobs in California and a lot of other places are going away and going overseas. Yeah, Jim, I appreciate the call, sir. Good info. Thank you. All right. Bye. Yeah, have a great weekend. Ozzy said, Trump loves executive orders. He should ban exports on gas and limit oil to excess refinery capacity. That's a great idea. Stop pumping all the oil and not sell any of it. That's a brilliant idea, Ozzy. Oh my gosh, this is bigger than Donald Trump, dude. This is a far more complex issue that has unfolded over decades in this country. Just try to see the world outside the prism of the orange man. All right, that'll do it for this episode. Thank you so much for listening. I could not do the show without your support and the support of the businesses that advertise on the podcast. So if you'd like, please support them too and tell them you heard it here. You can also become a patron at my Patreon page or go to thepetecalinershow.com. Again, thank you so much for listening, and don't break anything while I'm gone.