Dan S1

Oil Majors Exiting the Gas Station Business

This situation is the same throughout the economy. Namely, that the producer of the raw material is making all the margin, but the retailer of the finished product is getting squeezed. What this tells us is that the consumer's income is increasing at a lower rate than inflation, which causes these margin squeezes.

Today, you only want to be the producer or at the front of the supply chain and not at the back as the people up at the front took all the profit and you at the back are left with all the low margins and consumers complaining that you're the one making money with these high prices when you are not.

Honestly, I saw this coming back in 2003, but I do not know how to profit from the information I know.

I agree with the oil majors that the relatively high oil prices are here to stay as I would now expect an extreme low to be around $45 to $50/bbl. Forget about $1.50/gal gas going forward, even if we go into recession in a couple years, but we can see $2 a gal gas again in low tax states in the upcoming recession. The money a person spends for fuel means that they have less money to spend on other things like cigs, lotto tickets, soda, candy, alcohol, car washes, etc, so it hurts all parts of the convenience store business as well.