*
Bedford Ramblings
Steve Mills

Here is another question, what about oil prices?

Posted Monday, December 22, 2014, at 8:10 AM
Comments
View 9 comments
Note: The nature of the Internet makes it impractical for our staff to review every comment. Please note that those who post comments on this website may do so using a screen name, which may or may not reflect a website user's actual name. Readers should be careful not to assign comments to real people who may have names similar to screen names. Refrain from obscenity in your comments, and to keep discussions civil, don't say anything in a way your grandmother would be ashamed to read.
  • Like it has every time OPEC members have cut prices to stop US productions.The prices on everything from bread to CD's continue to stay at the inflated prices due to high fuel cost. Nothing goes down but gasoline.Then when prices rise again we see another increase.Don't blame it on oil producers,blame it on Corporate America.

    -- Posted by mytaxesaremine on Mon, Dec 22, 2014, at 9:38 AM
  • But you just said OPEC cut prices, not Corporate America.

    If the price of gas drops and then goes up, we are used to it, but other things are not that easy. Even gas stations have to sell their current gas based upon the price they paid when they got it.

    Items manufactured when the price of oil was high still have to be sold at the costs when they were made. From a marketing standpoint (I've been in sales & marketing for over 40 years), I would not play with the price based on a small reduction in cost.

    Instead, I am probably going to enjoy a little more profit, while it lasts. At least from our standpoint, we are not making a killing and I would bet the farmer and bread-maker is not either.

    Also, gas price is just one aspect of production cost. If lower gas result in a savings 2% are we going to notice a drop of that size? When $10 item drops to $9.80 are we going to say, "Wow, the cost or gas is down"?

    -- Posted by stevemills on Mon, Dec 22, 2014, at 10:24 AM
  • I was not speaking of Corporate Oil companies.I was speaking of where it leaves us(average person). Fuel price has been an excuse to raise prices on domestic items since the 70's embargo.Now if you want me on the oil companies, why is it a barrel of oil goes up $2 and gas goes up 20 cents a gallon.A barrel of oil goes down $4 and a gallon of gas drops 4 cents.Must be Chinese math.I respect your comments as I have been in business a few years myself.

    -- Posted by mytaxesaremine on Mon, Dec 22, 2014, at 10:39 AM
  • The original intent of my post was to stimulate discussion on how the drop in oil pricers will affect us.

    I enjoy the savings, but one of our companies is in recycled plastic. It is now almost as cheap to use virgin plastic as it is to fool with recycling. The end result is that we are sitting on a lot of recycled product but have no market which to sell. Because margins were so little before, we either sell at a loss or sit on it, hoping.

    Entrepreneurs who "bet the farm" on new technology to extract oil from shale, etc. are now finding their resale price so low that they too cannot make their production profitable. OPEC claims they are not trying to bankrupt competition but this will be the result. Then who steps up to challenge their stranglehold?

    Predatory pricing? They say no, but the results say otherwise.

    -- Posted by stevemills on Mon, Dec 22, 2014, at 4:32 PM
  • Right now I am enjoying the low price of gas.Now what I saved will go for the rise in food.Last week a dozen of eggs was $2.80 in some stores.

    -- Posted by lets be real on Tue, Dec 23, 2014, at 10:55 AM
  • Items manufactured when the price of oil was high still have to be sold at the costs when they were made. From a marketing standpoint (I've been in sales & marketing for over 40 years), I would not play with the price based on a small reduction in cost.

    Posted by stevemills on Mon, Dec 22, 2014, at 4:32 PM

    Mr. Mills, most if not all companies of any size sell their products based on replacement cost, not on aquired cost.

    -- Posted by Blessed Assurance on Tue, Dec 23, 2014, at 4:56 PM
  • I'm not sure I agree with you Blessed Assurance.

    We produce machinery and do not price on what our projected costs will be when we make again. We adjust our resale price to account for raw material increases.

    Does anyone know what their tank of gas will be in a week and charge their transportation costs based on hypothetical prices?

    Even if I don't make the product, how do I know what the manufacturer is going to charge me when I re-order in six months?

    -- Posted by stevemills on Tue, Dec 23, 2014, at 8:35 PM
  • Nothing wrong with different opinions.

    I mistakingly thought your blog was about the pricing of gasoline of which is most commonly priced on replacement cost.

    -- Posted by Blessed Assurance on Wed, Dec 24, 2014, at 6:33 AM
  • It was originally about gas. Then it shifted a little to corporate philosophy on pricing.

    I agree with your observation about gas pricing.

    -- Posted by stevemills on Wed, Dec 24, 2014, at 9:34 AM
Respond to this blog

Posting a comment requires free registration: