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Speculators are necessary
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<blockquote data-quote="upfrombottom" data-source="post: 799957" data-attributes="member: 13088"><p>You, just like most, don't understand. Say I bought 1000 gal at the beginning of the month and paid $1 a gal. for it. I sold 100 gal a day for the first 4 days and made $.08 a gal. The price goes up $.10 so I go up the same. For the next three days I sell a 100 gal each day and make a profit of $.18 a gal. The price goes up again $.10 so I go up again . For the next three days I sell a 100 gal each day and make a profit of $.28 a gal. So in nine days I made a total profit 32+54+84= 170. So for that last load I took in $1170. I order another 1000 gal. and the price is $1.30. so that 1000 gal. is going to cost me $1300. so to pay for it I have to come up with $130 out of my pocket to replace the fuel. Keep in mind that the increases are not because demand has gone up, meaning the volume of business has not increased. If it had my profit for the same time period would have had increased because the volume had increased. </p><p></p><p>This same scenario goes on for four weeks strait. All of a sudden, in one months time, I have 1000 gal. of fuel that cost me $1900., so I had to come up with $520.00 out of reserves. Do this for several months and you'll have all the reserves you had saved up, invested in something you haven't gotten any income out of. The price has then gotten to the point that demand starts to fall because people can't afford to purchase it. Then the price falls. In one day it drops $.10, and the 1000 gal that I've got $1900.00 invested into is now only worth $1800.00 and sales have dropped to 80 gal. a day. On this day I just sold 80 gal., so I just took in $150 for something that cost me $152. I just lost $2 and all the profit for that day. It keeps declining, so at the end of two months I have 1000 gal. of fuel that is worth $1000 and have lost all profits and $600 of my reserves. This is a small example so try and multiply it by volumes and actual prices and its very easy to see where this can bankrupt a small company.</p></blockquote><p></p>
[QUOTE="upfrombottom, post: 799957, member: 13088"] You, just like most, don't understand. Say I bought 1000 gal at the beginning of the month and paid $1 a gal. for it. I sold 100 gal a day for the first 4 days and made $.08 a gal. The price goes up $.10 so I go up the same. For the next three days I sell a 100 gal each day and make a profit of $.18 a gal. The price goes up again $.10 so I go up again . For the next three days I sell a 100 gal each day and make a profit of $.28 a gal. So in nine days I made a total profit 32+54+84= 170. So for that last load I took in $1170. I order another 1000 gal. and the price is $1.30. so that 1000 gal. is going to cost me $1300. so to pay for it I have to come up with $130 out of my pocket to replace the fuel. Keep in mind that the increases are not because demand has gone up, meaning the volume of business has not increased. If it had my profit for the same time period would have had increased because the volume had increased. This same scenario goes on for four weeks strait. All of a sudden, in one months time, I have 1000 gal. of fuel that cost me $1900., so I had to come up with $520.00 out of reserves. Do this for several months and you'll have all the reserves you had saved up, invested in something you haven't gotten any income out of. The price has then gotten to the point that demand starts to fall because people can't afford to purchase it. Then the price falls. In one day it drops $.10, and the 1000 gal that I've got $1900.00 invested into is now only worth $1800.00 and sales have dropped to 80 gal. a day. On this day I just sold 80 gal., so I just took in $150 for something that cost me $152. I just lost $2 and all the profit for that day. It keeps declining, so at the end of two months I have 1000 gal. of fuel that is worth $1000 and have lost all profits and $600 of my reserves. This is a small example so try and multiply it by volumes and actual prices and its very easy to see where this can bankrupt a small company. [/QUOTE]
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