flyguy
Well-Known Member
Re: \"Why the big boys won\'t come back\" - Fortune says majors doomed
That's a bad analogy. Right now the problem is as you said that there are 4 gas stations on the same corner competing with each other. What is happening is two of them sell only low octane at very low prices. The other 2 sell low octane, high octane and diesel, but lose money on the low octane because the other 2 stations are selling it cheap. They can get away with it because they don't have the extra costs from carrying the other products. This forces the other stations to discontinue sales of the low octane. What the article is suggesting is that the gas stations will merge and liquidate and we'll end up with individual fuel stations each serving its own market. Some will have low octane for general purpose, some will have high octane for high performance vehicles, and others will have diesel. If there are 4 gas stations at the corner but only one that sells the type of fuel you need, there is no competition and that stations can charge as much as they want.
That's a bad analogy. Right now the problem is as you said that there are 4 gas stations on the same corner competing with each other. What is happening is two of them sell only low octane at very low prices. The other 2 sell low octane, high octane and diesel, but lose money on the low octane because the other 2 stations are selling it cheap. They can get away with it because they don't have the extra costs from carrying the other products. This forces the other stations to discontinue sales of the low octane. What the article is suggesting is that the gas stations will merge and liquidate and we'll end up with individual fuel stations each serving its own market. Some will have low octane for general purpose, some will have high octane for high performance vehicles, and others will have diesel. If there are 4 gas stations at the corner but only one that sells the type of fuel you need, there is no competition and that stations can charge as much as they want.