Andrew - 2/1/2006 4:54 PM
The advantage that Exxon has lays on the fact they are selling a necessity, therefore they can figure their operating expenses and adjust a 10% profit if you will. (or whatever they think they can get away with before people starts crying foul)
Andrew, you are correct... In so much that fuel is a necessity. However, consumers do have a bit to say about how much of a necessity, to an extent, fuel is to their lives. This is the most onerous attribute to the fuel price/oil company profit issue.
A consumer has no choice, here you are on the road with an almost empty tank, what are you going to do, ditch your car on the side of the road? They know and you know the answer.
In reality, we do have a choice to be on the road or not, don't we? Why are we on the road? Are there alternatives?
Where they selling shoes or salamis or cars that makes a for different story, we do without or patch the thing, they would be seating on top of a mountain of salamis going bad and be willing to deal with you.
Not really... they would scale back, layoff, cut expenses, diversify, go bankrupt, etc. We've seen it before. Remember, we are dealing with companies, not individuals. As soon as the return on investment, or stock value begins to head south, the share-holders will take action (Ford, GM, MB, to name a few recent examples)
I know what you are talking about, I been in business when things were bad, I had to borrow money from the bank just to make payroll, after a while the bank said nyet and that's when things got interesting.
Knowing when to quit can be an art. It is certainly different when an individual is calling the shots, as opposed to a board of directors and shareholders...
This I will admit: What I know about business and economics wouldn't fill a thimble; however, I do like to postulate so another will post and teach me different.