₦airaland Forum

Minjim:
Nigerian economy defies the normal textbook theory of demand and supply bullshit crap.

The only explanation is greed and corruption

No, that's how the economy normally works in reality, especially in the saner climes.

You bought fuel from the refiner when it was 100 dollars per barrel, and you raised your prices accordingly to reflect that rise. Only for crude oil prices to fall to 75 dollars 2 days later. If you reduced your prices in accordance, you go lose a lot of money, and it would affect your ability to do business. To the point that it may even force it to close.

Meaning more unemployed people for no good reason.

In brief, until the crude bought at 75 dollars per barrel gets refined and sold, prices will remain high

Also, keep in mind that oil prices fluctuate. You got to have some sort of profit cushion, so to speak, against the price fluctuations, or else your business will fail. SO, prices stay up paradoxically.

Fekumzi123:
That's still cheap, I will continue selling mine at 1900 until I finish the old stock except my competitors adjusted sooner.

It is simply greed and corruption.

When most biz now have unions to regulate prices and even sanction any member that tries to reduce price.
Is it not the duty of govt to establish sanity?
But when Dangotee's fuel is even cheaper that NNPC .

NNPC is suppose to be dictating the price reduction but we often ring Dangote reducing pump price b4 NNPC.

Alexas58:
Please I am not understanding this stuff at all
Fuel price increased immediately oil rose to $118/ barrel from about 850- 1350, and now that oil is back to $74/ barrel , why is fuel still being sold at 1350??


I thought it’s forex that runs this oil economy

Imagine a filling station bought 100,000 litres of petrol when the landing cost was high, say ₦1,300 per litre. After adding transportation, staff costs, and profit, they start selling at ₦1,340 per litre.
A week later, crude oil prices fall and new petrol shipments become cheaper. Does that mean the station should immediately reduce its price to ₦1,200 per litre?
No. The petrol in their tanks was bought at the old, higher price. If they suddenly reduce the pump price, they could end up selling below their cost and losing money on the stock they already paid for.
So they usually continue selling the existing stock at the old price. Only after that stock is exhausted and they purchase new, cheaper supplies can they begin to reduce prices.
It's similar to a shop owner who bought bags of rice for ₦100,000 each. If the market price drops to ₦90,000 the next day, he can't immediately sell his existing stock as if he bought it at ₦90,000. He first needs to recover the money he spent on the old stock before passing on the lower prices from new purchases.
That's why a drop in crude oil prices today does not automatically translate into cheaper petrol at filling stations tomorrow. The cheaper crude must first work its way through refining, importation or production, distribution, and finally the sale of new stock to marketers before consumers see lower pump prices.

THE CRUDE BOUGHT AT HIGH PRICE AS FEED STOCK HAS TO BE EXHAUSTED BEFORE THE NEW PRICE CAN REFLECT ON THE PRODUCTS. ALSO, THE CRUDE BOUGHT TODAY COULD TAKE UP TO A MONTH BEFORE IT ARRIVES AT THE REFINERY.

REFINERS SELL PRODUCTS AT HIGH PRICES WHEN CRUDE PRICE INCREASES TO ENABLE THEM BE IN BUSINESS AND TO ATLEAST MAINTAIN THE SIZE OF THEIR BUSINESSES.

IT MIGHT TAKE CLOSE TO A MONTH BEFORE THE NEW PRICES WILL START REFLECTING.

Nigeria way. Nothings come down. Look at the transport sector. Even if they sell petrol at 500, naira, nothing change

yemre:
We're so funny in this country. When prices of crude go up, we would not sell the old stock at old prices but the moment it comes down, we suddenly remember the need to sell off the old stock!

As of today, petrol is supposed to be selling for N770.00

I think it's more in the range of N900-N1000. We get 70 litres of petrol from 1 barrel of crude. If we consider exchange rates, refining cost, distribution cost, retail margin, regulatory fees and taxes. These factors influence the cost, if we sell below market value, we will encourage smuggling to our neighbour countries.

nairalanda1:
Well, the old fuel stocks have to be sold off first, or else the marketers and refiners lose money..

The only reason for this is monopoly not all this grammar you wrote sir.

They'll lose money but when they gain do they call us. You people talk as if we don't do business too.

dallyemmy:
THE CRUDE BOUGHT AT HIGH PRICE AS FEED STOCK HAS TO BE EXHAUSTED BEFORE THE NEW PRICE CAN REFLECT ON THE PRODUCTS. ALSO, THE CRUDE BOUGHT TODAY COULD TAKE UP TO A MONTH BEFORE IT ARRIVES AT THE REFINERY.

REFINERS SELL PRODUCTS AT HIGH PRICES WHEN CRUDE PRICE INCREASES TO ENABLE THEM BE IN BUSINESS AND TO ATLEAST MAINTAIN THE SIZE OF THEIR BUSINESSES.

IT MIGHT TAKE CLOSE TO A MONTH BEFORE THE NEW PRICES WILL START REFLECTING.

In account, you are not really making lost depending on how you cost your inventory.
To know that this marketers or dangote is lying with costing is because, immediately oil crude rise, these greedy fellow increase price. This reflect that the costing on inventory is reflected immediately.

APC zombies said is was the closure of the Hormuz that caused it, now that it is open , they will look for another excuse. They just love suffering

nairalanda1:
Well, the old fuel stocks have to be sold off first, or else the marketers and refiners lose money.

In brief, when the fuel that is being sold now was being refined, the price was higher than it is now. So the prices of fuel won't come down until that old stock is sold off.

When the fuel that is being sold at the new prices ie the lower price, is refined and reaches the market, that's when the price most likely would come down.

It may happen in the next few weeks, since most of our fuel is being produced domestically, but again depends.

Keep in mind that if fuel prices fall TODAY...it means losses, which affects salaries and wages of workers in the petroleum sector. Ordinary Nigerians.

When they changed the price was it not the product they refined at the old price they were selling at the new price?

Sheuns:
Why did this same analogy of yours not apply when they increased prices just a few days after the price of crude oil rose to over a hundred dollars?

Don’t always defend.

If you sell bottle water in a shop and you hear prices have gone up which will cost you more when you want to restock,will you still keep selling at a lower price? Despite still having your old stock.

Ganjafama:
When the price changed was it not the product they refined at the old price they were selling at the new price?

Yes, to cushion against possible price fluctuations.

If they do not do that, you will see a lot of fllling stations closing shop.

IN America, a lot of fuel stations make more money selling provisions and suchlike than they do selling fuel.

BioData45:
The only reason for this is monopoly not all this grammar you wrote sir.

They'll lose money but when they gain do they call us. You people talk as if we don't do business too.

LOL...it has nothing to do with monopoly...especially since 1) we have several other refineries 2) importation of fuel still happens

More with the oil price issues.

(Did I imply you don't do business? NO.)

Teymanhenry:
Imagine a filling station bought 100,000 litres of petrol when the landing cost was high, say ₦1,300 per litre. After adding transportation, staff costs, and profit, they start selling at ₦1,340 per litre.
A week later, crude oil prices fall and new petrol shipments become cheaper. Does that mean the station should immediately reduce its price to ₦1,200 per litre?
No. The petrol in their tanks was bought at the old, higher price. If they suddenly reduce the pump price, they could end up selling below their cost and losing money on the stock they already paid for.
So they usually continue selling the existing stock at the old price. Only after that stock is exhausted and they purchase new, cheaper supplies can they begin to reduce prices.
It's similar to a shop owner who bought bags of rice for ₦100,000 each. If the market price drops to ₦90,000 the next day, he can't immediately sell his existing stock as if he bought it at ₦90,000. He first needs to recover the money he spent on the old stock before passing on the lower prices from new purchases.
That's why a drop in crude oil prices today does not automatically translate into cheaper petrol at filling stations tomorrow. The cheaper crude must first work its way through refining, importation or production, distribution, and finally the sale of new stock to marketers before consumers see lower pump prices.

How do you cost your inventory? You are not technically making loss. If your inventory turnovrr on timw and you now buy at a very reduce price, all loss is covered. Why did you not wait to exhaust the old inventory when you bought it cheap? It's because inventory has to reflect on current price. Same accounting principle applies to gold, foreign exchange, btc, or any assets, etc.

Oga you are not making any loss. Turnover your inventory quickly and buy new price. Cost have reduce.

Kukutente23:
We are still selling old stock

Op are you a learner? Go and build your own refinery and sell at 800 says dem zombies

garri boy, how are u?

Alexas58:
Please I am not understanding this stuff at all
Fuel price increased immediately oil rose to $118/ barrel from about 850- 1350, and now that oil is back to $74/ barrel , why is fuel still being sold at 1350??


I thought it’s forex that runs this oil economy

I think government is using the opportunity to introduce new tax based on IMF recommendations...

Checkwell:
And we have a task force that is supposed to regulate fuel station pump activities?

This country lacks leadership on all fronts.

Rather is market force that determines the price. Hence. no more taskforce to enforce uniform pricing regime.

Kukutente23:
Did it take 2 or 3 weeks to go up during the conflict

Every sensible person knows prices will go up immediately your supply price goes up because you already anticipate it will cost more to restock.... every wise person will hedge against the price increase......its simple logic ,its really pathetic this beats many of you hollow

Kukutente23:
We are still selling old stock

Op are you a learner? Go and build your own refinery and sell at 800 says dem zombies

But when the price of oil increased your old stock became new stock within 5 minutes of the news

If you blame Tinubu God will punish you

Did you say Leadership 😂😂😂?

Checkwell:
And we have a task force that is supposed to regulate fuel station pump activities?

This country lacks leadership on all fronts.

Checkwell:
And we have a task force that is supposed to regulate fuel station pump activities?

This country lacks leadership on all fronts.

Task force was there when subsidy was in place. Now that it is gone, the market determines the price.

nairalanda1:
LOL...it has nothing to do with monopoly...especially since 1) we have several other refineries 2) importation of fuel still happens

Sorry about business mention. But I don't take these your 2 points. It is government fault sha, don't know why individual can build a refinery successfully but government can't.

Kukutente23:
We are still selling old stock

Op are you a learner? Go and build your own refinery and sell at 800 says dem zombies

Did they finish selling the old stock before they jacked up the price?

Teymanhenry:
Imagine a filling station bought 100,000 litres of petrol when the landing cost was high, say ₦1,300 per litre. After adding transportation, staff costs, and profit, they start selling at ₦1,340 per litre.
A week later, crude oil prices fall and new petrol shipments become cheaper. Does that mean the station should immediately reduce its price to ₦1,200 per litre?
No. The petrol in their tanks was bought at the old, higher price. If they suddenly reduce the pump price, they could end up selling below their cost and losing money on the stock they already paid for.
So they usually continue selling the existing stock at the old price. Only after that stock is exhausted and they purchase new, cheaper supplies can they begin to reduce prices.
It's similar to a shop owner who bought bags of rice for ₦100,000 each. If the market price drops to ₦90,000 the next day, he can't immediately sell his existing stock as if he bought it at ₦90,000. He first needs to recover the money he spent on the old stock before passing on the lower prices from new purchases.
That's why a drop in crude oil prices today does not automatically translate into cheaper petrol at filling stations tomorrow. The cheaper crude must first work its way through refining, importation or production, distribution, and finally the sale of new stock to marketers before consumers see lower pump prices.

Na lie

The same oil station increased their pump price just 5 minutes of getting the news of $118 per barrel

They sold old stock of #850 for #1300

Well nobody should push this blame on PBAT, out greedy businessmen should be held responsible

just2endowed:
How do you cost your inventory? You are not technically making loss. If your inventory turnovrr on timw and you now buy at a very reduce price, all loss is covered. Why did you not wait to exhaust the old inventory when you bought it cheap? It's because inventory has to reflect on current price. Same accounting principle applies to gold, foreign exchange, btc, or any assets, etc.

Oga you are not making any loss. Turnover your inventory quickly and buy new price. Cost have reduce.

That's not how it works in reality.

It would require that every filling station in Nigeria sells fuel to over 1000 cars a day, with the tankers moving fast enough to supply the stations when they run dry.

Plus it takes time for crude bought at new prices to be refined.

Prices will come down when the fuel that is refined from crude sold at 75 or less dollars per barrel is refined. The good news is that it may not take too long. We now refine most fuel at home.

Krak:
Even cooking gas too. I bought for 1680 just yesterday.

Only God knows where you bought your own cooking gas, in my city here it’s 2200 per kg

nairalanda1:
If they reduced prices while they had old stock, they would lose a lot of money. It may make us happy, but their workers and shareholders won't be so happy. Again, most of them are ordinary nigerians, most of whom have to support families and workers.

It's because we had subsidy for over 5 decades that we were 'protected' from these realites of doing business.

Nothing to do with a crime scence. It's called the reality of doing business. You can change it by running a party that nationalizes the whole industry and sells fuel at people's prices, but experience has taught most it always ends with heavy debt for the nation eventually.

you can never be wise like what do you always smoke to writ all this .you keep defending bad habits

ogascomax:
That is why I say we don't have government. When it was high our stupid government were saying that it's the war that cause it but now the war is over and crude has dropped down, Dangote is not using same energy and quickness to bring the products down. Now they are taking time because their excuse will be we bought it at that price. What about the price that they did not buy it and sold almost doubled the price.

No b government dey control price of fuel oga.

Go reason your marketers

Zico5:
This government is the worst ever in the history of this country. So far Tinubu is getting his cut, every other thing is meaningless to him. The man lacks emphaty and doesn't care about the welfare of the masses.

It's d market force that control price of commodities not the president.

Kukutente23:
We are still selling old stock

Op are you a learner? Go and build your own refinery and sell at 800 says dem zombies

Arrrrgh.... ref. That is below the belt.

But in reality.
If you want to have proper economic control over a thing you need to set up a market place for it.