₦airaland Forum

jamafa:
No b government dey control price of fuel oga.

Go reason your marketers

So you think I don't understand what I am talking about. Who regulates the activities of the oil industry. Who regulates their operations. You don't still understand that government oversees their activities. Government can still regulate pricing when they see that citizens are being charge excessively.

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

There is no 'market' as far as the oil industry in Nigeria is concerned.

'Market forces' in the true sense of it do not exist. It is what the producers and importers dictate that we end up buying it. A classic sellers scenario.

To create that price moderating 'force' in the case of petroleum products you need to introduce a third party with the capability of hedging. That is a party able to buy what is doesn't need and selling what it doesn't have inorder to neutralize the forces of demand and supply.

Those are the 'forces' of demand and supply.
But on my own I can't go to a gas station and force them to sell to me at my desired price except with a gun. That kind of force is jail bound.

gabicon:
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.

I disagree.

Crude was $80 when we were buying fuel for #839. Now it's $74, we should buy for #770. Even as at last week, crude was $118-$120 and we were buying for #1,350. Now tell me if my analysis is not correct and why we should buy it for #1,000 at $74/barrel.

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.

MODIFIED

This guy explains it better than I can ever do

But they didn't lose money when they sold old stock at the new price of #1350?

Lithiumite:
Thats the spot price,most oil rates are negotiated on futures contract......prices will definitely come down at the pumps but might take upto 2 to 3 weeks to fo back to pre conflict levels.

All those that defended Buhari’s incompetence here for 8years gained nothing, yet you’re going that same route… I pity you

rapheal5:
Only God knows where you bought your own cooking gas, in my city here it’s 2200 per kg

I bought directly at BOVAS filling station, where those who resell buy it from. I always buy from places like that to reduce cost.

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.

MODIFIED

This guy explains it better than I can ever do

Yes it's when the old stock are sold out before we can get the new cheaper fuel but I pray our people will allow it to be and not continue to sell in higher price under one flimsy excuse or the other.

udemzyudex:
But they didn't lose money when they sold old stock at the new price of #1350?

Yes, but they can't be losing money by reducing price to reflect the new oil prices, until oil sold at the lower price is refined and transported

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.

MODIFIED

This guy explains it better than I can ever do

So was it not old stock they were selling when the price of barrel went up?? Why didn't they clear the old stocks at old price, but rather fuel prices jumped up immediately?? It has nothing to do with old stocks, but greed! Even after clearing the so called old stocks, price won't come down. Mark this comment.

Bluearrow:
So was it not old stock they were selling when the price of barrel went up?? Why didn't they clear the old stocks at old price, but rather fuel prices jumped up immediately?? It has nothing to do with old stocks, but greed!

Prices had to go up with the rise in oil prices, because if they did not, many of them won;t have been able to afford fuel refined from the crude sold at a higher price.

That means, for the common man, scarcity, and fuel only being avaialble in the black market at N3000 or more per liter.

I mean, you bought fuel when crude was 75 DOLLARS per barrel, then it goes up to 120 dollars per barrel. If you do not raise your price now to reflect the new reality, by the time the crude refined from the 120 dollars per barrel hits the market, you won't have made enough money to pay for the new expensive stock.

It's hell, but its; business. That;s why some of us refuse to be business people.

nairalanda1:
Prices had to go up with the rise in oil prices, because if they did not, many of them won;t have been able to afford fuel refined from the crude sold at a higher price.

That means, for the common man, scarcity, and fuel only being avaialble in the black market at N3000 or more per liter.

I mean, you bought fuel when crude was 75 DOLLARS per barrel, then it goes up to 120 dollars per barrel. If you do not raise your price now to reflect the new reality, by the time the crude refined from the 120 dollars per barrel hits the market, you won't have made enough money to pay for the new expensive stock.

It's hell, but its; business. That;s why some of us refuse to be business people.

Oga it is greed!
Finish old stocks in old prices, add money to your capital & carry new stocks, that way u can talk about finishing new stocks at high price even if prices go down. But they start selling old stocks at high prices to make more money.

Lithiumite:
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.

Why not sell old stock available at old sale price, buy new stock at new cost price and sell at a new cost price?

Why sell old stock at new cost price when you’ve not purchased new stock?

If you bought 100 bottle water at 1$ a piece and resell at $2 a piece, while selling, cost price rise to $1.5 and you still have 70 bottle water left from old stock purchase.

If you sell the rest of the 70 bottles at $3 a piece due to new cost price, you’ve made $210 total revenue with profit of $140.

Fast forward to two weeks later, cost price drops back to $1 a piece even with you having old stock bought at $1.5 a piece, if you sell at $2 a piece, you’re still making profit. Also remember you’ve made more profit on the old stock you sold at higher price.

Technically you’re not making any loses at all even if the prices drop. The profits you’ve made before have covered for any deficit.

Helinuse:
You guys are yet to grasp the concept of an inflated economy like Nigeria,
In a non-inflated economy, when prices rise due to events, the structure of the economy will bring it back to its place post-event.
For an inflated economy, even without events, prices want to go up; they want to explode.
The event just gives it the excuse. But the real place of the price is up there.

The rule is that, when a price goes up, it cannot come down.

Person wey send you go school supppse dey cry
If the determinant of Pricing slopes downward, the market prices ideally must go down thats is the Rule.
kindly note naija factor is off book, we are just human disorder, so dont insult our intelligence here. Do una nunsense buh dont bring it into economics textbook

[quote author=nairalanda1 post=139754423]

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

Sounds logical right, Buh who is regulating and keeping stock to ensure consumer protection, if we keep going by your logic, sellers have an upperhand to exploit the consumer for as long as they want, maximize profit. I can understand if we have an effective consumer protection

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.

Who decides when the old stock is off ?? You want us to trust Marketers, You know in business Maximizing Profit is very legit

emirate9:
Person wey send you go school supppse dey cry
If the determinant of Pricing slopes downward, the market prices ideally must go down thats is the Rule.
kindly note naija factor is off book, we are just human disorder, so dont insult our intelligence here. Do una nunsense buh dont bring it into economics textbook

One strong sign of a lack of intelligence is being loud or insulting in order to feel that his/her opinion is relevant.
You had to start your statement by displaying such.

See people defending rubbish and saying old stock.

If you increased fuel prices immediately oil prices rose while you sold old cheap stock then it makes common sense to bring it down immediately it falls.

You made extraordinary profit by selling old stock at inflated prices, now you have to cut some loses to balance it put by selling old stock at lower prices or buy some and mix with old stock to get dollar cost average.

It is only greed that makes you want to gain one way without any adjustment and you the citizens are justifying greed so why should your leaders care?

emirate9:
...

You are witnessing how a buisness runs.

This is the time to ask Dangote question. Many of us supported him against the NMPDR DG when he complain about the sharp practices and the man was removed. It is now time for him to demosrtrate to us that he is NOT out to exhtort with high price. We expect him to adjust his prices downward with the same speed he increased price. Uncle Dangote and the current DG of Nigeria Mid Stream and Down Stream Regulatory Authority, over to you.

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.

u apply emotions and hatred its so obvious and clear.but not to worry ur likes who sees obi as Saint and saviour lacks decorum continue ur evil against d government of tinubu b4 ur eyes tinubu will succeed

They will tell you that they still have old stock but when the crude price increase, they didn't wait for old stock to finish before increasing price. They must milk the masses

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.

MODIFIED

This guy explains it better than I can ever do

But when oil prices go up... they dont use the old stuck explanations

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

It's the spirit of witchcraft

cr7lomo:
But when oil prices go up... they dont use the old stuck explanations

Yeah. they don't and it is kind of easy to see

Say you were selling fuel refined from crude that was being sold at 80 dollars per barrel today, then oil prices go up to 120 dollars per barrel later in the day.

That means fuel refined from that 120 dollars per barrel crude is going to cost more , and you need to make money fast to buy crude at the new price.

So, you raise your prices...or else you cannot buy new stock when old stock runs out. Imagine if a large number of filling stations do the same...result is fuel scarcity on a large scale.

Meanwhile, when fuel sold from crude at 120 dollars per barrel is being sold, suddenly crude prices go back to 75 dollars per barrel. You got to sell the old stock at the higher prices, or else you lose money massively, to the point that you may struggle to buy fuel at cheaper prices when old stock runs out.

When subsidy was there, government was the one paying money for all those fluctations, and since Nigeria was broke all those years, we had to borrow to atake over such costs...result debt.

Welcome to business life.

Bluearrow:
Oga it is greed!
Finish old stocks in old prices, add money to your capital & carry new stocks, that way u can talk about finishing new stocks at high price even if prices go down. But they start selling old stocks at high prices to make more money.

So, that they make a profit on the old stock.

If they started selling at low prices, they would lose money. Makes us happy, makes their workers and shareholders and investors and their creditors misreable.

ogascomax:
So you think I don't understand what I am talking about. Who regulates the activities of the oil industry. Who regulates their operations. You don't still understand that government oversees their activities. Government can still regulate pricing when they see that citizens are being charge excessively.

Unfortunately, now that subsidy is gone, government cannot regulate prices of fuel.


Regulation arose because under subsidy, government was assuming a lot of the costs of selling fuel, meaning that (in theory) marketers were taken care of. Any marketer trying to scam the government or make extra illict money on the side was subject to regulations..hence the need to regulateprices and enforce such regulations

Now that subsidy is gone, no more regulation. The only way government can regulate prices is to pay a production subsidy to refineries..via giving them some money, reducing their taxes, etc. Not by consumption subsides anymore. ANd it does not bring down prices a lot.

(And even production susbdies can cost the treasury a lot of money...see Russia for example).

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

Oil is quoted in futures delivery price. The refined fuel you get at the pumps was delivered at over 100$ five weeks ago. Price reflections is not instantaneous. The $74 oil will get to the pumps in weeks time. This is how the refineries worldwide stay afloat, despite the very thin margin of gains due to industry competition.

In local example, dangote petrol of today was priced and paid for in naira equivalent of over 100$ to NNPC and co, marketers booked the fuel from dangote at that price template also weeks back, any instantaneous crash in price will make holders of unsold or unsupplied marketers go bankrupt. Remember what happend to otedola and co during 2008 crises?
It's a low margin but high volume business.
However, this is not to say Nigeria isn't a hyper profiteering environment. That's just how it operates worldwide. The pump prices even in Texas have not drop significantly.

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.

MODIFIED

This guy explains it better than I can ever do

Can you try and make sense for once. You are not talking to kids. Please answer the following questions:
When crude oil prices rose due to the disruption and uncertainty caused by the Iran–Israel conflict and the threatened closure of the Strait of Hormuz, fuel prices were increased almost immediately, even though much of the crude oil being refined had been purchased at lower prices. Now that the conflict has eased and global crude oil prices have declined, why is the same speed and logic not being applied to reduce fuel prices for consumers?
Let me be more assertive here:
Fuel prices were increased promptly when crude oil prices surged during the Iran–Israel conflict, despite refiners processing crude purchased at earlier, lower prices. Now that the war has ended and crude oil prices have fallen significantly, consumers deserve to know why fuel prices are not being reduced with the same urgency.
Thank you!

dgitrader:
Oil is quoted in futures delivery price. The refined fuel you get at the pumps was delivered at over 100$ five weeks ago. Price reflections is not instantaneous. The $74 oil will get to the pumps in weeks time. This is how the refineries worldwide stay afloat, despite the very thin margin of gains due to industry competition.

In local example, dangote petrol of today was priced and paid for in naira equivalent of over 100$ to NNPC and co, marketers booked the fuel from dangote at that price template also weeks back, any instantaneous crash in price will make holders of unsold or unsupplied marketers go bankrupt. Remember what happend to otedola and co during 2008 crises?
It's a low margin but high volume business.
However, this is not to say Nigeria isn't a hyper profiteering environment. That's just how it operates worldwide. The pump prices even in Texas have not drop significantly.

Do not try to defend nonsense as if Nigerians are daft.
We know how monopolists like Dangote take advantage of our vulnerability.
When crude oil prices rose due to the disruption and uncertainty caused by the Iran–Israel conflict and the threatened closure of the Strait of Hormuz, fuel prices were increased almost immediately, even though much of the crude oil being refined had been purchased at lower prices. Now that the conflict has eased and global crude oil prices have declined, why is the same speed and logic not being applied to reduce fuel prices for consumers?
Let me be more assertive here:
Fuel prices were increased promptly when crude oil prices surged during the Iran–Israel conflict, despite refiners processing crude purchased at earlier, lower prices. Now that the war has ended and crude oil prices have fallen significantly, consumers deserve to know why fuel prices are not being reduced with the same urgency.
Thank you!

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

We don't need this type of human being in this country. When that increase no old stock?

Polchiz:
Can you try and make sense for once. You are not talking to kids. Please answer the following questions:

I always assume that everyone on this site is a legal adult.

When crude oil prices rose due to the disruption and uncertainty caused by the Iran–Israel conflict and the threatened closure of the Strait of Hormuz, fuel prices were increased almost immediately, even though much of the crude oil being refined had been purchased at lower prices. Now that the conflict has eased and global crude oil prices have declined, why is the same speed and logic not being applied to reduce fuel prices for consumers?

Say you bought fuel when crude was 80 dollars per barrel two days ago. Today, crude prices rise to 120 dollars per barrel. It will take some time for the crude to be refined into fuel, but once it is refined, you have to buy it at a higher price.

So, to make enough money to buy the new stock refined from higher costing fuel at higher prices, you have to raise your prices NOW, not when new stock comes in

Otherwise, you won;'t be able to afford the new expensive fuel when it comes in. That means you will not be able to make sales, and you lose money.

That;s how it works.

Let me be more assertive here:
Fuel prices were increased promptly when crude oil prices surged during the Iran–Israel conflict, despite refiners processing crude purchased at earlier, lower prices. Now that the war has ended and crude oil prices have fallen significantly, consumers deserve to know why fuel prices are not being reduced with the same urgency.
Thank you!

Right, so crude prices have fallen...but you still got to sell fuel refined from crude that cost higher before.

You got two choices

1. Reduce the prices now, and sustain heavy losses that would be so bad, it might leave you in debt

2.Keep selling your old crude at high prices until the new fuel refined from lower costing crude hits the market.

That's how bad it is. Infact, in America, fuel stations make more money from selling snacks, food, provisions than they do selling fuel.