Letter to the Editor 4-10-20

Dear editor,
Since it has not warmed up sufficiently to meet my new requirements for outdoor comfort while at the farm, but Robin is tiring of my presence through the winter, here I sit. We really like Concordia and yet still have reason to believe we could better our rural plight in life with a few changes. The look of life after the plague may be different than what we lived before, but we will still be mobile and everything we do should not be more expensive than anywhere else. There is volume in NCK.
There are things we can change as we look ahead and one is the reason for this letter, to look at fuel prices. I hesitate to bring up the fuel price situation in Concordia and all areas directly north because retail is difficult enough without this type of input and the fuel business is expensive and difficult. Having been a part of this type of business in the past ands watching it here as well as traveling fairly often there is a definite pattern to what we are subject to. Fuel, especially car gas, normally has very elastic demand. Meaning in this case a retailer cannot be high in their market area and expect to sell gas. What makes this market unique is that it is someone isolated and thus creates a buffer for higher margins from here and going north. Here are some facts — There is branded fuel. All fuel comes from the pipeline between pigs with several wholesale companies owning a piece of the whole. The four suppliers need to make margin. The gas that comes to Concordia is cheaper, due to less freight, than that in Salina.
Let's take a look at some real numbers (March writing) that you can check yourself: Unleaded nearby (April) futures are going to be close to pipeline prices. (check the cbot – fuel is a commodity). As I check at this writing unleaded April futures settled today at .6254 – add state and fed road tax of .4243 – add freight, I'm guessing here .02 to .03 – add margin that I always thought was ok @ .15=$1.23 per gallon, which makes $1.87 not look as good as it could. In fact, it makes the margin more than the wholesale cost. (240% markup).
Other considerations: 10% ethanol at these corn prices probably doesn't have as much of an impact either way. Kansas' allowable 2% shrink would raise the cost .03/gal., however you can't take that at face value. You take 2% shrink (that you don't pay road tax on) but you probably don't actually see that much shrink especially in underground tanks, and those extra gallons are sold with road tax added in. Also there is state tested minimum tolerance and pumps are set to be that tolerance-under (the state could check pumps each year and I always had an independent check in an alternate 6 month time. (You can go the wrong direction with inventory if you don't keep an eye on things). The price is also a function of inventory and a fuel dealer has to watch that as well as replacement cost. (However I have seen trucks unloading for weeks at lowering prices. Brokers also now play a big role. A company with large storage capacity, ie several locations can take positions on large quantities for future delivery at discounted prices...(this can also be a problem for them if they get on the wrong side of the market).
The bottom line is our gas prices have been consistently very high. We are in a less competitive market, however there is no reason we should be above Salina's market. We can watch that because we have a store here that also has branches in Salina. You need to nicely visit with your supplier about the gas price and I'm sure they will get us in line.
Thanks for reading,
John Isaacson