The master of business strategy explains …

Here, he notes that gas prices are high, and suggests that California shouldn’t insist on fuel-efficient cars!

Always thinking outside the box! Needless to say, if cars were less fuel-efficient, Californians would use more gas, therefore spending even more of their budgets on fuel.

And with this kicker – as they use more gas, an increase in demand is more likely to make prices increase, not decline, so Californians would not only use more gas, but would probably also pay more per gallon!

Gee, I can’t understand why he went bankrupt so many times.

9 thoughts on “The master of business strategy explains …

  1. Another contributing factor is probably in the ethanol area (10% of gas tends to be ethanol). California is opposed to using corn for ethanol production, as a result they are having to import it from other states. The transportation adds to cost and to supply issues.

  2. yes, I think he also spun that reducing mileage and safety standards would save lives because new cars would be cheaper and people would get rid of their older less safe cars.

    1. …which assumes that carmakers would pass on reductions in their costs, rather than just make bigger profits. Also, if you reduce safety standards, older cars would be more safe, not less.
      Dim bulb can’t even spin right.

  3. Why ARE California gas prices so high? Is it the demand for gas there, or is it high state taxes on gas?

    Trumps taunts, which are a combination of lies, malice, and stupidity, used to make me so angry. I think the looming possibility of impeachment makes them easier to take.

    1. One mistake you’ve made it to take Donald Trump at his word. I’d want to check on gas prices in California being $4.50 vs $2.50 in the rest of the U.S.

      So, according to CNN, the numbers are actually $4.18 vs $2.65.

      The reasons for gas prices being higher are usually related to taxes (or the tax equivalent carbon trading that California has) or lack of space in refineries. Refineries are often in need of repairs. Of course, there could be collusion at the wholesale level, as was the case in California caused by Enron more than 15 years ago now.

    2. There are many factors. California’s gas taxes are high, but not enough to explain why its retail price is a buck and a half more than the national average.

      California’s state gas tax is the highest in the nation at 61 cents per gallon, according to the American Petroleum Institute, but it’s only about 30 cents per gallon more than an average state (Iowa is 25th at 30 cents per gallon) , so that does not explain the vast retail discrepancy.

      For example, Pennsylvania’s gasoline taxes are almost the same as California’s, but the average retail price in Pennsylvania at this moment is $2.74, while California is $4.19.

      There may be some retailers taking windfall profits from market volatility, but in general, Triple A blames the current California spike on supply problems. There are currently maintenance issues at four different refineries which supply the state.

      That explains some of the immediate problem, but there is a supply issue in California in general. Back when I was in the oil “bidness” in the eighties, there were 55 refineries in California. Today there are about half as many, despite greater demand than ever.

      That is wise, efficient business strategy. Oil refineries have to operate at a very high level of efficiency because their fixed costs are so high. A refinery operating at 90% of capacity may be a big profit center, but it can turn into a money hole if the throughput declines even slightly, so it’s in the interest of the oil companies to operate with as few refineries as is practical, even if they have to spend a little more transporting the product greater distances. But what is good for the oil companies is not necessarily good for the consumer, as we all know.

      1. I’m not sure how this has been calculated. If it’s just taxes added to prices at the pump, it would leave out the prices that are paid in carbon cap and trade in California.

        California is part of a carbon cap and trade market with the province of Quebec. Ontario used to be part of that as well, but the provincial government, led by the brother of Rob Ford, Doug Ford, pulled out.

        1. Thanks, Adam and UncleScoopy. Some things take more than simple Googling, they take active thinking.

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