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Diesel and the ski industry this Winter...

MidnightJester

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Diesel use for the US and the ski industry will be on even more rocky roads apparently after tonight's President Biden comments in NY. This is a repeat of similar comments he made before the last election 2 and 3 years ago.

Just now Nov 6 2022

3 Years ago 2019

There is no mistake or fluke in the Rising Diesel, Gas and energy prices and corresponding shorter supplies here and the world.
 
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SteezyYeeter

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lol. There’s no if here. I want you to be dead. Full stop. You’re irredeemable and when people like you become extinct the rest of us can get on with it
2f7.jpg

average marijuana addict. not impressed 🤡
 
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IceEidolon

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Inflation is partly from rising materials costs including fuel, but we're also seeing record corporate profits - a substantial chunk of inflation is just companies at every level raising prices beyond what covers their own increased expenses.
 

Newpylong

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Yep, they saw what could be charged during covid. Why lower prices now even after your cost to market has gone back down?
 

icecoast1

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Inflation is partly from rising materials costs including fuel, but we're also seeing record corporate profits - a substantial chunk of inflation is just companies at every level raising prices beyond what covers their own increased expenses.

You mean these companies are trying to make up for those record losses they had in 2020? Who could have saw that coming...
 

FBGM

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I'm sure the White House has a plan to remedy the diesel shortages, maybe Electric Snowcats?
They make them. Ton of power. I had the first electric and natural gas one in the stases 7+ years ago
 

FBGM

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Most ski areas (bigger ones) have fuel prices locked in. When I was in the ski business at a huge resort, we had locked prices.

When I was in the equipment and over road truck business we had massive fuel cost breaks and locked prices. But I also did 1m+ gallons a year.

Locked prices help. Still expensive. Will you see change in habits and grooming? Probably not. Ski areas that use diesel compressors, maybe they would think of cutting back, but also doubt it.
 

EPB

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Why lower prices now even after your cost to market has gone back down?
This is exactly the right intuition. It's the inverse of businesses putting things that don't sell on sale to get it off the shelves.

Unfortunately, this is a much bigger problem than most people seem to appreciate. Lowering prices would just lead to blowing through inventory, rolling stock outs and the chaos that would ensue (especially if pursued economy wide). We're in a worst-of-both worlds scenario where we have more dollars chasing fewer-than-normal goods and services. It's a great environment for those who already have valuable assets and/or valuable skills and awful for those that don't.
 

machski

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This is exactly the right intuition. It's the inverse of businesses putting things that don't sell on sale to get it off the shelves.

Unfortunately, this is a much bigger problem than most people seem to appreciate. Lowering prices would just lead to blowing through inventory, rolling stock outs and the chaos that would ensue (especially if pursued economy wide). We're in a worst-of-both worlds scenario where we have more dollars chasing fewer-than-normal goods and services. It's a great environment for those who already have valuable assets and/or valuable skills and awful for those that don't.
Maybe, but in the automotive sector, we are already seeing supply catch up on the new vehicle side and price hikes relax from when inventory was all but non existent. Some business costs are here to stay, like higher payroll costs. Not saying that was a bad thing in and of itself, but looking back through history big wage roses always seem to get equalized out, often in short order like we are seeing today.
 

IceEidolon

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You mean these companies are trying to make up for those record losses they had in 2020? Who could have saw that coming...
Let's run that idea out and see where it stops. How do you tell the difference between businesses raising margins to make their owners richer, and businesses raising their margins to make back their owners' money? Is there some mechanism where, after the Walton family (or whichever owner) is "made whole" after pandemic losses, they return Wal-Mart (or whatever company) to a lower margin plan, or do they ride that wave as long as it lasts?
 
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Yeah and I cannot believe how little attention the folks in DC are paying attention to this. The longer diesel stays high, the longer inflation will not be cooling off. Diesel moves the entire economy!! And I'm not saying they should slap bandaids on this, do the tough work. Figure out what the hang ups are in the industry to produce diesel (which happens to be #2 heating oil as well just dyed differently for taxation) and/or get it to market. It is nearly $2/gal more than Unleaded right now and it is a less refined fuel. Something isn't right but they just worry about unleaded cost.
Finally someone that understands economics. It's a refinary shortage, but also the loss of Russian imports of finished products. Raw oil is WTI lighter, or Brent heavier. Many of our refinaries can't refine WTI. They are set up for heavier Brent. If we had the pipeline we could get the heavy type of oil down from Canada or N. Dakota to the refinaries.
 
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RH29

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Finally someone that understands economics. It's a refinary shortage, but also the loss of Russian imports of finished products. Raw oil is WTI lighter, or Brent heavier. Many of our refinaries can't refine WTI. They are set up for heavier Brent. If we had the pipeline we could get the heavy type of oil down from Canada or N. Dakota to the refinaries.
No it's just corporate greed. Nothing more. They need to enact a windfall tax.
 
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Let's run that idea out and see where it stops. How do you tell the difference between businesses raising margins to make their owners richer, and businesses raising their margins to make back their owners' money? Is there some mechanism where, after the Walton family (or whichever owner) is "made whole" after pandemic losses, they return Wal-Mart (or whatever company) to a lower margin plan, or do they ride that wave as long as it lasts?
The old adage "a fool and his money are soon parted." holds true. Much of the free $$ has been spent and is in corporate coffers. Then at some point the free $$ runs out and demand destruction kicks in, with rates skyrocketing, it will happen quickly. Used car prices are starting to drop like a rock. In a few months inflation will start lapping some pretty high #'s. They need to stop printing $, Stimulus packages add to M2= very bad for inflation. The Fed overreacted to COVID as well. M2, the money supply, needs to come down as it finally peaked in March https://fred.stlouisfed.org/series/M2SL
 

EPB

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Let's run that idea out and see where it stops. How do you tell the difference between businesses raising margins to make their owners richer, and businesses raising their margins to make back their owners' money? Is there some mechanism where, after the Walton family (or whichever owner) is "made whole" after pandemic losses, they return Wal-Mart (or whatever company) to a lower margin plan, or do they ride that wave as long as it lasts?
At a marco level, it works how I outlined above. To Machski's point, each company has it's own ability (or lack thereof) to keep up with rising input costs, but high prices and high contribution margins are what one should expect.

Using your Walmart example, they have no way to raise prices purely to make up for lost profits. They compete with Amazon, Target, local grocery stores and other discount retailers - competition is stiff. If they decided to raise prices purely because they thought they "deserved" it, a big chunk of their customers would shop elsewhere. The flip side would happen if they marked all their goods at 2019 levels. Inventory would fly off the shelves albeit at low/negative margins given their goods are now more expensive to source.
 

icecoast1

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Let's run that idea out and see where it stops. How do you tell the difference between businesses raising margins to make their owners richer, and businesses raising their margins to make back their owners' money? Is there some mechanism where, after the Walton family (or whichever owner) is "made whole" after pandemic losses, they return Wal-Mart (or whatever company) to a lower margin plan, or do they ride that wave as long as it lasts?
Wal Marts profit margins were trending downward at least as of their last earnings call (next one scheduled for NOV 15th.)
 

1dog

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Wal Marts profit margins were trending downward at least as of their last earnings call (next one scheduled for NOV 15th.)
Those large discount retailers work on 2-3% margins. . . . sure its volume, but competition, capitalism is the best price-controls we have.

;Capitalism is relatively new to human history.Prior to capitalism the way people amassed great wealth was by looting, plundering, and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man.' Walter E .Williams
 

IceEidolon

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Those large discount retailers work on 2-3% margins. . . . sure its volume, but competition, capitalism is the best price-controls we have.

;Capitalism is relatively new to human history.Prior to capitalism the way people amassed great wealth was by looting, plundering, and enslaving their fellow man. Capitalism made it possible to become wealthy by serving your fellow man.' Walter E .Williams
Capitalism, like most other economic systems, tends to work well at a small scale and fall apart once any one actor gets too much control. That's why a hybrid economy, shamelessly stealing bits from multiple systems, seems to work out best (look at most of the Western world for the conventional example, and look at mainland China getting huge outputs and quality of life increases (at a hell of an ethical cost, but ethics aren't economics) by grafting capitalism into their command economy.

Disincentivize stock buybacks, massive direct payouts to owners, etc. while making reinvestment in private infrastructure and staff more attractive. A windfall profit tax tracks well with that. One example would be railroads earning record margins by cutting rail freight capacity and service quality. Those cuts are directly against the national interest, but they make short term cash. Change the regulationaround railroads such that maintaining their infrastructure is aore attractive option for shareholders. (The class 1s are seeing enormous profits and spending a lot of that on stock buybacks, while service and track conditions continue to degrade.)
 
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