100ll jumps $0.40 in a month?

Matthew K

Matthew K

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Broke Engineer
Hello all! I haven't been flying very often so I'm not too familiar with price changes in 100ll.

A while back I joined my Flight Schools club($49 a month), where your able to rent the plane dry and then pay for fuel at places much cheaper than my home airport. Since I started paying for the fuel directly, I became much more aware of the fuel prices.

At the airport I've been filling up at, I noticed that a month ago 100ll was 3.25 a gallon(what I thought was pretty darn good). Then, this Sunday I filled up and noticed it was now $3.65 a gallon. In the terms of relativity, this still isn't a bad price, but I still question the 40 cent jump.
I understand that especially at small airports, they don't buy fuel very often, and that, for the most part, fuel prices are stagnant. At my home airport, where fuel is $6.70 a gallon(So I definitely shouldn't be complaining about $3.65) hasn't changed more than a few pennies in the past month.

Would that pipeline that leaked in the south a few weeks back have an impact on this? Or have prices risen enough in recent time to cause the price to go up 40 cents since the last time the airport bought fuel? Or something else?
 
One aspect of pricing I have heard in some places is a FBO will buy fuel and adjust the price based on what they just paid for their last purchase.
 
It wasn't that long ago it was a "crisis" and it was up above $6/gal.

Price rises and falls at the whims of a lot of things.
 
denverpilot said:
It wasn't that long ago it was a "crisis" and it was up above $6/gal.

Price rises and falls at the whims of a lot of things.
Click to expand...
Well like I said at my home airport it's still $6.70 a gallon.
 
I've seen auto gas rise by 25¢ or more in one day, with prices much lower than avgas. So no, 40¢ in a month isn't unusual. Where I used to be based, the FBO had to buy a truckload at a time (8000-10,000 gal), and would set their price based on what they paid and not change it at all until the next truck.

After moving, I've got no on-field fuel. My two nearby gas stops are quite different, but prices are similar. One seems to change a little at a time, but often; the other makes bigger jumps much less frequently. Maybe you just caught a delivery and price adjustment to match.
 
Lots of factors, but if gas goes up $0.10/month and your FBO only takes in a tanker full ever 4 months, then it will raise their price $0.40 when they take delivery.

Matthew K said:
Hello all! I haven't been flying very often so I'm not too familiar with price changes in 100ll.

A while back I joined my Flight Schools club($49 a month), where your able to rent the plane dry and then pay for fuel at places much cheaper than my home airport. Since I started paying for the fuel directly, I became much more aware of the fuel prices.

At the airport I've been filling up at, I noticed that a month ago 100ll was 3.25 a gallon(what I thought was pretty darn good). Then, this Sunday I filled up and noticed it was now $3.65 a gallon. In the terms of relativity, this still isn't a bad price, but I still question the 40 cent jump.
I understand that especially at small airports, they don't buy fuel very often, and that, for the most part, fuel prices are stagnant. At my home airport, where fuel is $6.70 a gallon(So I definitely shouldn't be complaining about $3.65) hasn't changed more than a few pennies in the past month.

Would that pipeline that leaked in the south a few weeks back have an impact on this? Or have prices risen enough in recent time to cause the price to go up 40 cents since the last time the airport bought fuel? Or something else?
Click to expand...
 
Pretty normal fluctuation.
 
Low volume product, so changes are more noticeable as they don't happen as often as at a gas station.

Talked with a FBO manager one time and he said they had to take a loss on fuel to get a new load at lower prices so they could sell it at a profit. Fuel prices had dropped rapidly and the the fuel in their tank had cost well above what other nearby airports were selling their 100LL inventory.
 
wayne said:
Low volume product, so changes are more noticeable as they don't happen as often as at a gas station.

Talked with a FBO manager one time and he said they had to take a loss on fuel to get a new load at lower prices so they could sell it at a profit. Fuel prices had dropped rapidly and the the fuel in their tank had cost well above what other nearby airports were selling their 100LL inventory.
Click to expand...
Fuel is like any other inventory, keep it moving quickly and you will remain profitable. With fuel buying just enough for the next 2 weeks or so means you will always be able to price according to the market, but it seems most smaller FBO's buy much larger quantities, say 30-60-90 days supply at a time. I don't know if they get a discount on the quantity or if it's only delivered every so often or what the reason is, but for every business it pays to turn your inventory quickly. :D
 
N747JB said:
Fuel is like any other inventory, keep it moving quickly and you will remain profitable. With fuel buying just enough for the next 2 weeks or so means you will always be able to price according to the market, but it seems most smaller FBO's buy much larger quantities, say 30-60-90 days supply at a time. I don't know if they get a discount on the quantity or if it's only delivered every so often or what the reason is, but for every business it pays to turn your inventory quickly. :D
Click to expand...

Yep.

Not being in the business I don't know if they do it to reduce delivery fees, minimum orders or what, but it certainly seems from the pricing data that the smaller airports buy in loads that last at least a month, if not longer. If the costs go down after they get a load it will impact their sales as others may get a lower cost and be able to sell it at a lower price.

The piston planes just buy so little fuel. Someone said at FTY one of the FBO's told them they buy multiple loads of JetA a week and either one load of 100LL every two or four weeks; it's been years since that conversation. And that's when Fulton Aviation (flight club) and Superior Flight School had a location there.
 
At my home field, the self serve is and has been $5.10 for ages. When gas for your car was $4.35, they had 100LL for $5.10 and when car gas dropped to $1.98 it was still $5.10.
 
N747JB said:
The rise seems to happen a lot quicker than the fall!
Click to expand...
Yes, some FBOs try to maximize profits by price gouging.
When the prices of AvGas fall, they won't lower their prices until they exhaust the "expensive" fuel remaining in their tanks. Once they get a new batch of "cheap" fuel, they reluctantly lower the price for the pilots.
However, when everybody around starts charging more for AvGas, so do they, not waiting on the "expensive" fuel tanker to arrive.
Double standard? Sure. Maximizing profits? Sure. Dishonest to the consumer? Absolutely.
Most of us have the option of filling up elsewhere.
 
BigBadLou said:
Yes, some FBOs try to maximize profits by price gouging.
When the prices of AvGas fall, they won't lower their prices until they exhaust the "expensive" fuel remaining in their tanks. Once they get a new batch of "cheap" fuel, they reluctantly lower the price for the pilots.
However, when everybody around starts charging more for AvGas, so do they, not waiting on the "expensive" fuel tanker to arrive.
Double standard? Sure. Maximizing profits? Sure. Dishonest to the consumer? Absolutely.
Most of us have the option of filling up elsewhere.
Click to expand...

Things I've learned from PoA in the past couple weeks:

1) When a natural disaster occurs it's perfectly reasonable to screw people who have no choice but to pay huge amounts of premiums for things like water, food or electricity (generators).

2) When an FBO charges "too much" it is price gouging and dishonest.
 
BigBadLou said:
Yes, some FBOs try to maximize profits by price gouging.
When the prices of AvGas fall, they won't lower their prices until they exhaust the "expensive" fuel remaining in their tanks. Once they get a new batch of "cheap" fuel, they reluctantly lower the price for the pilots.
However, when everybody around starts charging more for AvGas, so do they, not waiting on the "expensive" fuel tanker to arrive.
Double standard? Sure. Maximizing profits? Sure. Dishonest to the consumer? Absolutely.
Most of us have the option of filling up elsewhere.
Click to expand...
The free market will level out the pricing for most products, avgas is in a league of it's own when it comes to pricing. In Georgia, there are probably 200 or less public use airports, probably 3-5000 gas stations. I buy a lot of fuel at Cherokee, KCNI, they do all my maintenance. They are consistently $2.00 less on Jet-A and about that much less on avgas compared to FTY where I am based. Last weekend I bought 80 gallons at FTY, $5.73 per gallon, 150 gallons at Athens at $3.86 per gallon, I didn't really need any fuel in Athens, but I have a trip this weekend and now I have enough to fly to New Orleans, buy a little fuel and fly home without paying $5.73 per gallon for most of it. People will buy what they have to, when they have to, but a lot of people will buy more when it's considerably cheaper and tanker it when they can. Pilots are a cheap bunch! ;)
I don't blame FBO's for charging what they feel is fair, I just don't want them to blame me if I can save 25-40% on fuel buying it elsewhere. :D Destination airports, big cities, beaches, mountain resort towns etc tend to have higher fuel prices, some is based on local flowage fees, some is based on cost of doing business and sometimes it's based on the fact that you have no choice. :rolleyes:
 
172andyou said:
Things I've learned from PoA in the past couple weeks:

1) When a natural disaster occurs it's perfectly reasonable to screw people who have no choice but to pay huge amounts of premiums for things like water, food or electricity (generators).

2) When an FBO charges "too much" it is price gouging and dishonest.
Click to expand...

I'm not sure where your getting this? I certainly haven't seen anything in line with this on PoA.
 
N747JB said:
Fuel is like any other inventory, keep it moving quickly and you will remain profitable. With fuel buying just enough for the next 2 weeks or so means you will always be able to price according to the market, but it seems most smaller FBO's buy much larger quantities, say 30-60-90 days supply at a time. I don't know if they get a discount on the quantity or if it's only delivered every so often or what the reason is, but for every business it pays to turn your inventory quickly. :D
Click to expand...

The small field FBO where I was based could only buy a full tanker at a time, the distributor wouldn't sell them less. Selling it at a reduced price when prices fell would have cost them a large chunk of change . . . With razor thin margins in aviation, not many small operators can afford to take a loss on several thousand gallons of fuel.
 
The market sets the price,if your not happy with an FBOs price,go elsewhere. There are many reasons why an FBO prices their fuel.
 
The price of crude oil jumped signifigantly at the beginning of the month.
The various product prices will go up, too.
 
172andyou said:
Things I've learned from PoA in the past couple weeks:

1) When a natural disaster occurs it's perfectly reasonable to screw people who have no choice but to pay huge amounts of premiums for things like water, food or electricity (generators).

2) When an FBO charges "too much" it is price gouging and dishonest.
Click to expand...

Water and food were never mentioned in the other thread, but it's interesting to see how you expanded on generators to that in your head.

Generators aren't perishable nor are they all that hard to come by at any time. You can buy one tomorrow and guarantee nobody will ever "gouge" you for one.

There's a significant difference between perishable goods vs things like generators, flashlights, etc.

As far as fuel goes, throw enough to get to another airport on board and vote with your dollar. Easy to avoid an FBO that's selling well above market. Airplanes do travel pretty well, after all.
 
Hank S said:
The small field FBO where I was based could only buy a full tanker at a time, the distributor wouldn't sell them less. Selling it at a reduced price when prices fell would have cost them a large chunk of change . . . With razor thin margins in aviation, not many small operators can afford to take a loss on several thousand gallons of fuel.
Click to expand...
That makes sense! They need a couple of 421's and Navajos based there to help move all that 100LL! :)
 
denverpilot said:
Water and food were never mentioned in the other thread, but it's interesting to see how you expanded on generators to that in your head.
Click to expand...

Brad Z, unit74 and oldcfi all commented on how unfair it was that they couldn't charge as much as $30 for a case of water. One of them even speculated that the gummint was going to throw boy scouts in jail.

And you think *I'm* the one expanding arguments! :)
 
172andyou said:
Brad Z, unit74 and oldcfi all commented on how unfair it was that they couldn't charge as much as $30 for a case of water. One of them even speculated that the gummint was going to throw boy scouts in jail.

And you think *I'm* the one expanding arguments! :)
Click to expand...

Hmm. I must have missed the water thing. Oh well. It was a pretty dumb argument anyway. Hurricanes aren't exactly difficult to predict nor prepare for.

But we covered this in the other thread. Life being a little harder when one is unwilling to prepare for known things, is pretty normal.

I guess I bailed before it got to water. Ha.
 
denverpilot said:
Water and food were never mentioned in the other thread, but it's interesting to see how you expanded on generators to that in your head.

Generators aren't perishable nor are they all that hard to come by at any time. You can buy one tomorrow and guarantee nobody will ever "gouge" you for one.

There's a significant difference between perishable goods vs things like generators, flashlights, etc.
Click to expand...
I have seen (not surprisingly) generators at 5x their price during a disaster. If a hurricane is barreling down onto the coast, there are people who will buy all few generators at local Home Depot's and Lowes stores and then sell them with incredible markup when electricity goes out.

denverpilot said:
As far as fuel goes, throw enough to get to another airport on board and vote with your dollar. Easy to avoid an FBO that's selling well above market. Airplanes do travel pretty well, after all.
Click to expand...
True. Those FBOs that sell fuel for a lot more money don't usually get business from the recreational "little" GA guys but instead from the corporate pilots who have a company credit card.
Though I have seen a few King Airs land at our airfield with $5 Jet-A, drop off pax and fly nextdoor (15 miles) to fill up for $3. :)
 
I need to get my google button working better. I can't find it right now but there was an article in some flying magazine that attempted to explain why 100LL doesn't track to the price of a barrel of oil anywhere near the way auto gasoline does.

One of the factors was that the ANNUAL supply of 100LL for the US is produced in a single refinery in one MONTH. Then the refinery goes through maintenance and comes back online for non-leaded fuels. So the production cost is whatever the oil price was some month in the past.

Another factor was storage and delivery. When you make a years supply, you're gonna be storing a lot of it somewhere.

I'll get back to googling a bit.
 
rolivi said:
One of the factors was that the ANNUAL supply of 100LL for the US is produced in a single refinery in one MONTH. Then the refinery goes through maintenance and comes back online for non-leaded fuels. So the production cost is whatever the oil price was some month in the past.
Click to expand...

Ain't no way that's true...
 
rolivi said:
One of the factors was that the ANNUAL supply of 100LL for the US is produced in a single refinery in one MONTH. Then the refinery goes through maintenance and comes back online for non-leaded fuels. So the production cost is whatever the oil price was some month in the past.
Click to expand...

Definitely not true.

The article someone else linked is more accurate.

There are refineries that refuse to make the stuff however. As the article points out.
 
>> One of the factors was that the ANNUAL supply of 100LL for the US is produced in a single refinery in one MONTH. Then the refinery goes through maintenance and comes back online for non-leaded fuels.

>> Definitely not true. The article someone else linked is more accurate. There are refineries that refuse to make the stuff however. As the article points out.

Yeah, Ben's a good guy, but he's not a refinery guy. For instance, there's no stream that flows from the crude fractionation unit to the alkylation unit to make alkylate (iso-octane).

So there's 150 some refineries in the US now, down from nearly a 1,000 in 1970. But as Ben says in the article, fewer than ten that make avgas. As noted, it's complete BS to say a single refinery makes all the avgas in a month and then goes down for maintenance... there's no basis in reality for that.

In order to be an avgas refinery, you need at least three things:

1) A good source of LPG olefins and isobutane to feed your alkylation plant (and of course, an alkylation plant; most refineries have 'em, but not all...)

2) An alkylate splitter... to separate heavy alkylate (not good for avgas, boiling point too heavy, octane too low) and light alkylate, that is good for avgas.

3) A willingness to build or maintain lead facilities, which are expensive and carry an ever higher future retirement cost that's somewhat unknown... what will future hazmat regulations cost to comply with?

So maybe refineries "refuse" to make avgas... but the entire annual profit on avgas for the entire country is only about $50 million... that won't readily justify building the three things above if you don't already have them.

Folks talk about leaded avgas not being transportable in multi-product pipelines due to lead contamination. That's true... but even when avgas goes unleaded, it will still be uneconomic to transport avgas in multi-product pipelines... the volumes are too small to justify the facilities, and the cargoes would be so small that most of the avgas would be lost to transmix (transportation mixing, at the interface between avgas and adjacent products).

On pricing, avgas leaves the refinery gate at about $1/gallon premium over premium mogas. What happens to pricing after that is attributable to high transportation costs and the vagaries of FBO costs and pricing decisions.

Paul
 
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