[extropy-chat] Value chain tracing

[Brett Paatsch]

BillK wrote:

> On 8/22/05, Brett Paatsch wrote:
>>
>> I reckon your probably pretty right Eugen but getting at the purer truth
>> of it might be fun, but bearing in mind I'm in not in either Europe or
>> the US I think we need to get specific because the variatious in taxes
>> and charges and profit margins etc are very likely to exist within such
>> big geographic areas, thats why I want to hone in one particular petrol
>> station one in each of two particular places. (And it makes sense that
>> each of these be stations that are of least some interest to someone
>> involved in the conversation.
>>
>> The notion that someone somewhere is getting filthy sneakily rich on oil
>> (and even going to war over it) sure as heck seems to be making some
>> folks at least a little antsy so lets turn on the light on the problem in 
>> a
>> practical and analytical way and see what the facts tell us.
>>
>
>
> I think you might be leaping in where angels fear to tread. :)

Well that's why I was figuring on a sort of group leap :) But international,
inter-timezone group leaps carried out over internet lists are a tad hard
to organise. People tend to need to go to bed.

> The oil distribution industry must be about the most analysed industry
> in the world. I doubt if there is anything new that we can discover.

Good reports and analysis done by others represents just the first
part of understanding something. A person still has to read them
to personalise their implications and develop a personal investment
plan or business plan, or a to work out how to. Data isn't
information unless we want to make use of it.

> Here is a report from ExxonMobil defending the UK price. (June 2004).
> http://www.exxonmobil.co.uk/UK-English/Newsroom/UK_NR_VP_Viewpoint_FuelsPricing_june2004.asp
>
> Quote:
> Petrol prices in the UK are high because over 75 per cent of the pump
> price is excise duty and VAT. This is the highest level of tax in
> Europe. When taxes are excluded, not only are UK petrol prices among
> the lowest in Europe but they are lower even than those in the USA
> (OPAL/IEA data).

Ok. But excise duty paid to whom, and value added tax (VAT) paid to
whom? Which levels of government are taking the slices and how much?

Is the UK a homogeneous market in terms of government taxes and
excise duty? ie. Is tax taken out in only two places, two levels of 
government
or in some cases one or three, and if there is differences why?

I don't really care about the answers specifically, personally, and if I did
care I could find them out myself, but its the sort of questioning that 
needs
to be done to understand why fuel costs X in location XL and Y in location
YL.

And that sort of questioning is a part of finding ways to make money in
a global economy, and understand policy, and see where bloat is getting
in. And that sort of questioning is not the sort that the average voter
bothers to do (on the average) and the politicians know it.

I don't mean to get preachy on you, you may well know this. But
perhaps some others reading don't.

> The UK petrol retailing business remains extremely competitive and
> margins are very tight. For example, the average industry price of
> unleaded petrol in 2003 was 76.3p per litre. When taxes and the cost
> of producing the fuel are excluded, just over 5p per litre is left for
> the retailer and the oil company.

Ok. So the UK government(s), (at one or more levels), have an
interest in petrol that per se has nothing to do with its power to
expode in an internal combustion engine producing energy or to be
converted into plastics.

They (the levels of government) have set up systems to specifically
tax not just any old thing, but oil, and those systems (the systems by
which tax is extracted by the levels of government from not just
any old thing but oil specifically) would *themselves* take some
work by those same levels of government to substitute for other
systems that would tax something else.

And of course for elected representatives to do or cause the public
service to do that work, they'd have to understand it, and they'd
have to see that work that policy change as worth while not just
in its own terms but in comparative terms when measured against
the other things that the vagaries of democratic electorates are
clamouring that they attend to.

A bottle neck on changing anything at any stage thus turns out to
be the ability of those they would have to implement the changes
capacity to both understand the changes and advocate for those
particular changes to be enough of a priority of the business of
the government for them to happen.

Little wonder political stuff takes time :-).

> This 5p has to cover the cost of getting the product from the refinery
> to the distribution terminal, storing it, putting in additives to
> improve performance and trucking it to the retailer, the retailer's
> staff and other costs of running the site including credit card
> charges (themselves over 1p per litre), promotions and marketing
> costs, as well as generating an income for the retailer and a return
> on investment for both the retailer and the oil company.
>
> The margins earned by the petrol retailing industry have been falling
> in real terms since the1960s. With little incentive to remain in the
> retail business, some petrol retailers have left the industry, whilst
> some oil companies have chosen to focus only on upstream activities.

Yup but is the petrol retailing industry always separate from the petrol
wholesaling industry (this I sincerely doubt) or in some cases are they
more vertically integrated than others. This can affect the differential
prices of petrol in locations XL (where say Eugen buys his petrol)
and YL (where you buy yours) too.

You don't have to know it to buy the petrol but you, or rather, one,
does have to know it to know who is making or taking money at
different spots in the different value chains that put petrol at locations
XL and YL.

Anyway, without *specifics* like a particular petrol station at a particular
location and date in each of two locations within Europe and the US
as real points of comparison this isn't really interesting enough for me to
spend time on.

Its only interesting to *me* if someone I like is going to learn something
useful to them out of it. If the people I like already know it, I'll find
something else to do.

The pity is that sometimes such really smart and likeable people stay
trapped in stagnant little knowledge domains or overspecialisations.

Brett Paatsch