“When losses happen, somebody’s got to pay for it.”
Called Freedom Fuel Network, the enterprise encompasses dozens of gas stations throughout Pennsylvania and New Jersey, USA Today reported, although it isn’t exactly clear which locations are open for business. Plastered in American flag decals and “Freedom Fuel” branding, the gas stations seem to be selling unleaded gasoline for the fixed-price of $3.47 per gallon, about 32 cents cheaper than the current average price in the US.
According to GasBuddy, nearby prices range from $3.85 to as much as $4.49 — no doubt reflecting the slower drip of oil from the president’s costly war on Iran, which burst back into active fighting this week.
As head of petroleum analysis at GasBuddy Patrick De Haan told the Philadelphia Inquirer, the current price of crude oil means there’s no way Freedom Fuel’s $3.47 price point can turn a profit.
“Stations selling at this price, it’s not sustainable,” De Haan explained. “Generally, when losses happen, somebody’s got to pay for it.”
De Haan raises an obvious question: who is paying for it? If the stations are losing money on every gallon, somebody has to make up the difference somewhere — whether out of Trump’s pocket, that of a friendly donor, or the taxpayer’s. And if it’s a private company taking the hit, how long until they stop subsidizing Pennsylvania drivers?
Already, the stunt seems to be distorting local markets. As of Wednesday, a nearby Sam’s Club in Dresher dropped its price to match the $3.47 figure — surely good news for anybody buying gas in South Eastern Pennsylvania, but as always, the devil is in the details.
Imagine if you were someone with no moral scruples and a lust for making more money than you ever need, and you somehow become the US president. How can you make lots of money off the position without being so blatantly corrupt that you actually end up in jail?
Well, you have the power to make decisions, decisions which drastically affect things like the oil price. You could monetise this small time by making bets on prediction markets, or maybe buying futures low and selling high, but that’s a higher risk strategy after you lose the presidency and has limits to how much you can make.
To think bigger, you could leverage the retail petrol industry. Normal participants buy wholesale and sell quickly at retail prices aligned to the replacement cost of what they are selling. They don’t usually stockpile large amounts, because they have no insight into what oil prices will do, and don’t want to take the risk. But if you are the president, you can influence that price, so you have a a strategy no one else has to profit big: drive the prices down through government actions, build up a large reserve wholesale while the prices are low, and when your reserve is full, drive up oil prices (antagonising another country into disrupting oil transport will do, for example). Your competitors put up their prices, and you undercut them and sell your reserves at a price significantly higher than what you paid, but less than your competitors are paying to replace their reserves.
You keep the level of your reserves, and your next move secret (refill reserves at the current higher price and try to drive prices even higher, or drain reserves, then lower prices with a fig leaf deal to the country you antagonised, refill reserves, and then drive higher again). This way, competitors can’t copy your strategy and reduce your profits, and they lose while you get richer.
Of course, all this is net destroying value for the world and your country as a whole - you are shrinking the pie, but none of that matters because you yourself get a much larger slice, and who cares about anyone else?
I guess if you keep it up long enough you can drive your competitors out of business then buy up their businesses on the cheap. Which if things are heading for a make America great again depression then that strategy ends up accumulating cash to then buy up assets for pennies on the dollar.