Speedway SuperAmerica Gas Company

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Speedway SuperAmerica Gas Company
By Angela Iadanza, Kamilla Grigorova, Ashle
David, JD Krasonic, and RJ Zitzelsberger
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JD
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TABLE OF CONTENTS

• JD
• Facts About Speedway SuperAmerica Gas Company.
• Opportunity Costs of Selling Gasoline.
• Kamilla
• Substitutes and Complements
• Elasticity of Gasoline
• Angela
• Marginal Utility
• Advertising

• Ashle
• Gas Industry as a Perfect Competitor
• Factors of Production for Gas
• RJ
• Price Discrimination of Gas
• Taxes
• Governments Role in Gas Industry
• CONCLUSION

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FACTS ABOUT SPEEDWAY

• WHO WE ARE 1) A gasoline-convenience store
  company.  
• 2) Marathon Ashland Petroleum LLC
• 62 owned by Marathon Oil Company.
• 38 owned by Ashland Inc.
• WHERE WE OPERATE 1) Headquarters in Enon,
  Ohio.
• 2) Midwest and Southeast United States.
• WHERE WE RANK IN THE INDUSTRY One of the
  largest chains.

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Opportunity Costs

• The value of best alternative which must be
  given up in order to get something.
• Revenue- loses convenience store revenue when
  the company chooses to produce more gasoline
  rather than selling goods.

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Kamilla
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Substitutes and Complements
Complements
Substitutes

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ELASTICITY

• The Sensitivity of Quantity Demanded to Price
• Gasoline -.20 (Hall and Lieberman)
• Very inelastic in the short run. Differ in the
  long run.
• Ex) (Long Run) Finding a job closer to home and
  move closer to your job. (Short Run) A car pool
  and drive more slowly on the highway.

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Angela
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Marginal Utility
EXAMPLE

• the change in total utility an individual
  obtains from consuming an additional unit of a
  good or service.
• such as Gasoline
• varies from purchaser to purchaser.

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Marginal Utility (cont.)

• LAW OF DIMINISHING MARGINAL UTILITY
• The Example shows what a rational consumer of
  gasoline would do. Purchase until Marginal
  Utility equals zero.

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Advertising

• Tries to differentiate its product.
• Entice individuals to come to their gas station.

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Advertising (cont.)
Other examples of Advertising

• Speedway attempting to entice the Consumers

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Ashle
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Perfect Competition

• Speedway fits the Characteristics of the Perfect
  Competitive Ideal
• Large Number of buyer and sellers
• Homogenous Product
• Easy entrance and/or exit
• Perfect Knowledge

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Perfect Competition (cont.)
Perfectly Competitive Firms such as Speedway are
said to be profit maximizers. 1. Because of the
homogeneous product and perfect knowledge
assumptions. 2. PC firms take the market price as
given and react to it. 3. Their objective is to
maximize profits. 4. And profits are simply the
difference between Total Revenue and Total Costs.
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Factors of Production

• Land Over 2,000 store locations
• Labor nearly 34,000 employees
• -19 different benefits available for non-store
  employees and store managers and 15 different
  benefits available for fulltime Store Customer
  Service Reps and Assistant Managers
• Capital a). Human Capital includes the skills
  possessed by the factory
  workers as well as the
  knowledge of the chairman of the board.
  b). Physical Capital includes the
  buildings, machinery and equipment used by
  the company. No exact value was found for
  Speedways physical capital

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RJ
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Taxes
Affects on supply curve Price, Quantity
Price (Dollars)
Quantity (Gallons)
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Price Discrimination

• Price Discrimination - different prices for the
  same product/service when the differences in
  price do not reflect differences in costs.
• Occurs only within the same city.
• Income and Location.
• Discount Cards.

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Example of Discrimination
www.speedway.com
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Governments Role

• Government places clean-air regulations on
  gasoline.
• 1) Reduce Smog, Air Toxins, and Carbon
• Monoxide
• 2) Restrictions on Storage and
  Transportation
• State and Federal Tax
• 1)Based on National Averages
• Federal Excise Tax18.4 cpg
• State Excise Tax20 cpg

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Conclusion
What we learned 1)Taxes 2)Conglomerates 3)Pric
e of Gasoline 4)Elasticity 5)Price
Discrimination
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Questions ?????????