Americans Are Doing Their Part, Time for Bush's Oil Cronies to Do Their Part, Says DNC (Barf alert)

U.S. Newswire ^

[Sub-Driver]

Americans Are Doing Their Part, Time for Bush's Oil Cronies to Do Their Part, Says DNC

9/1/2005 12:34:00 PM

To: National Desk

Contact: Josh Earnest of the Democratic National Committee, 202-863-8148

WASHINGTON, Sept. 1 /U.S. Newswire/ -- The following was released today by the Democratic National Committee:

This morning, President Bush told Diane Sawyer on ABC's Good Morning America that to ease skyrocketing gas prices Americans "oughtta conserve more and I would hope Americans conserve if given the choice."(ABC, Good Morning America, 9/1/05)

Democratic National Committee Chairman Howard Dean issued the following statement reminding President Bush that in case he hadn't noticed, ordinary Americans have been doing their part. They have been making sacrifices, they have been suffering. Meanwhile President Bush has failed to rein in skyrocketing gas prices.

[Hendrix]

"Let's say I am a dealer and I get a 10,000 gallon delivery for which I paid $2.50 per gallon. Then the next day after the tanker leaves, I raise my prices to $3.00 per gallon due to a calmity that has happened somewhere else in the country."

The answer to your question is YES! In your example, you imply that supply must not be high enough to meet demand because of the tragedy (or the company would not be ABLE to raise the price of what it bought earlier). If the supply is lower than the demand, it does not matter when it was bought or how much was paid for it. The price must go up because supply is lower than demand. As I noted, the higher price plays a vital role by making people buy less of the product so more will have some of it, the higher price attracts more supply, etc., etc. It is how any economy works.

The oil company gets to keep the windfall or higher profit because it took a great risk in buying oil that could have gone down in value. I know your gut reaction is to be mad at the oil companies for making a windfall (really it is just their return for the risk they took, so it is not a windfall), but you are overlooking the way a market functions. If we try to regulate prices, we have a mess (people buy too much of the scarce product, less production to make up the shortage in supply, etc.). I see the same kind of arguments that you make by liberals because they really don't understand economics or they don't believe in economics (or maybe they think they can change the laws of economics).

[tx_eggman]

The refinery you point out is from some small outfit, Arizona Clean fuels. Not Chevron, Texaco, etc.

The point isn't the size, it's the fact that they've been trying to get it permitted for ten years.

As I said, the industry has increased capacity and efficiency at existing plants, but they haven't been able to build new ones because of regulatory restraints (translation, in part - greatly increase costs)

They have built plants, just not in the US.

So, in that sense, you are correct, but only if you amend your statement to read:

Facts: Capitalism. Increasing profits. Oligopoly (too many large, state owned companies for this). Why would the big guys who ever more dominate the market act to decrease their profits by building more refineries in the United States?

[ThinkDifferent]

think the term profiteering is fitting. If you raise the price of what you have, and it causes real suffering

Stop right there. The suffering is not caused by high prices, it's caused by a lack of supply. The alternatives to high prices are long lines and shortages where gas is unavailable at *any* price. Higher prices are the best way to deal with a limited supply, because it discourages nonessential use. Yes, the sellers profit. So what? We're not socialists here; we should recognize that one entity's profit is not another's loss.

[Hendrix]

"Ok. So you're telling me that the oil companies are raising prices purely for our own good? That they are just trying to be sure we all have enough? I'm skeptical."

You obviously have never taken an economics course. Free market economics assumes that everyone is trying to maximize their profits (it works off greed). However, that greed is what makes the supply/demand relationship work and it keeps the supply/demand of any product in equilibrium. I don't want to give you an entire economics course online, but you really need to understand some basics and you would see how all of this works. It is pretty simple and it makes perfect logical sense.

[ThinkDifferent]

So you're telling me that the oil companies are raising prices purely for our own good? That they are just trying to be sure we all have enough?

Of course not. They're doing it because it's in their best interests. But the *effect* is exactly that it allocates the limited supply to the most valuable uses. Textbook Adam Smith.

[tobyhill]

To any Freeper than can assist in understanding,

The price of gas on the market is set 45 days out so todays prices are for October delivery contracts, how did prices accelerate 30% in 3 days?

[brownsfan]

"Stop right there. The suffering is not caused by high prices, it's caused by a lack of supply."

Ummm... high prices = lack of supply.

This is not a commodity where consumers can choose not to buy. If you make $8/hr, and gas costs $3/gal that causes suffering.

President Bush just called for zero tolerance for gouging. Isn't that against free market?

[Hendrix]

Demand for oil, in general, is not local--it's global. The demand for oil globally has gone up (China, etc.). As far as raising prices before new shipments have come in, see my post above which explains this perfectly in very logical, economic terms. Bottom line: it is all supply and demand.

[ssstewart]

Hendrix, I appreciate the education.

However, not being an economist, I just simply disagree with the premise as these thing usually happen after a crisis. I would whole heartedly support the dealer if in fact they were out funds for which they would have no other recourse in which to revover without a price increase, after all, I'm sure he did not get into the business for his helath!

But in my simple minded way of looking at things, he is taking advantage of a situation with no defendable position as to how he would be taking a hit for selling the gas at the cost he contracted for when he bought it. After all, why did gas go to $4 and $5 per gallon in Atlanta. There was no real crisis there and their deliveries had already been made by the local jobber...

I'm not in favor of any type of price control as I believe in a free market society, but it still seems like gouging.

With that, I'll sit back and try to learn something.

[brownsfan]

"Textbook Adam Smith."

Adam Smith was a man. Man = falible

[tomjohn77]

Right on. There is no real competition in the oil market. Thus the supply and demand curves should be forgotten. They are making a lot of money and thats their goal. Maybe its about time to check up on how much the oil companies talk with eachother. It might be time to bring them to justice.

[dfwgator]

How about government do their part and drop the gasoline taxes.

[Hendrix]

"President Bush just called for zero tolerance for gouging. Isn't that against free market?"

What Bush is referring to is local gas stations that are gouging--probably colluding with the station across the street to raise prices when supply is very low, mainly in Louisiana due to the storm. It would be very hard for a gas station in Texas or some other state to do that because there is enough supply at other gas stations, etc. If a couple of gas stations tried that in Texas, for example, you could just drive to the next corner and buy it for a cheaper price. That is what keeps people from raising prices--other suppliers will supply it for less when there is enough supply to do so. Again, very basic economics here folks. Not rocket science.

[dfwgator]

I would gladly pay an extra one or two dollars a gallon if it avoids having to wait in line for several hours to get gas. Time is money.

[Smittie]

It's called CAPITALISM.....supply and demand.....economics 101.....

Capitalism only works in a free marketplace. Seeing how most of our oil comes from O.P.E.C. which arbitrarily sets limits and prices, it's not a true open marketplace. They use our system against us.

[frgoff]

Profiteering is stealing materials and then selling them on the black market.

Explain to me how the oil companies are profiteering.

[usastandsunited]

It's called CAPITALISM.....supply and demand.....economics 101.....

Your right. But our economy extends beyond economics 101. Price does not, nor should it, always depend upon supply and demand.

[Hendrix]

"But in my simple minded way of looking at things, he is taking advantage of a situation with no defendable position as to how he would be taking a hit for selling the gas at the cost he contracted for when he bought it.

That is partially correct and that is what makes the free market system work--people try to maximize their own profits. The whole free market capitalistic system works off self greed and freedom of choice, as opposed to socialism which works off trying to make everyone equal and eliminating self greed and free choice. However, raising prices is permissible greed in a free market system (not gouging as you refer to it) as long as no laws are broken, and that self greed actually makes it all work. If we did not have the self greed, free market capitalism would not exist (but that is like saying if we did not have gravity, an object would not fall when you drop it). The laws of economics are as TRUE as the laws of gravity--we cannot change them.


After all, why did gas go to $4 and $5 per gallon in Atlanta."

Gas went up in Atlanta dues to a global demand and future global supply (some are worried that the supply will fall due to the damage to our refineries, etc., so the price of oil goes up--even oil that you already own!).

[nikos1121]

"Let the talk of this continue. We have a horrendous nation tradgedy taking place and the DNC is blaming oil companies!!"

No, didn't you know? It's Bush's fault. Had he agreed with Al Bore I mean Gore and Robert Kennedy and realized that there IS widespread global warming Katrina wouldn't have happened.

[Hendrix]

"Price does not, nor should it, always depend upon supply and demand."

That is the most idiotic statement that I have ever seen. Idiotic because that is like saying gravity does not exist and should not apply if we drop an object.