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.

[frgoff]

The fact that prices go DOWN proves they are not an oligopoly.

[Hendrix]

"Right on. There is no real competition in the oil market. Thus the supply and demand curves should be forgotten."

There is plenty of competition in the oil market, and there are no barriers to keep new competition from entering into the market. If profits are too high, new competitors will enter the market and drive prices down as they try to capture those profits.

[frgoff]

If the gas station owner doesn't raise his price, where's he going to get the money to buy the next shipment of 10,000 gallons at $3.00 a gallon?

In business, you set your prices based on what it will cost to REPLACE your current inventory, not recoup what you already paid on it.

You are making the common mistake of confusing prices with costs. The moment the gas shortage hit, the dealer's COSTS went up. He HAS to raise prices to meet those costs.

If there is a huge run on gas, and there is the prospect of not getting more for a while, he has to raise his prices significantly during the run to make sure he has enough money to survive the dry spell AND replace his inventory when the gas does become available, since it will likely be very expensive at that time.

The only reason this is an argument today is because of 50 years of communist indoctrination in our public school systems that business is evil, greedy and corrupt and preys upon the helpless proletariat.

[usastandsunited]

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.

LOL... Familiar with "Farm" programs ? .. What about price gouging?

[Hendrix]

Well OPEC is not part of our free market system, and it does cause prices to be higher than they should. However, that is not our oil companies fault--they do not control OPEC and they do not profit from OPEC's prices directly. However, understand that OPEC keeps prices up by limiting supply. The lack of supply is what makes the price go up--not setting an arbitrary price. Therefore, the laws of economics are still in force (just like the laws of gravity)--lower supply makes prices go up.

[tomjohn77]

Well it looks like it works now, NOT. There are a lot of state own oil enterprises pluss the OPEC etc. that interefere. This makes the oil market not a free market.

[Hendrix]

Price gouging is illegal activity and can only occur in very rare circumstances (monopoly, etc.). The market naturally prevents price gouging with competition, and very few markets lack competition.

Farm prices are where our government has manipulated the supply to keep prices higher, which is only possible because they don't allow competition to set prices.

In short, the two examples you gave are rare examples of non-free market examples and are not part of a competitive free market system. I can assure you that the oil market if very competitive.

[brownsfan]

"Again, very basic economics here folks. Not rocket science."

One of the things I find most amusing about free market types is the direct and not so direct attempt to cast those who disagree as someone of low intelligence. I suspect that many free market types are simply regurgitating what they were taught without a single original thought.

If free market is such a good thing, then why is anti trust bad? If free market is always the right answer, then why is it bad/illegal for the local stations to try to make some money too? It's ok for the oil companies to raise prices, (so that there is enough for everyone), while it's not good for the local station to do the same. The only difference I see is that on the local level, the owners make money. At the oil company level, stock holders get to share in the profiteering.

[brownsfan]

"The fact that prices go DOWN proves they are not an oligopoly."

That would only be true in the absence of anti trust laws.

[usastandsunited]

I can assure you that the oil market if very competitive.

Sounds like your awful close to the oil market.
btw.. Thanks for acknowledging my initial statement was true and not as idiotic as you thought. : )

[Hendrix]

"Well it looks like it works now, NOT. There are a lot of state own oil enterprises pluss the OPEC etc. that interfere. This makes the oil market not a free market."

You are referring to foreign manipulations with our economic system, which has absolutely nothing to do with our oil companies. Yes, OPEC is distorting prices by limiting produciton, but what can we do about it and why are you blaming our oil companies for it?

Would it be better if OPEC did not manipulate the market? Absolutely. Would we have lower prices because of more supply? Absolutely. But don't blame our oil companies for it.

[ThinkDifferent]

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.

Precisely. And this is the result of ignoring market prices.

[Hendrix]

"The fact that prices go DOWN proves they are not an oligopoly."

"That would only be true in the absence of anti trust laws."

That is true. However, they are not an oligopoly.

I do not own any stock in any oil companies, nor do I work for any oil companies. I just don't like to see bad logic about economic activity.

Some of the anti-trust laws are needed, especially in the very rare circumstances of dealing with monopoly, etc. However, most markets or products are highly competitive, and the market itself will take care of attempted manipulations by competition (if you try to raise your prices, you will probably lose market share and thus profits to competitors, etc.).

I am not trying to say people are dumb, but it is obvious that a lot of people on here really don't understand basic economics. Furthermore, people seem to think they can change economic outcomes or that the outcomes do not always apply, which is kind of like saying you could change the outcome of jumping off a building (that gravity only applies when you want it to).

[tomjohn77]

Well I think you are more like a person that thinks he knows it all. You obiously dont know everythin about free market and anti trust

[Hendrix]

"If free market is always the right answer, then why is it bad/illegal for the local stations to try to make some money too? It's ok for the oil companies to raise prices, (so that there is enough for everyone), while it's not good for the local station to do the same. The only difference I see is that on the local level, the owners make money. At the oil company level, stock holders get to share in the profiteering."

Honestly, if the local supply is down because of some of the gas stations have been knocked out, then what they are doing (raising prices) is perfectly acceptable as long as they are not colluding on the prices. Normally, they would not be able to collude if they wanted to because the market has competition, but if a lot of the competition has been knocked out, then collusion may work, and that would be against the law. Bush said that they should not raise prices (or gouge), and that really should only be true if they are colluding. Politicians often say things that are incorrect because it sounds good to the folks who don't really understand how things really work.

However, the big oil companies still have all their competition, so I would bet they are strictly going off supply/demand/price.

[MortMan]

However, remember, the price of the gas I have in the tank was at $2.50 per gallon. Am I now to be accussed of price gouging? I would say yes, and that once I buy a new load at the higher price, then I should be allowed to fairly raise my price, but not before!

Where does the money come from to but that next tank-full of gas? It comes from the gas your are selling now.

If the first load was $2.50 per gallon, but the next will be $3.00, selling the first load at $2.50 will not refill your underground tank. Obviously, my description leaves out a lot of variables, but to say that a gas station owner must sell his gas at the level that he has already paid - and not to anticipate the likely cost of his next delivery - is a recipe to close the gas station, unless the price of gasoline is in a steady downward trend.

[Hendrix]

Well I think you are more like a person that thinks he knows it all. You obiously dont know everythin about free market and anti trust

I don't know it all and I know that, and I apologize if I come across that way to you. Believe what you want. Folks, its been fun, but I better get back to work. We will have to have some more economic discussions sometime in the future.

[ThinkDifferent]

However, remember, the price of the gas I have in the tank was at $2.50 per gallon. Am I now to be accussed of price gouging? I would say yes, and that once I buy a new load at the higher price, then I should be allowed to fairly raise my price, but not before!

Say I bought a house in San Jose 5 years ago for $500,000. The market price is now $1 million. Is it "gouging" if I sell my house for $1 million if I don't intend to buy another house in that area?

[TheBattman]

The only part I don't like about that statement is who made it.....

This is NOT the time for the oil industry to take advantage of the situation. Yes, the actual cost will be taken into account. But any effort to make profit off the situation is wrong - and that is going on.

[goodnesswins]

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

OKAY.....you're holding onto a rare $10 coin......it's rarety (supply) makes it worth about $500. How about I give you $11 for it?