No gouging, just supply and demand

Denver Post ^ | 09.08.05 | David Harsanyi

[zencat]

Well, in this case, the consumers provided their own misinformation. That being said, regardless of the source, there is a real increase in demand at the pump. As a result, prices should increase.

Somewhat. However, there was a radio station in Springfield, MO that picked up the rumor and broadcast it. It quickly spread to Columbia, MO and then to KC and STL. Another assumption of 'Econ 101: Guns & Butter' is that suppliers and consumers have accurate information. Confusion, rumor, and inaccuracy enter the equation at times. It's similar, though not identical to speculation. Speculation is based on the "best" information available, whereas hysteria can be created through disinformation or ignorance, particularly with mass-media.

Of course, no such thing as a perfect world.

[EagleUSA]

So your tears about high prices are all MOOT when there is nothing to buy, anyway.
------
Alot of worry over nothing, really. No gas? No crude? Hardly. Nothing really in the last 12 months has changed in the market, except...prices. The price of crude, the price of gas, diesel, heating oil, etc.

Where is your shortage? I don't see it. Supply and demand are the same as they were 12 months ago. Again, only prices have changed...and many of the refineries in the Gulf are already back on line --- shortage? Where?

[SoothingDave]

Nothing really in the last 12 months has changed in the market, except...prices.

Perhaps you are unaware of the existence of the awakening giant known as "China"?

(We also experience growth in population and energy usage right here in the US as well, but the growth in usage is not nearly as sharp as in Asia.)

SD

[Trust but Verify]

I can sympathize with your current situation. I suspect there are more republican families in your situation than in mine. I know my sister's family is struggling to make ends meet, and we have been trying to help them out here and there by finding ways to trade things we need for things they need, like having my b-i-l do maintenance on our vehicles in exchange for us cutting and hauling firewood so their heating bills won't be overwhelming.

I really think these prices are heading down, and they will sttle in the $2.30-$2.50/gal range. I hope that's enough to put your budget back in balance.

[fooman]

we used to sell TONS of chainsaw and kerosine heaters in the early 80 when oil cost so much.

[EagleUSA]

Perhaps you are unaware of the existence of the awakening giant known as "China"?
-----
Not at all unaware -- but also aware that this country does not have a comprehensive energy policy in place and functioning that will ensure the supply of energy we need. Washington has been totally remiss with insuring our supply of domestic oil and energy.

Until that happens IN EARNEST will we ever be in a position to not be completely manipulated by international energy suppliers. We need true competition in our own U.S.-supplied energy market that is not prevented by the campaign contributions to both sides of the aisle in Washington. It is no accident that we are, where we are, with domestic energy supply.

[SoothingDave]

Not at all unaware

Then why would you say something as nonsensical as you did about nothing changing in the market except price. Demand is a factor in prices.

The rest of what you say, about the gov't needing to work to ensure we have our supply is forthcoming and ample is so rational that only inside the beltway could it be considered controversial.

SD

[EagleUSA]

Demand is a factor in prices.
------
What I said was not nonsensical at all. You are thinking narrowly. I would agree too that DEMAND is a BIG factor in pricing.

In a non-competitive marketplace, it DRIVE PRICES UP!
In a competitive marketplace, it DRIVES THEM DOWN!

Now, which scenario are we suffering?? :-)

When you distill it all down, cost, price, availability versus demand are inseperable -- and at no time have I EVER advocated price controls - I don't believe in them. I just don't like being a victim of a non-competitive, over-priced market. I don't think anyone does -- competition is the key in a healthy, well-balanced capitalist system. Our energy market is not healthy....not for the consumer anyway.

:-)

[fooman]

it is competitive marekt per the figures above. The supply is restricted, but because of government mandates.

[SoothingDave]

What I said was not nonsensical at all. You are thinking narrowly. I would agree too that DEMAND is a BIG factor in pricing.

In a non-competitive marketplace, it DRIVE PRICES UP!
In a competitive marketplace, it DRIVES THEM DOWN!

If you think demand drives prices down, in any kind of market, you need to go back to Econ 101.

SD

[EagleUSA]

If you think demand drives prices down, in any kind of market, you need to go back to Econ 101.
-----
OK, last iteration.

In the market I work in, as more suppliers AND CAPACITY (as in refineries and cracking plants) comes on board, driven by increased product demand, more competition rises for the amount of available business, and PRICES GO DOWN. You can go back to Econ 101.

Many markets behave that way, and the energy market would IF IT WAS COMPETITIVE and suppliers had to vie for business. But they don't as I have said and as you should be able to reason out.

BYE.

[fooman]

the HHI of this industry is well below 1000 at 704. It is a competitive industry. Intel on the other hand has 80% market share and an index of 6400 on this index well above 1800.

Supply is only restricted by refineries. Even the saudi has told us to build them and would invest in the same.

[expat_panama]

Washington has been totally remiss with insuring our supply of domestic oil and energy.

Puh-leeze, let's not have Washington do anything beyond providing a legal environment for enforcing contracts.   I agree that something has to be done--  but let's you and I do any 'something' that needs doing. 

The price of oil has gone up.  If we act fast we (yes, you and I) can explore, drill, and refine oil.  If we leave it to the big government types they'll just botch it up like they did in '79.   Demand will collapse along with the economy and will take decades to recover (click here to see how oil consumtion is finally recovering).

We don't want any more taxes or regulations to 'fix' (read distort) the market.   I'm already expanding US refinery capacity (click here to see how much) and if anyone thinks they can do better they're welcome to join in the fun.

I do not want --repeat DO NOT WANT-- anyone raising my taxes to force me to pay for someone else building their refineries.   They can do it on their own nickel for heaven's sake..

[fooman]

with capacity pegged near 100%, it is not enough. It is also impractical to import gas. with no new refineries since 76 there is a real problem. We have gone from 315 to 135 refineries and while the ones remaining have become more efficient, we are still not keeping up.

[fooman]

http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/Ref_image_Crude_runs.htm

This graph from the same site seems to show less capacity coming online.

[kempo]

No competition/ Why don't you go to the commodities exchange and just see what you can buy a boat load of crude oil for. Thats competition my friend and there is plenty of it.

[kaki]

I received this emai this am, but added my own opinion before passing it on!


Don't know who started this silliness, but would bet they are a) an
environmentalist wacko and/or b) a real Bush Hater. First of all, the
prices are NOT going up!! They are already coming down. Reports are
that by Dec. they will be back to pre-Katrina prices.

I agree that last weekend, some INDIVIDUAL stations upped their
prices before it was necessary. That in my opinion is price gouging,
but it is NOT "this administration's" fault. It is just sorry people
in our own neighborhoods!

Supply and demand pricing is the way our capitalistic society works,
NOT price controls, A few states that have gas taxes (Gov. Sonny
Perdue-REPUBLICAN of Ga.) have waived some of the taxes for a period
of time.( NOT the Gov. of North Carolina, Mike Easley-DEMOCRAT!)
http://money.cnn.com/2005/09/06/pf/taxes/gas_tax/?cnn=yes This will
give more info.

If the environmentalist wackos and the Liberal Democrats would allow
us to drill for the oil we know is in our own country, we could cut
our dependence on foreign sources drastically!! How about some new refineries after 25-30 years of not building any! If the Liberal
Democrats cry that "GWB went to war in Iraq just for oil, why in the
hell would he not be passing it out freely now to quiet his critics???

Guess whoever started this email thought everyone was to pass it on
without further comment. Sorry, but I am tired of this sort of email
being sent!







URGENT 9-10-05 NO GAS DAY















Subject: 9/10/05 Gas Boycott



IT HAS BEEN CALCULATED THAT IF EVERYONE IN THE UNITED STATES DID NOT
PURCHASE A DROP OF GASOLINE FOR ONE DAY AND ALL AT THE SAME TIME, THE
OIL COMPANIES WOULD CHOKE ON THEIR STOCKPILES.



AT THE SAME TIME IT WOULD HIT THE ENTIRE INDUSTRY WITH A NET LOSS OF
OVER 4.6 BILLION DOLLARS WHICH AFFECTS THE BOTTOM LINES OF THE OIL
COMPANIES.



THEREFORE Sept 10TH HAS BEEN FORMALLY DECLARED "STICK IT TO THEM DAY"
AND THE PEOPLE OF THIS NATION SHOULD NOT BUY A SINGE DROP OF GASOLINE
THAT DAY.



THE ONLY WAY THIS CAN BE DONE IS IF YOU FORWARD THIS E-MAIL TO AS
MANY PEOPLE A S YOU CAN AND AS QUICKLY AS YOU CAN TO GET THE WORD OUT.



WAITING ON THIS ADMINISTRATION TO STEP IN AND CONTROL THE PRICES IS
NOT GOING TO HAPPEN. WHAT HAPPENED TO THE REDUCTION AND CONTROL IN
PRICES THAT THE ARAB NATIONS PROMISED TWO WEEKS AGO?



REMEMBER ONE THING, NOT ONLY IS THE PRICE OF GASOLINE GOING UP BUT AT
THE SAME TIME AIRLINES ARE FORCED TO RAISE THEIR PRICES, TRUCKING
COMPANIES ARE FORCED TO RAISE THEIR PRICES WHICH EFFECTS PRICES ON
EVERYTHING THAT IS SHIPPED. THINGS LIKE FOOD, CLOTHING, BUILDING
MATERIALS, MEDICAL SUPPLIES ETC. WHO PAYS IN THE END? WE DO!



WE CAN MAKE A DIFFERENCE. IF THEY DON'T GET THE MESSAGE AFTER ONE
DAY, WE WILL DO IT AGAIN AND AGAIN.



SO DO YOUR PART AND SPREAD THE WORD. FORWARD

__________________________________________________

[bvw]

Thanks.

[bvw]

1. at no time have I EVER advocated price controls - I don't believe in them.
2. I just don't like being a victim of a non-competitive, over-priced market.

First: Why is the market non-competitive in your view, what data supports your claim of that?

Second: What is your suggested cure for a non-competitive over-priced market? It sure seems as if you are saying price gouging restrictions -- which are in fact a form of price control -- is your cure. But if that is so, then your belief statements are in complete contradiction. Can you explain how they would not be, for surely you think they are not.

[aspiring.hillbilly]

To make this a choice only between accepting price collusion in restraint of trade OR heavy handed government price controls is a red herring. We put the book-cookers from Enron and Worldcom in prison for theft, the oil robber barons need a dose of the same medicine. They are stealing from the public just the same. Will that happen? The fox is guarding the hen house; not enforcing the law is corruption at the highest levels.