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No gouging, just supply and demand
Denver Post ^ | 09.08.05 | David Harsanyi

Posted on 09/08/2005 11:08:53 AM PDT by aynrandy

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To: kx9088
"...Yeah, ok, sure, that's why yesterday your gas price was $3.35/gal and today it is $3.19/gal and two days ago it was $3.25/gal."

Pop quiz time. I but a widget for 100 bucks and sell it for 110. What's my profit? (hint, it's 10 bucks) I pocket 10 bucks and use 100 to buy another widget to sell. Now lets pretend my supplier emails and says sorry, the widget plant was destroyed in a hurricane. Your widget now costs 200 bucks. Now I'm screwed. If i want to stay in the widget business (ie buy another one to sell) i need to double my price. The widget now costs 210 bucks. I pocket 10 bucks and use the other 200 to buy a new widget.

So the price double over night, but what happened with the profits? I can't give you a hint on this one, you'll have to work it yourself.
61 posted on 09/08/2005 11:44:45 AM PDT by tfecw (It's for the children)
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To: frogjerk

You mean I can't go to a competetors gas station and get a lower price?
------
You can and in my town here in California, the highest price over the holiday weekend was $3.09 a gallon -- the LOW-PRICED, CHEAPER COMPETITION was $3.06.

I will say it again -- there is no competition.


62 posted on 09/08/2005 11:45:16 AM PDT by EagleUSA
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To: Wiseghy
"By restricting the ability to build refineries, we have set up a situation of a lack of supply and insufficient competition to hold prices down. Given the short term inflexibility in demand (people are NOT panic selling their SUV's, have you noticed?) the market is not performing as well as it might, and we will continue to see price spikes, and crashes, until this situation is remedied through public policy."

The only public policy that will work is reducing restrictions to bringing more supply on the market. Any other solution, such as price caps, profit restrictions, extra taxes on profits, will only exacerbate the problem of high prices and low supply.
63 posted on 09/08/2005 11:45:20 AM PDT by Hendrix
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To: aspiring.hillbilly

price is set at NYMEX, an efficient market.


64 posted on 09/08/2005 11:45:55 AM PDT by fooman (Get real with Kim Jung Mentally Ill about proliferation)
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To: frgoff
Gasoline and other energy commodities are in this category. No matter how high the price goes, past a certain point there will be no corresponding reduction in demand.

Ah. The dreaded inelasticity of demand. I remember in the 70's when all the leftist economists told us that demand for gasoline is virtually infinitely inelastic because it is a necessity. Hence the need for price controls.

Their ideas got tested in the real world when gas prices skyrocketed after the Arab oil crisis. The leftist economists of the 70's turned out to be completely wrong. You are just as wrong today as they were then. Both demand and supply will respond to changing market conditions if well-meaning but ignorant people will just butt-out and let the price mechanism work.

65 posted on 09/08/2005 11:45:56 AM PDT by ModelBreaker
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To: aynrandy

"We were seeing the prices go up in four or five days from 60 to 70 cents..."

If this increase were due to a gas tax, they wouldn't consider it a legislative gouging of the public. They'd consider it money owed by the consumer to the protective state.


66 posted on 09/08/2005 11:46:27 AM PDT by Ghost of Philip Marlowe (Liberals are blind. They are the dupes of Leftists who know exactly what they're doing.)
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To: EagleUSA

"I will say it again -- there is no competition."

And you will be just as wrong as the first time you said it. Competition does not mean there will be a lot of different prices. The price that you are seeing is the market price, and the fact that there is not much difference from one gas station to the next is even more proof of that.


67 posted on 09/08/2005 11:47:30 AM PDT by Hendrix
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To: anonsquared

yes, I think it would be ok. if we put an artificially low price on seating, the demand would be so high, in effect, no one would be able to get on the plane. As many smart people have already noted: capitalism isn't the fairest system in the world, only the fairest one we have.


68 posted on 09/08/2005 11:48:01 AM PDT by aynrandy
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To: EagleUSA

you live in a high reg, boutique gas state. move. seriously.


69 posted on 09/08/2005 11:48:26 AM PDT by fooman (Get real with Kim Jung Mentally Ill about proliferation)
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To: Rodney King

"...why did they let it go down...?"

??

Well, I drive by this place at least 4 times per day. They are an independent station. They don't have a convience store inside, but they do have a service garage.

The worse part is, he has a LED billboard with some text scrolling begging that he is do what he can to keep prices down. LOL!


70 posted on 09/08/2005 11:49:27 AM PDT by kx9088
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To: Hendrix
It really is common sense if you have taken the time to understand simple economics. The problem is that most people on this board have not, and thus they are working off zero knowledge about how an economy works and how prices are determined.

I expect more from people on a conservative site. Populism in economics will be the death of the conservative movement because, when all else is said and done, conservative economics works. If you take away from our movement that we actually have policies that work and replace them with the silly c$$p being proposed by many FREEPERS on this and other threads, there is really no reason to vote for conservatives.

71 posted on 09/08/2005 11:50:55 AM PDT by ModelBreaker
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To: fooman

you live in a high reg, boutique gas state. move. seriously.
-----
Yes, and more properly, I live in a state that has been hijacked by liberals that pander to the enviro-whacko leftists which support them. I am going to move for sure for that, and other reasons all tracable back to the liberal dessimation of what was the greatest state in the nation...


72 posted on 09/08/2005 11:51:26 AM PDT by EagleUSA
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To: aspiring.hillbilly
"The very fact that they were able to collude en masse on increases and stick it to the consumers is solid evidence that supply and demand pricing is not in not functioning."

If they are colluding, why are they just now doing so? Why didn't they raise prices years ago? Why not raise them to $10 a gallon?

The fact that prices are uniformally high is a good indication that is the market price. It is almost impossible to collude in today's highly competitive oil market, unlike the times you quoted.
73 posted on 09/08/2005 11:51:31 AM PDT by Hendrix
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To: aynrandy

Then you would be the only one not complaining that you are being gouged.

One more question...
IF WE CAN PUT A MAN ON THE MOON, WHY CAN'T WE DESIGN A CAR THAT RUNS ON JUNK MAIL?


74 posted on 09/08/2005 11:51:46 AM PDT by anonsquared
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To: tfecw

That's fine, but how often does his fuel supplier call him and say "Hey, your cost will be $3.00/gal."...3 hours later they call back "Hey, you cost will be $3.20/gal."...the following morning they call back back "Hey, your cost will be $2.98/gal."...etc.

And so on and so on.


75 posted on 09/08/2005 11:52:42 AM PDT by kx9088
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To: EagleUSA

If cali were charged a Nimby tax until offshore rigs and refineries were built, this nonsense would stop.

I live in NYC, so I hate the nonsense too. When expenses outweigh what I can make, I will move too.


76 posted on 09/08/2005 11:53:17 AM PDT by fooman (Get real with Kim Jung Mentally Ill about proliferation)
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To: frogjerk
You mean I can't go to a competetors gas station and get a lower price?

Agreed! And not only that but gas is one of the few items that a consumer can comparison shop without ever getting out a car. Gas is MORE competitive than almost any other market.

77 posted on 09/08/2005 11:54:06 AM PDT by PMCarey
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To: aspiring.hillbilly
The oil companies ruthlessly jacked up prices on mere anticipation of the amount of future expenses due to to the wreckage of Katrina for oil already in the pipeline. Oil companies with no facilities in the path of the storm shared in the windfall.

You don't think that the increased demand symbolized by everyone lining up to buy gas in the southeast had anything to do with it? I.E. demand goes up, price goes up?

78 posted on 09/08/2005 11:54:07 AM PDT by Rodney King (No, we can't all just get along.)
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To: EagleUSA
I just drive my "other car" that gets better gas mileage and I make sure I don't make useless trips.

That saves money. Gas prices directly effect certain people more than others...

79 posted on 09/08/2005 11:54:15 AM PDT by frogjerk (LIBERALISM - Being miserable for no good reason)
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To: ModelBreaker

"I expect more from people on a conservative site. Populism in economics will be the death of the conservative movement because, when all else is said and done, conservative economics works. If you take away from our movement that we actually have policies that work and replace them with the silly c$$p being proposed by many FREEPERS on this and other threads, there is really no reason to vote for conservatives."

I agree 100%. People who spout this nonsense just don't have a clue about economics or our free market system.


80 posted on 09/08/2005 11:54:17 AM PDT by Hendrix
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