Mac Johnson: The O'Reilly Fiction [High gas prices as conspiracy theory]

humaneventsonline.com ^ | Apr 24, 2006 | Mac Johnson

[Tolik]

Interesting!

This ping list is not author-specific for articles I'd like to share. Some for the perfect moral clarity, some for provocative thoughts; or simply interesting articles I'd hate to miss myself. (I don't have to agree with the author all 100% to feel the need to share an article.) I will try not to abuse the ping list and not to annoy you too much, but on some days there is more of the good stuff that is worthy of attention. You can see the list of articles I pinged to lately  on  my page.
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[Crazieman]

O'Reilly wouldn't understand business economics if you hit him in the face with a textbook.

[Brilliant]

“Gasoline supplies are at an eight year high, according to OPEC. There is plenty of gas selling on the open market, more than enough to meet the worldwide demand. So rising gas prices are not a supply and demand issue.”



Maybe according to OPEC, but it's not true. There is a difference between supply and inventories, as every first year economics student knows. There is also a difference between supply and quantity supplied.

They actually do not publish statistics on the supply. It's not something that is easily determined just by looking in the storage tanks since it depends on the willingness of sellers to sell at a given price, and you can't determine that by looking in a storage tank.

And even if it were true, so what? If supply is at an 8 year high, but demand is at a record high, then of course the price will go up.

[mnehring]

Normally I don't have a problem with O'Reilly, but his ranting about the so called 'gas conspiracy' and calls for price fixing by the government really has pissed me off..

[ConservativeBamaFan]

Personally, I can't stand to watch O'Reilly (and I don't). He is in a fantastic time slot on the #1 news channel. ANYONE in that slot would have his ratings. On this fuel issue, he is no better than the politicians who promise "investigations" into profits (but never seem to investigate losses).

If gasoline costs too much: PRICE GOUGING!!
If gasoline costs too little: UNFAIR COMPETITION!!
If gasoline costs the same: COLLUSION!!

[Alberta's Child]

We shouldn't expect much from a guy who probably has never worked in a job that involved the production of a single product or commodity in his life.

[Realism]

There is a difference between supply and inventories, as every first year economics student knows.

Apparently you didn't take economics? Inventory is a record of the supply on hand.

[Tolik]

http://www.eia.doe.gov/oil_gas/petroleum/info_glance/petroleum.html

 

 
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[OldFriend]

And to think that B'ORE was a teacher.

And just how does he think punishing the oil industry will lower prices at the pump?

Talk about illogical, his 'theory' is outright ignorant. No other word for it.

[Just another Joe]

I agree with what this author has to say, however, (isn't there always a however?)
What I want to know is why, when crude oil prices rise, the price of gasoline rises the next day but when crude oil prices drop it takes weeks, if not months, for the price of gasoline to drop?

There may not be any price gouging going on but they sure are putting the shaft to us in that respect.

[massgopguy]

It also appeared lost on O'Really that most of the big oil companies are actually owned by foriegn governments that do not answer to Congress.

[massgopguy]

That's because the people that own the local stations are at the mercy of those who own the contracts.

[P-40]

but his ranting

It just made me loose what little respect I had for his radio show. (I've never seen the one on TV)

[jec41]

There is a difference between supply and inventories, as every first year economics student knows.

Apparently you didn't take economics? Inventory is a record of the supply on hand

Actually I am more concerned with the production of light crude from which most gasoline is refined. It is in decline. While there still may be plenty of crude oil most of it is heavy oil that yields less gasoline and most refineries are not yet able to accept. SA is building new refineries for heavy oil because the percentage of their light oil is decreasing and the percentage of heavy oil is increasing.

[Brilliant]

No. Actually, I have a degree in economics. Inventory is not supply.

It might have some impact on supply, but not one that can easily be quantified because the people who maintain inventories do so in a way that does not necessarily depend on price, as such, at least not in the same way that supply does. In the case of supply, the amount of oil producers are willing to supply goes up when price does. It goes down when the price does.

But inventories depend more on expectations and the cost of storage than the actual price. If the price goes up, you might sell your stored inventory, but then you might not if you think the price is going to go up even more. If fact, if you thought that the price was going to go up even more, you might even increase your inventories.

And if you thought that the price of oil was going to remain exactly as it is, then you would have no incentive to maintain a significant inventory at all. All you'd accomplish by doing so is increase your storage cost. There would be no profit in holding unused oil in a storage tank since you could always buy more on the open market for the same price that you can do so now.

So inventories are really an indication more of expectations and fear of a disruption than they are of supply.

[Realism]

Well that just leaves crude oil costs. Have they gone up? Well, yes, apparently they have.

91%, obviously crude is the major reason for the higher cost of gasoline, etc.. Now the question is who supplies the crude and why does it cost them so much more now than just a few years ago to bring it to market? I believe O'Reiley's theory is on the money, but I also believe we should let prices rise. I believe some good may come of it.

[Just another Joe]

That's because the people that own the local stations are at the mercy of those who own the contracts.

I didn't mean to imply that it was the local proprietors that were raising, or lowering, the price so fast or slow.
I understand that most staions, anymore, are franchises.

My problem is the the price goes up before the contracts have hit and then doesn't go down when the price of crude goes down.

[Tangaray]

So according to you, unless you have worked on a production line, like making GM cars, or slopped hogs, (commodity) you're not allowed to question high oil prices? O'Reilly is on to something with his investigating team, and even the congress thinks that something smells. Whether it's the commodity traders wanting to drive up their own stocks, or an inventory problem with the oil companies, it deserves looking into, because too much of this process is being kept secret. Go O'Reilly!

[Major_Risktaker]

Thanks...