Doesn't matter...they could SELL their "cheap" oil for $75 on the open market. Are you saying someone should sell their house for $100,000 when all their neighbors are selling theirs for $400,000 just because they bought their house for $100,000 years ago???
The oil that is selling on the market is on oil FUTURES. Typically, the delivery is for 3 or 4 months from now.
Now there you go - introducing logic and common sense into the discussion. Recall that Clinton got elected twice and the Dims have been able to distort Bush's record to such a degree that his approval ratings hover around 33%. Americans are, on average, pathetically stupid.
Less than 10% profit is "fair" in any industry. Those who can't figure that out are pretty lame.
I'd suggest since this is 'American' oil, and tons and tons of it is freely given to the oil companies, they have to keep it in the American market...That'd be different, wouldn't it...
Thanks. You got it. The value of something is what a willing buyer and seller agree on. The trading of commodities creates buyers willing to pay prices based on their assessment of present conditions (e.g., war) and of future developments (e.g., expected embargos).
Sometimes houses in your example are bid up way beyond a sustainable price level. There are folks in my area who have spent $700,000 for condos in a development that is now cutting the price to $625,000 or less. You could assert that the earlier folks got the better units, maybe. But the automatic value increase they were anticipating has evaporated for a while. There is a psychology also in commodity trading and oil will likely back off from its heights.
I have a few stocks I've purchased in my retirement account that have increased significantly in value. Some of those that have risen to new heights I have sold. I did not sell at my purchase price. Similarly I have gotten out of stocks that were dogs. Despite what I paid for them I sold for lower prices.
Excellent point. The problem is that most folks think the idea of the other guy realizing a profit on an investment is obscene.
Of course, the gains they make on a really hot stock buy... are just deserved good luck.
You have nailed it with your analogy. And what follows is my rant about the situation. Put on your seat belt.
There is a huge culture out there that does not get it. It is a culture that either ignores or does not understand the free market and supply and demand economics. These are the ignorant ones who are being used and mislead by politicians who have in their back pocket another group which is called the "Me Generation".
You may have heard of the "Me Generation," which got its name in the 1970s. It must now be a powerful segment of the population because they seem to have the financial clout to attract politicians who will push the real agenda: limit the supply and add taxes so that high gas prices will push more people out of their cars and off the road. Only a self-centered culture would allow market conditions to be created by government action that raises the economic threshold without regard to its consequences. That is because their strategy is for one thing: limit those using the road (It is the same strategy they are using for cigarette smokers). For them, the less cars in their way, the better. It is the everybody-but-me culture that tailgates other drivers until they move out of their way; only to speed by while flipping the bird at 30 mph over the speed limit. It that group that says, "If those people wouldn't be having so many damned babies, there would be more sanity . . . I wish half the people would get themselves sterilized. . . Homosexuality is good because it takes more people out of the baby making market."
The blame game which attacks the oil companies fits into their selfish agenda. They are willing to use any lie and every deception to accomplish their narcissistic goal. It allows more regulation which increases the cost of production, limits the production of oil, and raises the price. They know market economics but they will not reveal what they are doing and the press is their willing accomplice. By hiding the realities of market economics; by creating a scapegoat, it allows the game to be played without any public outcry at what is actually is being done. By shifting the focus away from the nature of the game being played, the effort to push more people out of their cars-- and to a certain extent, population control--continues to their delight on schedule.
Doesn't matter...they could SELL their "cheap" oil for $75 on the open market. Are you saying someone should sell their house for $100,000 when all their neighbors are selling theirs for $400,000 just because they bought their house for $100,000 years ago???
You've got the wrong analogy.A better analogy would be that someone who has the material to make a house.
Builder A:
- Material cost: $80,000
- Labor cost: $120,000
- Sell price: $300,000
- Profit: $100,000
Builder B:
- Material cost: $40,000
- Labor cost: $120,000
- Sell price: $300,000
- Profit: $140,000
If Builder B sells his material to Builder A, he only makes $40,000. If he builds a house, he makes $140,000.
Besides. Builder B is in the business of building, not just being a material middle-man.
A good business man would never simply sell the raw material.