Posted on 04/09/2002 8:27:13 AM PDT by WaterDragon
The email came in from a friend in Eugene. Bear in mind that oil companies are no more greedy than you are. (Have you ever turned down a raise?) Neither are they stupid. They know the basic rules of supply and demand, and so are fully aware that $3.00 a gallon gas will cost them income, not increase it. The prime guilt here must be laid at the doorstep of government policy, including taxation, and decades of liberal lockdowns on exploration and development in North America.
The idea that an oil company would like to sell less gasoline is ridiculous. The idea that they are all conspiring together to do it is beyond ludicrous. The only people who want you to be priced out of your SUV and forced into high-density housing and public transportation work for the Sierra Club or government. Every one of them is a registered Democrat. The big oil companies want more people driving more cars, more miles, not the other way around. Higher gas prices produce exactly the opposite of what they want.
The oil companies are therefore third down in the rank of villains who are ripping you off. Remember, too, that the approach suggested below will affect more than just a few bigshot oil executives. Most of the people who work for those companies are just average Joes and Janes.
Neverless, this approach could have some interesting public realtions effects. 300 Million people demanding lower fuel prices would give the present Bush administration some heft as it tries to get liberal elements in Congress out of the back pockets of the greenie terrorists. If it worked that way, on the off chance that this effort is really an attempt to damage those who would, if they could, make America less dependent on OPEC, the net result would be the opposite of their intention.
Now for the email, itself.
We are going to hit close to $3.00 a gallon for gas by this summer. Want gasoline prices to come down? We need to take some intelligent, united action.
Phillip Hollsworth offered this good idea: This makes MUCH MORE SENSE than the "don't buy gas on a certain Day" campaign that was going around last April or May! The oil companies just laughed at that because they knew we wouldn't continue to "hurt" ourselves by refusing to buy gas. It was more of an inconvenience to us than it was a problem for them. BUT, whoever thought of this idea has come up with a plan that can really work. Please read it and join with us!..... (snip)
First, it ignores that many independent retailers get their gas from distributors/refineries owned by Mobile and Exxon. So money is still going into those companies' "pockets."
Second, it ignores that the price of gas is going up for a number of reasons having nothing to do with Mobile or Exxon, and everything to do with supply and demand.
These include:
Seasonal driving patterns;
The fact that the price of oil and gas was lowered when demand went down after 9/11
Iraq's actions re: output;
The actions of OPEC;
The war on terrorism has increased demand by the government (ex: the government is buying up fuel to reshore the strategic reserve).
If people really want to lower the price of gas there's a very simple way to do so:
Stop driving so much!!!
For example:
Don't take a vacation this year;
Cut down on trips to the store--go once a week and "stock up" on groceries;
Walk, ride your bike, etc.
Ask yourself (as we did in WWII) "is this trip really necessary?"
If the demand goes down, the supply will increase and the price will go down.
Simple economics.
Not so ridiculous: to business people, the worst thing after 'no customers' is 'customers'. Customers want to do business their way and at their prices rather than yours, which makes doing business unpredictable and less profitable than planned.
By reducing the number of customers and increasing unit prices, a business will return as much on investment as it does by serving more customers at lower prices, and with less trouble; this is why Chevy dealers dream of selling Cadillacs but seldom the other way around.
Yes, ultimately much money can be made by selling to the mass market; but it's a lot of work and most business people have better things to do with their time, like spend some of it with their families. This temptation to minimize the number of customers is also why prices naturally tend to rise.
AMEN!
I hope the administration uses the current situation to point out to America why the United States needs to be
Remind America that while price spikes can still occur because of supply and demand and the onerous cost of refining gasoline, especially with various government restrictions, we need not be so dependent upon foreign countries for our energy needs.
Under impeached42, America became dramatically more dependent upon OPEC. I may be mistaken on the exact numbers, but I believe the foreign share of our energy consumption went from around 40% to around 60% during his shameful tenure.
Build at least 300 NEW "DOMESTIC" Refineries!!!
How can oil supplies increase without more drilling, more oil tankers, more oil exploration, etc. ?
You've trapped yourself into some false logic -- if supply were solely dependent on demand, we would all be living in Paradise.
Phantom Lord is more on the mark.
In addition, supply and demand are actually interrelated.
The statement should have been: "If the demand goes down, the [inventory] will increase [in the short run]and the price will go down [in the short run, but will go back to normal in the long run as businesses leave the industry and supply DECREASES]"
So actually the shift in supply is opposite what was stated.
Which I must concede.
In any event, I think we ALL agree that this email is not going to do one whit of good.
I agree the email makes little sense.
Again, your assumptions are killing you.
The assumption in supply demand analysis is that "other things remain equal," and they don't -- perfect correlation between "variables" is possible only in the presence of a physical law.
Supply & demand are interrelated and should only be analyzed separately in an academic context.
Furthermore, supply and demand meet at a place called equilibrium.
This is where Adam Smith believed that a free market would tend to arrive if left alone. Market forces are pushing supply and demand into this position. Every time prices stray from the equilibrium point, the laws of supply and demand draw it back. If prices rise above equilibrium, a surplus will occur and prices will fall, increasing demand and eliminating the surplus. If prices fall, then a shortage will occur, which will drive prices back toward the equilibrium point. Keep in mind that these changes in supply and demand are interrelated, not independent; as demand is changing, so is supply, price, and quantity.
I could be wrong, but I think we are more in agreement than disagreement. I don't know.
Build at least 300 NEW "DOMESTIC" Refineries!!!
AND, a BIG BINGO-BUMP to your #10)
After the refineries we should also do away with the EPA.
You've got my VOTE!
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