Economics of prices {price-gouging oil companies}

JewishWorldReview.com ^ | May 31, 2006 | Walter Williams

[discostu]

The other half of the equation is they still want to make a profit on the stuff they already bought. So if a business bought supply for $3 a unit and the price of units drops to $2 they're still going to keep the price above $3. It's not good enough to just replace stock, you need to recoup other costs (manpower, facilities), and turn a profit on every sale (unless the product is a loss leader).

[Cobra64]

OOPS, FreeRepublic is loaded with people who don't get it.

I disagree. Most folks here are very well informed. And we learn more from each other a lot of the time. Though sometimes I get lost when the military guys sometimes sorta 'chat' amongst themselves and use acronyms that we (I) dopey civilians do not understand. LOL

[Cobra64]

Doesn't Walter Williams sit in for Rush sometimes?

Yes he does. I believe Walter E. Williams has a Phd in Economics.

[Protagoras]

You can disagree if you want, but I have gone over the exact sames points that Williams covered in this article and gotten nowhere with many people on this forum. Some on this thread.

They are hooked on the concept of gouging, which in actuality does not exist, and the bizarre conspiracy theories about "big oil".

[Cobra64]

Do you not understand the fundamentals of capitalism, and a free market economy? Or does Communism make more economic sense to you? Is 1-800-KARLMARX on your speed dial? Alfred Marshall and Adam Smith economic principles work better among free people.

[Cobra64]

Actually, the cost for a gallon of gasoline at the pump is cheaper today than it was 30 years ago.

[Cobra64]

Supply and demand works.

Yes it does in a free market.

[Cobra64]

the profit made by oil companies pales in comparison to the amount of taxation on that gallon.

The oil companies paid DOUBLE in taxes in relationship to their net profits. These same TAXES are relected in the cost of the supplier to the price of a gallon of gas to the consumer.

I do not understand that so many folks (not you) do not understand simple logic and common sense.

[thackney]

And the cost per mile for fuel is even less when you look how mpg has changed. The average new passenger car is rated at 30 mpg in 2005; it was 15.9 in 1975.

[Cobra64]

But if we are fighting a war on terror for real, then we should be funding alternative energy research and not letting the oil companies any where near any of that grant money.

You certainly do not believe in free enterprise and the private sector. Do you have a government job?

[Cobra64]

Therefore, the coffee argument is a strawman. How wrong I'm not.

It was not a coffee "argument." It was an EXAMPLE. (shaking head and rolling eyes)

[Cobra64]

domestic fuels that we don't have to buy from terrorists

Dial 1-800-ENVIROMENTALIST and communicate your concerns.

[Cobra64]

If people spent a few bucks to buy some stock in an oil company, they wouldn't moan about the company's "record profits" when they're a shareholder.

True. But two points. The oil companies have not had record profits. Their ROI is less than most other industries. The ignorant unwashed shudder when they hear a corporate earnings number greater than their personal income. Further, those that may have investments in mutual funds are probably invested in the petroleum sector.

[Cobra64]

What was the rate of return on your investments last year? If you can figure that out, compare that to the rate of return from Exxon/Mobil or Chevron/Texaco.

[Cobra64]

Hey Prota. I've just been reading from the beginning of this thread. I retract my previous note to you. There ARE a lot of intelligence-deprived people here.

[Cobra64]

Some are on this thread.

Yes, and to be redundant, yes.

[Rte66]

Oh, I agree, totally - but it was a modification of my normal advice to the moaners ... "If you don't own an oil well, get one."

I took it down a notch and advocated for a stock purchase, instead. Same people would *not* be saying a word about "record profits," but, of course, they'd be whining about how little profit their oil companies made.

[mysterio]

Boy, you're the most enthusiastic of the stockbrokers I've met on here yet. lol.

What we have right now is not a free or competitive market. We have government protecting an oil-based monopoly on our transportation energy requirements.

What I want to see is real, useful research that results in innovation to get us out of the pockets of tinpot dictators in third world hell holes. If you think that doesn't fall under defense, then you are crazy. Unless you are arguing to privatize the military, in which case you would be logically consistant. It is insane to say we are fighting a war on terror when we depend on the terrorists to sell us energy. If replacing this energy source hurts your portfolio, I'm sorry.

And I have explained how the coffee example or argument is a strawman. Would you like me to explain again?

[edzo4]

true the government makes more on gas taxes than the oil companies make in profits....

http://www.taxfoundation.org/publications/show/1139.html



Table 1. State and Federal Gasoline Taxes Compared to Major U.S. Oil Companies’ Domestic Profits, 1977-2004

(figures in billions of 2004 dollars)


Total
Oil Profits $643.0
Federal Taxes $533.0
State Taxes $810.1
Total Taxes $1,343.1

[mysterio]

Is 1-800-KARLMARX on your speed dial?

Weak.