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Posted: 5/18/2001 7:30:30 AM EDT
I'm not an economist, and I don't play one on TV, but I have a few observations to make: Supply and demand drives price. There can be no argument on that. What I submit, is that as long as the demand is there...ANY demand...the price of gas will rise as high as people are willing to pay without screaming for a governmental solution. Every summer, gas prices go up. The oil companies claim it's becasue of increased demand. I dont' buy the logic. It would seem to me that demand has reached a critical stage when people are getting ready to line up for gasoline that cannot be found. Now, THAT'S demand! Sure, people drive more during the summer, and that will increase the VOLUME at which they sell fuel, but as long as there is enough to go around, DEMAND has not increased. I've come to the conclusion that it's the oil companies taking advantage (note that I did not say "unfair advantage") of an opportunity to increase prices for a plausible reason. We have become to used to it that we don't complain much any more. If enough people bitch loud enough, the prices will go down. This, of course, does not account for the "salon gas" that some regions mandate. Am I missing something here? Sleep? Brain cells? Tin foil hat?
Link Posted: 5/18/2001 7:37:59 AM EDT
Link Posted: 5/18/2001 7:43:29 AM EDT
They always say that prices are going up because supplies are low. Common sense would dictate that if demand goes up in the summer, companies should plan ahead by stocking up. Any other business that failed to plan for seasonal swings would be out on their ear fairly soon. The only way I could believe the "low supplies" argument anymore was if the Feds passed a new law about selling only a particular type of gas, which for the short term might cause a tight supply. Part of the current problem is that demand for gas continues to rise, but refinery capacity didn't go up during the Clinton years. Few if any refineries were built between '93 and today. When you factor in refineries shut down for maintenance or accidents, the remaining refineries can only push so much product into the supply system. Same deal with power generation. We need more power stations. Cheney had it right: it's nice to try to conserve, but you have to be able to produce the product in the first place.
Link Posted: 5/18/2001 7:47:29 AM EDT
Link Posted: 5/18/2001 8:03:16 AM EDT
I've studied economics. You all are a little confused. If a greater volume is demanded at a different period of time, and gas is being supplied continuously, presumably marginally more expensive sources of energy need to be found in the summer (vs. the winter) and thus prices will rise. Demand for gasoline is pretty "inelastic" in the short run, meaning most people don't vary their driving habits incredibly based on small changes in the price of gasoline. Thus even slight rises in demand for the volume of gasoline should translate into higher prices. It's true, sellers try to charge the highest prices they can, but there are tons of sellers and tons of buyers here. This is about as fair a market as there ever was. Even the option of "stocking up" for the summer (which undoubtedly companies do) costs money. If you've ever been in business you know that it costs money to store inventory. Stop looking for conspiracies. We can't all drive a lot of big SUVs and take road trips and run a/cs at a high rate and not pay the piper. It's just common sense.
Link Posted: 5/18/2001 8:19:39 AM EDT
Link Posted: 5/18/2001 8:46:07 AM EDT
It would seem to me that demand has reached a critical stage when people are getting ready to line up for gasoline that cannot be found. Now, THAT'S demand!
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No, that's evidence of an [b]imbalance[/b] between supply and demand. In a perfect market, increases in demand relative to supply result in price increases that lower demand.
Link Posted: 5/18/2001 9:56:27 AM EDT
Here we go: another liberal-based "let's bash the oil comapanies again". Rush is right: why aren't people screaming about the +$.43 per gallon of tax on every gallon of gas sold in this country? Because too many people are buying the liberal media's "evil oil company" argument. You want lower gas prices? Get the government taxes out of the price of gas. And not let's forget the cost of lack of refineries based on government environmental wacko Nazi rules plus lack of any new drilling for the same reason. Get real. Merlin
Link Posted: 5/18/2001 10:13:59 AM EDT
cut the taxes huh? that would work fine-for about a month, when there is a mysterious refinery fire that brings gas back up to where it was and when the plant gets "fixed" the prices somehow stay high. That or they say they need to "reformulate" for summer or winter which costs more...ITS ALL BULLSHIT!!!
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