Gas prices going up much faster than they should

> Pooh Bear:

<newsgroups pruned - forgot to do this in my last reply, sorry>

> A *limit* is fine as long as there aren't shortages. Provided that capacity can
> meet deamnd ( which it does - there's no shortages ) you can't use some presumed
> 'limit on supply' to demand higher prices.

Yes, you can. Works particularly well when the consumer is *quite*
willing (inspite of the ****ing and moaning) to pay the higher prices.
When the consumer is not willing to pay the higher prices, then demand
will ease and prices come down.

necromancer wrote:

> > Pooh Bear:
>
> <newsgroups pruned - forgot to do this in my last reply, sorry>
>
> > A *limit* is fine as long as there aren't shortages. Provided that capacity can
> > meet deamnd ( which it does - there's no shortages ) you can't use some presumed
> > 'limit on supply' to demand higher prices.
>
> Yes, you can. Works particularly well when the consumer is *quite*
> willing (inspite of the ****ing and moaning) to pay the higher prices.
> When the consumer is not willing to pay the higher prices, then demand
> will ease and prices come down.

Using that argument, where there's a balanced supply the oil companies could raise
prices almost arbitrarily. So why don't they ?

Graham

> Pooh Bear:
> Using that argument, where there's a balanced supply the oil companies could raise
> prices almost arbitrarily. So why don't they ?

Because they know that if they raise prices too much, fewer consumers
will be willing to pay their price and reduce consumption accordingly or
find/demand alternatives. Why do you think all the talk about hybrids,
E85, Bio-diesel, etc... is going on over here now.

necromancer wrote:

> > Pooh Bear:
> > Using that argument, where there's a balanced supply the oil companies could raise
> > prices almost arbitrarily. So why don't they ?
>
> Because they know that if they raise prices too much, fewer consumers
> will be willing to pay their price and reduce consumption accordingly or
> find/demand alternatives. Why do you think all the talk about hybrids,
> E85, Bio-diesel, etc... is going on over here now.

Part of the reason for the 'talk' about hybrids, E85, Bio-diesel etc is because some ppl
want to go 'greener' anyway. If running costs show a saving then all the better.

Graham

> Pooh Bear:
> Part of the reason for the 'talk' about hybrids, E85, Bio-diesel etc is
> because some ppl want to go 'greener' anyway. If running costs show a
> saving then all the better.

Don't be so sure about that. If gas goes back to $1.509 or less a gallon
you can watch all the talk of/demand for smaller cars, hybrids, E85
etc... become yesterday's news faster than you can say Hummer H4.

necromancer wrote:

> > Pooh Bear:
> > Part of the reason for the 'talk' about hybrids, E85, Bio-diesel etc is
> > because some ppl want to go 'greener' anyway. If running costs show a
> > saving then all the better.
>
> Don't be so sure about that. If gas goes back to $1.509 or less a gallon
> you can watch all the talk of/demand for smaller cars, hybrids, E85
> etc... become yesterday's news faster than you can say Hummer H4.

I doubt it's likely to drop back that much and in any event it's likely to
continue rising in the long term.

Graham

"Scott en Aztlán" wrote:

> On Tue, 02 May 2006 23:27:43 +0100, Pooh Bear
> > wrote:
>
> >Using that argument, where there's a balanced supply the oil companies could raise
> >prices almost arbitrarily. So why don't they ?
>
> Seems to me this is precisely what they are doing.

In a cartel-like situation you can do that. As soon as someone sees a buck in
increasing their share of market by offering a cheaper price it'll cease though.

OTOH if supply is so keenly balanced maybe no supplier can see any benefit in trying to
obtain market share that way.

If it's keeping prices high to the advantage of the oil companies, don't expect them to
increase refining capacity, it would be like asking turkeys to vote for Xmas.

Graham

> Pooh Bear:

> If it's keeping prices high to the advantage of the oil
> companies, don't expect them to increase refining capacity,
> it would be like asking turkeys to vote for Xmas.

In a truly free and competitive market, the current high gas prices
would attract new players (either individuals or companies) to build
refineries to get in on the action. That increased supply would bring
the prices down again.

BUT... Thanks to the criminal syndicates (most people call them
democrats or republicans) that run the government in the US, that is not
possible due to governmental regulation that makes it all but impossible
for new players to enter the market and of course, the current thieves
running things are not going to add to the supply.

necromancer wrote:

> > Pooh Bear:
>
> > If it's keeping prices high to the advantage of the oil
> > companies, don't expect them to increase refining capacity,
> > it would be like asking turkeys to vote for Xmas.
>
> In a truly free and competitive market, the current high gas prices
> would attract new players (either individuals or companies) to build
> refineries to get in on the action. That increased supply would bring
> the prices down again.
>

It would only attract 'new players' if there's a decent profit to be made.

It strikes me that refining involves high capital cost and low profit and
hence is relatively unattractive.

Graham

In article >, Pooh Bear wrote:
>
> It would only attract 'new players' if there's a decent profit to be made.

Virgin airlines wanted to build their own refinery.