Why is price gouging during a crises not classified as a terroristic act? It certainly causes great harm to the stability and security of the nation......hmmmm

"Sentors accuse oil companies of gouging", looks like someone missed their "campaign donations" last week.

Oh wait.. Sentars..

Argh, another "price gouging" thread.

The opposition Democrats cited accusations from some gas station owners that they had been ordered by the company to raise prices at the pump.

Wow, being ordered to raise prices at the pump is now "price gouging". Let me give the Dems a hint (and I am one of them, despite their apparent cluelessness on this issue).



Gasoline is an inelastic commodity. That means it takes large increases in the price of gas to bring about small decreases in demand. Prior to Katrina, the US had some supply of gasoline, call it 100%, all of which was being used. That 100% cannot be increased easily (or perhaps at this point, at all).

Now, a hurricane comes through and knocks, say, 10% of US gasoline production and imports offline (I don't know what the real number is, but it's something like that). Now, you only have 90% of the gas you had before. That's it, there is no extra. So, the question is: how high does the price have to go to knock 10% off the demand for gasoline? Because that's how high the price will go. It's almost a law of physics. If the price doesn't rise enough, there'll be spot shortages of gasoline since people will be buying more than their "share" since the price is artificially low. This will happen whether oil companies "gouge" or whether they sell gas at a loss. Only 90% of the gas is available, there is no more, no matter what happens Americans will be using 10% less gas one way or another.

The entire country for the last 35 years has been pissing away energy and wasting opportunity after opportunity to fix the problem. You farkers kicked Carter out of office, who told you exactly what the problem was, and it's just gone downhill from there, 25 years of piss-poor decision making thinking that oil and gas are going to last forever, always thinking that the problem would be handled later.

Well, it's later, biatches. You've painted yourself into a corner, and those same politicians biatching about oil companies are partially responsible for the problem (as are Americans for not putting political pressure on them to work on the problem). High gas prices now, while we still have gasoline supplies, are good, since it forces the American consumer to make decisions about alternatives (electric cars, walking, etc) before it's really crunch time.

You don't like high gas prices? Well do your part and stop driving and reduce your net energy usage. Live far away from your work and moving or walking "isn't a solution" as I hear people moan in these threads? Tough cookies, pay for gas then or make other arrangements. You can still carpool. Everyone wants oil and gasoline, reality doesn't give a rats ass about your commute. You'll either make changes, or suffer the same way the rest of us are. Gasoline supplies are limited, there aren't any other options.

Wow. People who still believe in "price gouging".

It amazes me that the US is blind to the corruption relating to the oil industry and government.

Its clear as day.

Wake the fark up.

submitter: Then the sky, of being blue

... and all the leaves are green!
My heart's as full as a baked patato!
I think you'll know, exactly what I mean...

consdubya: It amazes me that the US is blind to the corruption relating to the oil industry and government.


consdubya raises a good point here. Just take a look at GWB's business background, and what businesses he has been a part of. Hmmm...gee, I wonder why he is so reluctant to come down hard on oil companies for inflating their prices far beyond what is healthy for the economy.

That said, while supply and demand might explain increasing oil prices to a certain point, it is not a complete explanation. If the oil companies really gave a shiat about supplying energy (thus maximizing their long-term profits...sell more product, make more money. yes, i know refineries aren't exactly cheap to build, but it's not like the oil companies are without money) as opposed to maximizing their short-term profits, then why have no refineries been built for decades? Arguments such as "the 'not in my backyard' people" are not valid here; oil companies have enough political power -- see my previous paragraph -- that this is not relevant.

Also, the prices were shooting up long before either one of the recent hurricanes hit the gulf coast. In many places, they were up 40% to 50%, and even more in some places. Given how impossible it is for either supply or demand to change by more than a few percentage points in a year's span, 50% is not a justifiable price increase. It is a gouge.

2005-09-28 02:02:18 AM AntiNorm [TotalFark]

That said, while supply and demand might explain increasing oil prices to a certain point, it is not a complete explanation. If the oil companies really gave a shiat about supplying energy (thus maximizing their long-term profits...sell more product, make more money. yes, i know refineries aren't exactly cheap to build, but it's not like the oil companies are without money) as opposed to maximizing their short-term profits, then why have no refineries been built for decades? Arguments such as "the 'not in my backyard' people" are not valid here; oil companies have enough political power -- see my previous paragraph -- that this is not relevant.

Yes, an excellent question. The answer is that global crude oil supplies are about to pitch into depletion and decline and oil companies know this. There is currently sufficient refining capacity for 84mbd globally, barring current refining problems, but there's no point to building more now since global supply isn't going to rise much/any more than that.

Refineries cost millions and have lifetimes of 30 years. We'll be lucky to have half the crude production available to us currently in 30 years. There is no point to investing in them, since there won't be much oil to refine. They're simply a bad investment since in a few years they'll sit idle.

Staying out of this threa...

Nevermind.

Peak oil fanatics in 3...2...1...

I've said it before, I'll say it again:

If I want to charge $1,000/ounce for my gold, when the spot price is $400-something, I will. If the government tries to control the price (as they once did), then I will trade it off the market, or in other countries.

I'm not forcing anyone to buy it, and the buyer is free to go elsewhere to find cheaper gold.

I know there are those that will say gold is not like gasoline, because they need gasoline to get to work, etc. etc. blah blah blah. To which I reply that I didn't make their life choices for them.

Get used to it, people, or make the changes.

democrats use more gas when they are not republicans

/ :)

Come on guys! This is just capitalism at its finest! It's what the market will bear! The market will correct itself! Supply and demand should dicate the price! If you can't afford to gas up your car, move closer to work! Raising prices helps keep hording from spiraling out of control!

/think that about covers it for the apologists

In live in LA, and last week i stopped driving my car to save money. I ride my bike. Yesterday, when I went to check on my car, it was towed. $215.

Where's my god now?

i have lots of gas but nobody is paying me for it

If you live close enough to your work to walk but are a lazy ass, make an "electric car" out of a wagon with the back end replaced by two electric drills with wheels in the chucks, and add a large hospital grade extension cord. Presto you lazy ass!

I'll never understand this sense of entitlement that people have when it comes to cheap gasoline. There's a limited supply and ever increasing demand. If you were really stupid enough not to realize that a day of reckoning was going to arrive some day, then too bad for you. If you don't want to pay the going rate for gas, don't buy it. Just quit your whining, and if you feel strongly that price controls are needed, pack your things and move to Cuba or North Korea, where centralized econcomic planning has so clearly improved the life for everyone.

every single time the price of gas goes up somebody in congress makes this accusation. They get in front of tv cameras and vow to solve the problem They have their names in the newspaper and they can say they fought the oil companies when election time comes around. they call a bunch of oil excutives take testimony and then quietly drop the whole matter when they can't prove anything.

Nothing new here just media whoring senators looking for a cheap headline.

southgoingzax

I'll never understand this sense of entitlement that people have when it comes to cheap gasoline. There's a limited supply and ever increasing demand. If you were really stupid enough not to realize that a day of reckoning was going to arrive some day, then too bad for you. If you don't want to pay the going rate for gas, don't buy it. Just quit your whining, and if you feel strongly that price controls are needed, pack your things and move to Cuba or North Korea, where centralized econcomic planning has so clearly improved the life for everyone.

Ahh, the old "America! Love IT or Leave IT!" idiom. Gosh, I've never heard that one before.

Hey bud, you want to roll over while corporate America rocks you up the butt for profit, you be my guest. Don't expect me to go along with it just because you've donned your American flag coat.

For years democrats especially Al Gore have complained that gas is too cheap we need to be more like europe and have high gas prices because it'll encourage conservation. They've told us we shouldn't be driving gas guzzling SUV's (though most of them seem to excuse themselves).

They've got there wish. Gas prices are high people are rethinking SUV's and they still do nothing but whine, moan and complain.

Since when is the price of gasoline supposed to drop when a hurricane(s) had the potential of destroying 70% of all refining capacity in the US? I love the logic some of you have. Keep dreaming and keep blaming others, maybe one day you'll realize the ammount of space you waste and kill yourselves.

I guess the question is: are the oil companies colluding to artificially raise prices? Because that is no invisible hand.

Now I will sit back and watch absolutely no one react to my post.

sonnyboy11
No, we aren't expecting you to follow anyone. However, we expect people to be educated. Economics is something very few people know a lot about. That is why it is stupid to rant and rave about something you have a little clue.

ComicBookGuy
The evidence suggests no, they aren't. The extreme rise in gas prices have been predicted for the past 3 decades.

southgoingzax: I'll never understand this sense of entitlement that people have when it comes to cheap gasoline.

Maybe if gas hadn't cost 50% less 2 years ago they wouldn't have a sense of entitlement. Or the fact that gas has been extremely cheap for the 20 years before that. That kind of inflation is pretty hard to cope with, no?

Get ready for this winter when natural gas goes up 70%.

well being that i am within the first 100 on this thread i would like to welcome all the posters below me with this:

your not saying anything that hasn't already been said before... gg fark and gg america

dtzitz

Unfortunatly, that won't stop all the people who "didn't bother to read the thread, but here is my unique and introspective opinion". Those people inevitibly post the exact same thing that has already been posted, debated, debunked, and left for dead.

Comma,usage, submitter, comma, usage.

I bet if lesbian sex nazis gave those oil company CEO's a good spanking, gas prices would lower.

Wow. People who still believe in "price gouging".

Unfortunately, lots of people do. They believe they are entitled to someone elses' private property at a certain price before they even buy it.

Nobody sicks a scoundrel politician on them when they "overcharge" the price for selling their used car, furniture, or labor...

ComicBookGuy,
The oil companies don't need to collude or gouge, they've had the government preventing their competitors from building any refineries for the past 30 years.

The prices aren't artificial, they reflect real market prices. Must be nice owning one of the few refineries that are allowed to operate.

Kind of a NIMBY-motivated, urban environmentalist voter-approved oligopoly, if you will.

Ironic, I was just discussing this with someone the other day.
So I went and read up on it..

MYTH: " Recent price spikes are caused by the Katrina Energy Crisis"

Not true for California. The state gets 100% of its gasoline from West Coast refineries. It also gets all of its oil from Pacific oil suppliers. (most of it from California itself, with the rest coming from Alaska, Mexico and Indonesia). So Katrina should have only an indirect effect upon gasoline prices. More likely, what is happening is that California-based refiners are exporting fuel to the East Coast in order to take advantage of the shortage-driven high prices there. Californians end up paying the price for the export of gas that is supposed to be supplying the Western market.


MYTH: "Consumers are being gouged by greedy retailers"

Not true. For most San Diego retailers, the average profit margin on a gallon of gas is between 5 and 15 per gallon. On August 4, 2003, the California Energy Commission reported that the average amount of money or margin made by retailers, on a gallon of gas, including the cost of marketing and shipping the gas was just 8 per gallon, while the refinery margin stood at 41 per gallon.

MYTH: "The free market sets prices in my city"

Not true. UCANs tracking of the gasoline market suggests that the market is neither free nor competitive. Unlike most commodities , the price of the same brand and grade of gasoline can be as much as 25 per gallon higher depending on the location of the station. This is because oil companies price their gas using "zones." A Unocal dealer across the street from another Unocal dealer can be forced to pay 10 more per gallon because he is in a different "zone." Oil companies claim that zone pricing allows them to be more competitive. In reality, it allows them to arbitrarily drive dealers out of business by charging higher fuel prices. It also allows them to artificially control and inflate the price of gasoline. There are numerous other examples of how oil companies are able to undermine competition and intimidate or drive out of business any independent gas station that attempts to compete.

MYTH: "Locally owned gas stations cause high prices"

Not true. After eight years of investigations into retail street prices. UCAN has conclusively documented that in areas where there are no independent, locally owned gas stations, the prices can be as much as 20 higher per gallon

MYTH: "There is plenty of competition just look at all the different brands!"

Not true. On the surface, the San Diego market looks competitive: after all, there are dozens of different brands with different prices. The truth is a different story. For example, all Shell and Texaco stations are owned by the same holding company: Equilon. Another holding company, TOSCO, sets prices for all of the Union, Unocal, 76 and Circle K gas stations in San Diego. Exxon and Mobil merged recently, and every Thrifty station is actually owned and supplied by Arco/British Petroleum. UCANs statistics show that price competition in San Diego has waned as a result of the consolidation of the market.

The reason "gouging" gets thrown around is clearly a lack of economic understanding by those who speak it, but there is some truth to the matter. By not building new oil refineries, the oil companies have shifted the supply curve to the left (higher price side, and the elasticity of gas is such that they can easily get away with it. The gas companies, under the current structure, can charge whatever price they want for gas, and that is where the gouging comes in. The problem is that new companies who would like to enter the "gasoline" market have such a high cost of entrance to build refineries, and more importantly get the stuff out of the ground, that the gas structure is a perfect example of oligopoly.

Instead of gouging, we should be accusing the gas companies of price-fixing, whereby this oligopoly is acting like a monopoly, and the lower cost/higher volume comany is not coming forward to lower prices. Why doesnt exxon slash the profit per gallon in half, making exxon the lowest cost gas and forcing the consumers to buy exxon when availible? combination of refinery and price fixing.

While the gouging circle jerk going on now is usuless, if the legislative branch gave the oil companies a "new refinery" clause in thier latest tax break, that would probably help the speculative spiral gas prices are in now.

Nuclear cars.

Ok, I was going to flex my economic might, but I see Sparhawk got her done.

What? They didn't get their checks or what?

Good God. Are you people retarded?

From dictionary.com

price gouging

n : pricing above the market when no alternative retailer is available

Mocking someone for "believing" in price gouging is like mocking someone for "believing" in time. It's a defined phenomenon. Period.

Now, you might think the standards by which price gouging is determined are questionable, but then you should be arguing that people cry "price gouging" too early, not that they cry it at all.

It's a bit difficult to trust your intellectual superiority when you have such baseline issues with your mother tongue.

JohnGaltDiscGolfer

They believe they are entitled to someone elses' private property at a certain price before they even buy it.

Don't be such a drama queen. When one of the main components of our economy (and, by extension, our society) has questionable fluctuations that can have a ripple effect with truly severe consequences, it is only natural (and important, I might add) to make damned sure that it's necessary. And don't give me this "free market" crap. By definition, price gouging circumvents the free market, and the self regulation therein.

I am SO farking sick of people whining "entitlement" whenever market fairness is questioned. The economy exists to serve society, not the other way around. We have laws. If this incident conforms to the laws, it will go away. If not...well, there's reason to believe it will still go away, and that's cause for legitimate concern. Stop painting everyone who tries to keep industry honest as a dumbass looking for a farking handout.

Pole: But there are alternative retailers. Associates that are also a part of the oligopoly. As well as independent retailers, who make up a small portion of gas stations. As I mentioned above, the oligopoly is using marketing data "zones" too lower the gas prices in areas where there is independent competition and driving them out of business or forcing them to change suppliers.

Who needs the conspiracy suspicions. Exxon Mobil is a publicly held company. It shouldn't be too hard to investigate this.

I swear, if there wasn't some "evil other," some people would fail to exist and/or commit suicide.

Time has nothing to do with clocks or calenders

Somehow everybody has their opinion ranging from jonr's parroted "What? They didn't get their checks or what?" to Sparhawk's excellent refresher course on economics.

Anyone want to speculate what this little adventure in oil company profits are going to do to the already squeezed homeowners this winter? What is going to be the effect on the Interest Only mortgaged to the hilt moran in their McMansions?

Who cares about them?

Well, their next door neighbor when these idiots have to sell their houses short to get out of them wiping out the value of the neighborhood, among others. Then there are all the people that this "red hot" housing market employs.

Anyone out there remember when President Bush Sr. was in office and the little problem he had with what we quaintly called the "Savings and Loan" scandal? Read up on it sometime, you might get a deeper understanding of what might lie ahead.

Of course, we can also take a look at the collateral damage this rise in pricing is causing to every product we buy. Any of you out there eat? Have you checked the price of beef lately?

Here's the problem in a nutshell for anyone too busy to read the entire post. When you raise gas prices, you effect many different sectors of the economy, an economy that is built around inexpensive energy costs.

You like your job, want to continue living in a spacious home, continue commuting in your comfortable driving machine and being able to eat inexpensive food?

Then where we're heading isn't where you want to go.

Get it?

Random: Ummmmmmm no? I want to live in a tiny home, drive an uncomfortable driving machine and eat expensive food. I also want to get a hat that says "BUILT FORD TUFF" and learn to play the banjo.

We're americans damnit. We know when we're being screwed! We've all been screwed before and we all screw each other on a daily basis. Now it looks like we're all getting the aids and we wonder around biatching about it like idiots "WElll I DunNo WhaTs GoiNg On I DoNT LiVE HEerE I'M FroM NoRth KoREa I'm A DumB TeRRRoRiST And HAvE a SmalL PeEPee" well god damnit america this is all because you waited for that walmart employee to turn his back so you could replace the barcode on that foot massage machine you love so much. Ohh..you got your $30 rebate. You gots it good. Happy now, america?