jefnvk
Member
Once again, Mike is right on.
I was with you right up until this statement. Or rather, I'm even in agreement with this statement, but you're not following economics the next step down the road.Any reduction in price, either via tax reduction or a simple price cap, will increase demand while doing nothing to increase supply. The result will be a shortage.
Gas pricing has always bothered me. If they bought the supply that is in their current tanks underground at a certain price then why should it go up before they get the next higher priced supply?
You can repeat that all you want, that doesn't make it true.Gasoline prices were steadily rising before Katrina. The reason there are shortages in some parts of the country have nothing at all to do with price. Let me repeat that; shortages do not exist because the price was too low. There are shortages because the hurricane knocked out refineries and distribution lines. In other words, it's physically impossible to get gasoline to some parts of the country. If it cost $25 per gallon, there would still be no gasoline. Got it?
You're missing the point. The supply hasn't been cut off, the resupply has been cut off. You're right when you say that filling stations are left with only the supply on hand, and you're right when you say that people will buy the cheap stuff before they buy the expensive stuff. However, you're completely failing to consider that an increase in price will cause people to use less, extending supply.Regardless of whether the price is $2.50 or $25 per gallon, the supply has been cut off. The station selling for $25 per gallon has no more gasoline on hand than the one selling at $2.50. Nobody will buy from the $25 seller until the $2.50 seller runs out, then enough people will buy from the $25 seller until his supply is exhausted, and that will be quick. A high price does not guarantee availability, yet you continue to assert that it will. There is no gasoline in some areas because of the hurricane. Excessive prices did not change that eventuality.
No, I do not assert that. I assert that a high price will delay running out of gasoline. Unless you believe that there will never be resupply of gasoline, it's possible to delay running out for long enough that you get resupplied before it happens, which is why prices have gone up.Regardless of whether the price is $2.50 or $25 per gallon, the supply has been cut off. The station selling for $25 per gallon has no more gasoline on hand than the one selling at $2.50. Nobody will buy from the $25 seller until the $2.50 seller runs out, then enough people will buy from the $25 seller until his supply is exhausted, and that will be quick. A high price does not guarantee availability, yet you continue to assert that it will. There is no gasoline in some areas because of the hurricane. Excessive prices did not change that eventuality.
We're in agreement. However, the delay is insignificant if it fails to last until the re-supply arrives. Such is the case in portions of the east and southeast right now.No, I do not assert that. I assert that a high price will delay running out of gasoline.
Fair enough. While I believe that the nature of the competitive marketplace will address the problem of price gouging without government interference, I also understand that this belief is a matter of opinion, which many (including yourself) disagree with.I assert that when the re-supply arrives, the prices will be higher than warranted by reasonable operating profit motives, and instead will be dictated by pure avarice and a desire to exploit. That to me is extortion and a reason to place price controls and/or sanctions against gougers. Especially with something as vital to the economy as gasoline. In other words, if the oil/gasoline producers/distributors can't police themselves, public policy will and should regulate them. That's all I'm sayin'
Not quite. If I run a station and I run out of gas on Sunday, I'm screwed if resupply is Saturday. So are my customers. If, on the other hand, I bleed dry on Friday, things are a lot less dire. This is, in fact, the whole point of this exercise. Hopefully the price will rise fast enough and high enough to ensure that supply lasts until the (reduced, but hardly nonexistent) resupply occurs. If not, hopefully it will be close.We're in agreement. However, the delay is insignificant if it fails to last until the re-supply arrives.
...which is proof positive that they failed to raise price high enough, quickly enough.Such is the case in portions of the east and southeast right now.
In other words, you're in favor of quasi-socialism. I'm not.I assert that when the re-supply arrives, the prices will be higher than warranted by reasonable operating profit motives, and instead will be dictated by pure avarice and a desire to exploit. That to me is extortion and a reason to place price controls and/or sanctions against gougers. Especially with something as vital to the economy as gasoline. In other words, if the oil/gasoline producers/distributors can't police themselves, public policy will and should regulate them. That's all I'm sayin'
Almost correct. In tight times people will conserve. In lucrative times, people will consume more. In panic times, people will fill every container they have with gas, and consider buying more. By and large, though, you're correct. This means that the post-Katrina spike will fade rapidly, and should already be doing so.Think about it. People use a finite amount of gas. You burn the same amount of gas going to and from work regardless of anything else. The station has supplied that quantity of fuel every day up untill today, when they run empty. How did people suddenly start consuming mroe gas over night? They didnt, they just heard that something happened, and everyone rushed out to buy gas RIGHT NOW. All it means is that there will be fewer people with empty tanks tomorrow.
The price spiked the day after Katrina wiped out the gulf coast. While what you say is true, especially in the south east, the irrational increase in demand caused the price spike in existing supplies. The inability to efficiently resupply certain areas over the next three days contributed to the problem. The refinery issue won't be felt for a week or so, yet, which is why gas prices will not immediately subside to pre-Katrina levels. They'll drop, but not down to $2.50/gallon, at least not until the refinery output is stabilized.There are shortages because the hurricane knocked out refineries and distribution lines. In other words, it's physically impossible to get gasoline to some parts of the country.
That may be a whole 'nother discussion, but it is no less than a knee-jerk reaction ignoring the realities of the corporate/government incestfest that rules economics.In other words, you're in favor of quasi-socialism. I'm not.
Uh huh. That's the way it's supposed to work. I haven't seen a 'gas war' in what??? 30-40 years??If they price gas too high, people will continue to buy ONLY what they MUST. One of the multitude of retailers will note that gas is overpriced, undercut the competition, and sell more gas, thus making more money. Then the fight to the bottom will be on.
Uhhhhh....there were a whole lot of people trying to get away from a hurricane. That might cause an increase in the demand for gasoline, and hardly qualifies them as sheeple.Ergo, there is another consideration impacting price. Namely, the tendency of the sheep to run en mass to the pumps and tank up whenever something scary happens, and the reality of over-the-top reactions to the exhaustion of on-hand supply, which is what is happened in Atlanta when everyone ran to the pumps at once.
How can the retailers be solely responsible, when their costs are steadily increased by the producers? You can't have it both ways. There is a small group who control the refineries and distribution; they are the monopoly. They have been increasing prices and their profits are at record high levels. That is hardly the definition of a 'free market'.The "oil monopoly" has zilch to do with this sudden price hike in gas. This is 100% the retailers, trying desperately to have something to sell for the next week. Think they're making a killing on gas? Try having zero income for a week on for size. Mom and pop places could go under after a few weeks of that.