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Thread: Gasoline prices zip toward $3 mark

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    Re: Gasoline prices zip toward $3 mark

    Quote Originally Posted by Kandahar View Post
    I think most economists would agree that politicians don't have much control over the stock market...at least in capitalist nations like ours. China is a different story.
    Well,you're changing the topic a bit now--you stated that presidents have "very little ability to create uncertainty in the market". This is the one no economist would agree with. The president in fact can create uncertainty in the market in a variety of ways. For example, by promising to cap CEO salaries, or raise taxes, or impose universal healthcare, or by rewarding failure and punishing success, or by championing cap and trade legislation, etc.

    Quote Originally Posted by Kandahar View Post
    Oil stocks are not the same as oil. Exxon can be overpriced while oil is underpriced, or vice versa.
    The prices of both these would rise in uncertain times. Increasing your inventory of oil would be akin to increasing your inventory of gold, or cigarettes, or liquor, or ammunition....these things will all remain in strong demand in a bad economy.

    Quote Originally Posted by Kandahar View Post
    This smiley was in response to my saying that the Obama administration understands little about economics. One example would be Obama's insistance that government can "create" jobs--perhaps one of the greatest economic fallacies of all time. This idea was falsified in the 19th century by Frederick Bastiat, yet here we are in the 21st century with the POTUS repeating it every time he's in front of a microphone. And it's not just talk, his belief has radically been implemented--just look at the growth of employment in government relative to inustry in the past year.

    Quote Originally Posted by Kandahar View Post
    Price controls would not even be politically popular, as they would create shortages that would hurt consumers. Gasoline shortages were arguably one of the reasons Jimmy Carter lost his reelection bid.
    Your recognition that price caps create shortages makes my day. I was really glad to see that. Unfortunately, the vast majority of citizens do not understand it and that's why I believe we may see price-capping under the guise of some populist sentiment (like "controlling the evil, price-gouging oil companies"). For example, the citizenry is largely in favor of another moronic price-capping threat--capping CEO salaries.

    Incidentally, I'm curious to know if you also understand the converse principle--that price floors create surpluses. For example, what's your position on the minimum wage issue? Do you agree that the minimum wage creates a surplus of low wage workers (that is, increases unemployment)?
    Last edited by pendulum_jaw; 01-13-10 at 02:41 PM.
    ...this post brought to you by the United States government, "working hard to solve yesterday's problems as we strive to create the crises for a new tomorrow."


  2. #42
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    Re: Gasoline prices zip toward $3 mark

    Quote Originally Posted by Harshaw View Post
    You were indicting "free markets" and how they "work," not "commodities."

    I am not indicting free markets, just showing how they work. The higher price a company can get for their product the higher their profit margin. It is simple economics. It would be disasterous for oil companies to flood the market with their product. They keep supplies tight to keep prices up. When prices start to drop they cut production.
    US oil companies cut new drilling and production as soon as prices started to drop due to the recession. They are not going to drill, baby drill.
    Oil companies do not think gas prices are too high, consumers do.

    As for Walmart, their prices are only low compared to other retailers. Have you seen what toilet paper at walmart is going for? Now that Walmart has forced other stores out of business in my town there is no place to compare their prices.

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    Re: Gasoline prices zip toward $3 mark

    Quote Originally Posted by Dirty Harry View Post
    I am not indicting free markets, just showing how they work. The higher price a company can get for their product the higher their profit margin. It is simple economics. It would be disasterous for oil companies to flood the market with their product. They keep supplies tight to keep prices up. When prices start to drop they cut production.
    US oil companies cut new drilling and production as soon as prices started to drop due to the recession. They are not going to drill, baby drill.
    Oil companies do not think gas prices are too high, consumers do.
    No, you're describing what they could do, not how the "system works." In fact, if the market were freer, other, even NEW companies could have been offering oil for less. But, because of the cartels and this country's insane refusal to allow finding other sources, and a slew of other factors, the market is not as free as it ought to be.


    As for Walmart, their prices are only low compared to other retailers.


    No kidding?


    Have you seen what toilet paper at walmart is going for? Now that Walmart has forced other stores out of business in my town there is no place to compare their prices.
    Has nothing to do with my point which is that Wal-Mart intentionally used flooded inventory and lower prices to make an ***load of money in the free market.

    But I'm pretty sure you know that.
    Last edited by Harshaw; 01-13-10 at 03:09 PM.
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    Re: Gasoline prices zip toward $3 mark

    Quote Originally Posted by Dirty Harry View Post
    I am not indicting free markets, just showing how they work. The higher price a company can get for their product the higher their profit margin. It is simple economics. It would be disasterous for oil companies to flood the market with their product. They keep supplies tight to keep prices up. When prices start to drop they cut production.
    US oil companies cut new drilling and production as soon as prices started to drop due to the recession. They are not going to drill, baby drill.
    Oil companies do not think gas prices are too high, consumers do.

    As for Walmart, their prices are only low compared to other retailers. Have you seen what toilet paper at walmart is going for? Now that Walmart has forced other stores out of business in my town there is no place to compare their prices.
    Last edited by pendulum_jaw; 01-13-10 at 03:09 PM.
    ...this post brought to you by the United States government, "working hard to solve yesterday's problems as we strive to create the crises for a new tomorrow."


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    Re: Gasoline prices zip toward $3 mark

    Quote Originally Posted by Harshaw View Post
    No, you're describing what they could do, not how the "system works."

    :
    It is what they do and that is how the system works?
    Do you honestly believe that oil companies only exist to supply us with cheap abundant gasoline? If they did they would not have cut production when the recession hit and demand dropped.

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    Re: Gasoline prices zip toward $3 mark

    Quote Originally Posted by pendulum_jaw View Post
    Supply and demand is perhaps one of the most fundamental concepts of economics and it is the backbone of a market economy. Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer. The quantity supplied refers to the amount of a certain good producers are willing to supply when receiving a certain price. The correlation between price and how much of a good or service is supplied to the market is known as the supply relationship. Price, therefore, is a reflection of supply and demand.
    The profit margin is the dollar value difference in the selling price and total cost
    Last edited by Dirty Harry; 01-13-10 at 03:23 PM.

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    Re: Gasoline prices zip toward $3 mark

    Quote Originally Posted by Dirty Harry View Post
    It is what they do and that is how the system works?
    Do you honestly believe that oil companies only exist to supply us with cheap abundant gasoline? If they did they would not have cut production when the recession hit and demand dropped.
    Read what I wrote.
    “Offing those rich pigs with their own forks and knives, and then eating a meal in the same room, far out! The Weathermen dig Charles Manson.”-- Bernadine Dohrn

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    Re: Gasoline prices zip toward $3 mark

    Quote Originally Posted by American View Post
    Link


    Okay Obama, get busy fixing this.
    Is that what you said when Bush was president?

    If anybody things oil prices are all supply and demand and speculation on the stock market has nothing to do with it I've got ocean front property in Iowa I can probably sell you, since you're that naive.
    Last edited by EnigmaO01; 01-14-10 at 10:01 AM.

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    Re: Gasoline prices zip toward $3 mark

    Big oil companies are making most of their money by producing crude oil. They invested in oil fields when prices were much lower, with the expectation that they could break even at, say, $25 per barrel. Since the market price is around $70 a barrel, the extra money is gravy. It's like a farmer who can raise corn for $1.50 a bushel. If the market price is $1.75, he makes a quarter per bushel. If the market price jumps to $2.25, his profits jump as well. (If the market crashes to $1 per bushel, the farmer loses money. That can happen to oil companies as well.) Oil companies, like the farmer, are the beneficiaries of high market prices.

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    Re: Gasoline prices zip toward $3 mark

    Quote Originally Posted by Dirty Harry View Post
    Big oil companies are making most of their money by producing crude oil. They invested in oil fields when prices were much lower, with the expectation that they could break even at, say, $25 per barrel. Since the market price is around $70 a barrel, the extra money is gravy. It's like a farmer who can raise corn for $1.50 a bushel. If the market price is $1.75, he makes a quarter per bushel. If the market price jumps to $2.25, his profits jump as well. (If the market crashes to $1 per bushel, the farmer loses money. That can happen to oil companies as well.) Oil companies, like the farmer, are the beneficiaries of high market prices.
    Who argued that they aren't?
    “Offing those rich pigs with their own forks and knives, and then eating a meal in the same room, far out! The Weathermen dig Charles Manson.”-- Bernadine Dohrn

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