Down with the evil Gas lords II: Kaak's Revenge!

[Arrian]

What? Demand rises, supply rises, reacting to demand... and you claim that supply is solely responsible for price?

Does. Not. Compute.

They interact. It's not one or the other...

-Arrian

[Kidlicious]

Originally posted by Imran Siddiqui




The price that hit $2.50-ish/gal after Katrina DID drop to around $2.00/gal in Dec/Jan of this year. Where in the Hell is this "prices never seem to return to pre-spike levels" coming from?

They do return much slower than they spike. That creates a lot of profit.

[Velociryx]

Kid, I'm sure all of this is endlessly fascinating to you.

For the rest of us, just so you know, you are stating the obvious.

Again....are you attempting to make a point, or are you pretending to be Marx, reincarnated?

-=Vel=-

[Arrian]

http://www.randomuseless.info/gasprice/gasprice.html

Look at the spike in the graph caused by Katrina. Note that the spike and the subsequent subsidance look equally steep.

-Arrian

[Kidlicious]

Originally posted by Arrian
What? Demand rises, supply rises, reacting to demand... and you claim that supply is solely responsible for price?

Does. Not. Compute.

They interact. It's not one or the other...

-Arrian

Look. Ask yourself what the price of a product will be in the long run. Do you tell yourself that it depends on how many people want it? Or do you tell yourself how much it will cost to make it?

[Arrian]

By the way, if anyone has a better graph for inflation-adjusted gasoline prices, please do present it...

-Arrian

[Velociryx]

Look. Ask yourself what the price of a product will be in the long run. Do you tell yourself that it depends on how many people want it? Or do you tell yourself how much it will cost to make it?

Since the two are intractably tied to each other....Both.

Next.

-=Vel=-

EDIT: And "how much it costs to make it" doesn't really address the notion of supply, except in the most abstract ways (economies of scale), so you're still a fish out of water, really.

[Arrian]

Originally posted by Kidicious


Look. Ask yourself what the price of a product will be in the long run. Do you tell yourself that it depends on how many people want it? Or do you tell yourself how much it will cost to make it?

BOTH!!!

-Arrian

[Kidlicious]

Originally posted by Arrian


BOTH!!!

-Arrian

You're wrong. Many more people may want the product than before, and even be willing to pay more for it, but that wont affect the price one bit.

[Flubber]

Originally posted by Arrian
That would be true if the cost of production remained constant.

As I understand it, increased oil production has taken place (at least in part) b/c higher prices (driven up by higher demand) made developing certain oil fields economically viable (whereas at lower prices it's not worth it, b/c the cost of production is too high).

-Arrian

Canadian Oilsands are a perfect example of this. The vast majority NEED a $40ish price to be feasible.

Also a lot of things that can be done in the short term like injection schemes or re-entering wells require very high prices. I'm betting that as we speak there are small companies everywhere doing these small things even if they require 60 buck oil to be profitable. There are thousands of these instances where a few hundred thousand investment might increase production just enough to make it worthwhile

[Imran Siddiqui]

It seems Kid has never heard of "Marginal Revenue = Marginal Cost" or seen a basic Supply/Demand Chart.

[Velociryx]

It seems Kid has never heard of "Marginal Revenue = Marginal Cost" or seen a basic Supply/Demand Chart.

Stand back! He's a degreed economist at work, and he can't be arsed to explain basic concepts if you're just gonna turn around and tell him he's nutty!

-=Vel=-

[Kidlicious]

Originally posted by Imran Siddiqui
It seems Kid has never heard of "Marginal Revenue = Marginal Cost" or seen a basic Supply/Demand Chart.

It's obvious that you don't know that that's a static graph. Why don't you find me a long run price determination graph Mr. Econ grad who knows all the basics and judges who does and who does not.

[Kidlicious]

Arrian,

Don't get caught up with the fools. Use your head.

[Flubber]

Originally posted by Kidicious
That's why their prices and margins are high.

Now if your perceptions are causing you problems with seeing that clearly then you have some problems, because that's just not right.

My problem is simple. Taking one year of returns as indicative of anything in an industry where you probably have a 50 year investment life is silly.

If margins/ returns stay up for several years more such that returns on a 10 year basis start looking competitive with other ventures that require multi-billion dollar investments, THEN your comments might be worthy of discussion.