gas prices

[Drogue]

Originally posted by Japher
I find this argument to be hypocritical on my part

On one side I feel that if ppl are willing to pay the price than they should charge what they can

On the other side, gas prices don't just effect the cost of commuting my lazy butt to and from work, it also effects the costs of the other things I buy. Therefore, by charging higher prices for gas they are actually controlling inflation. And, IMO, inflation shouldn't be controlled by greedy corporate entities that would rather pass the cost of production pitfalls on to the consumers than to dare impede on their record profits.

Who else would control inflation? Prices are set by companies. Unless you want to regulate every single industry, inflation will always be set by corporate entities.

Any company is going to raise price if it feels it will raise profits. They'd be stupid not to. You're right in the sense that oil is particularly important as it is an input into most other goods. However you're wrong about this being the thing that controls inflation. As Krugman once remarked, "the rate of inflation will be whatever [the fed] wants it to be, plus or minus a percentage point or two to reflect that fact that [the fed] is not, in fact, God."

Originally posted by Japher
For this reason, I feel that gas prices should be regulated, though this would just give the power of inflation over to some other greedy smartarse. Maybe gas should be tied to some indicie or something, I don't know, but I don't like that a president with and oil company would turn a blind eye to such a prevalent issue.

The problem with regulation is shortages. Suppose price was regulated to increase in line with an index. Then suppose we had a bit of a shortage - not much, but say China grew a bit quicker than expected, or something. Then, rather than prices rising, they'd be a shortage. You would be able to get gas in some places, most likely those in far off places as it's harder to get it there. So these people would be left entirely without gas. This may mean your favourite foods or other goods simply wouldn't be able to be transported.

Either we accept that when supply or demand of oil fluctuates, price is going to, or we live with shortages every time the price would move upwards.

[Drogue]

Re: Re: Re: gas prices

Originally posted by Zkribbler
The bottom line is that the lack of competition between refining companies leads to an oil-refining cartel. There are charges that oil companies close down some of their refineries "for maintainance" in order to lower supply, boost prices and thereby profits.

If this is true, their profits would be "artifically high," i.e. not set my market forces but rather by unlawful manipulation of market forces.

Now this is an important point. Surely the easy solution is for the government to build a couple of refineries, thus acting to restore competition. If there is a tacit cartel (highly likely, and not actually anti-competitive in terms of an abuse of market power, just what happens when there are too few companies in an industry competing on quantity), then the government being one of those players can often break the cartel by changing the balance of power.

[alva]

Re: Re: gas prices

Originally posted by KrazyHorse


The fact that oil companies are making record profits has nothing to do with whether or not prices are "artificially" high.

Pretty sums up my response to this. Prices are still lower than they were in the '70ties, while public transportation often has become twice as expensive.

[SlowwHand]

I can ride the train all day for 2.50, and I doubt seriously I could go all day even on a motorcycle, and spend less; especially if you consider parking availability.

[DinoDoc]

Out of interest, what do Europeans think of American claims of high gas prices when they fill up their own cars?

[DanS]

They enjoy paying taxes, DD.

[DinoDoc]

Oh I thought we were avoiding discussing the government when it comes to determining a large portion of what is paid at the pump.

[Kidlicious]

Re: Re: gas prices

Originally posted by Drogue
Is the price of food artificially high because WalMart make huge amounts?

Yes

Is the price of using a search engine too high because Google are making huge profits?

Yes

[Kuciwalker]

Ignore Kid please.

[Kidlicious]

Originally posted by Kuciwalker
Ignore Kid please.

This is what I get for stating the obvious.

[Zkribbler]

Is the price of food artificially high because WalMart make huge amounts?

This question would have more relevance if food prices had doubled in the last six years, if there were only a few producers of food, and if those food producers were making record profits.

[SlowwHand]

Forget Walmart. Check out Costco. That's where the rich shop. You think I'm kidding or something, but I'm not.

[Kidlicious]

Both WalMart and Costco make too much profit. It's the way the system works. Competition is a non issue. The oil companies are just in a situation to make even more obscene amts of profit at this time.

[Drogue]

Re: Re: Re: gas prices

Originally posted by Kidicious
Yes

Using a search engine is free, how can the price be too high?

Or 100-0, as that was clearly a trap. The WalMart one I'll give you, it's a matter of opinion, but no price is lower than 0.

Originally posted by DinoDoc
Out of interest, what do Europeans think of American claims of high gas prices when they fill up their own cars?

That you're whiners.

Taxing pollutants actually makes a lot of economic sense. Income taxes are distortionary in a (generally considered) bad way, they're inefficient, but necessary. Environmental taxes tax the social cost that isn't paid by the user, hence they're efficient taxes. Simply raise environmental taxes and cut income taxes and you have a more efficient tax system that can still raise the same revenue.

[Jon Miller]

but that disapportionally burdens the poor

JM