The Price of Oil/Gas and why

[whenfoxforks-ruled]

Now that it seemingly is getting way too personal, you brought up the only good thing that the government has done in my lifetime. Got a lot of the couch slugs off full welfare and put them to work. No, people can not live off minimum wage, but it was a start, and a lot of those people have moved up and off welfare completely, and a lot were not actually couch slugs. If a few people in the government can up and decide to bail out a company worth trillions, by taking their billions of debts and adding it to the uncomprehensible national debt, why can't they bail out all the homeowners? That would cause an economic stimulus. But, like sending all this humanitarian relief abroad, what about home? If they ever bothered asking the public what to do, do you believe the outcome would be the same? That is why we elect local representatives, to relay to more elected but higher paid reps, to argue, barter and let a handful of people make the final decisions. If you stuck me in the honda r&d mx shop, I am fairly confident that I would some how benefit more than getting paid, or someone I knows brother!

 

[robwbright]

The Truth About Gasoline Shortages.

This will take about 3 minutes to read, but it is a nice story and explanation about why "price gouging" should be permitted.

http://www.lewrockwell.com/north/north655.html

On Saturday afternoon, September 20, my daughter, who lives in Nashville, called my wife, who was visiting in Atlanta. She knew that my wife had planned to return to the Memphis area by way of Nashville. She told my wife to be sure to fill up her gas tank in Atlanta, because there was a major gasoline shortage in Nashville.

My wife went out to fill her gas tank, and she found that she could not find a gas station with gas for sale. She called me to warn me. I immediately went to the local gas station. They had no premium gas, but they did have unleaded regular. I filled up my tank.

I came home and did a search on the web, and I found a story about the shortage in Nashville. The story said that a rumor of an imminent shortage had swept Nashville, and people lined up their cars to fill up their tanks. My daughter said that she had been in a long line herself. She was able to fill her gas tank, but shortly thereafter, the gasoline station manager placed "empty" signs on the pumps.

Here we have a classic example of rationing by lining up. A week before, there had been a regional gasoline shortage as a result of fears regarding Hurricane Ike and the possibility that gasoline refineries in Texas would be shut down for months. Some gas stations raised prices, but others refused. The ones that refused ran out of gas. People sat in their cars for half an hour or longer in the hope of getting to a pump, and filled up their tanks.

Before the weekend was over, President Bush went on national television and warned against gasoline stations that gouged consumers. He said that there would be an investigation regarding accusations of gasoline stations that raised prices on Friday.

The message got through this weekend. Instead of raising prices, in an attempt to reduce demand for gasoline, thereby allocating gasoline that was in short supply by means of price, station managers simply let people fill up their tanks until the pumps were empty. Anyone who wanted gasoline after that was out of luck.

This is rationing by lining up. It is the alternative to rationing by price. Rationing by lining up creates no financial incentive for suppliers of the item in short supply to allocate new supplies to the region of the country which is experiencing a shortage. Instead, delivery schedules remain the same as they did prior to the shortage. This continues the shortage.

Whenever there are complaints about price gouging during a period of a shortage, sellers get the message. The next time there is a shortage, they hesitate to raise prices. They shift to the other allocation system: first come, first served. This subsidizes people who have a low value on their time. People who place a high value on their time prefer to pay extra money in order to attain their goals. But this is made illegal by the state. So, the shortage lasts longer than it would otherwise have lasted.

The official goal of the government is to make certain that everyone has access to the item in short supply. The government says that raising prices during a shortage is unfair. So, the result is the opposite of what the government's official justification was for holding prices down. There is an even greater shortage, because people buy more of the item than they need immediately. They have no incentive to reduce their consumption, thereby making available supplies to those who were at the end of the line. There is no incentive for anyone at the front of the line to refrain from filling his gasoline tank. So, gasoline runs out before the line runs out.

This happens with regularity. All it takes is a rumor to create massive demand for the item that is believed to be in short supply. There is no pricing arrangement that alerts people to the crisis. Instead, long lines appear in the front of gasoline stations. As soon as the long lines appear, people panic, and line up to get gasoline even though they do not have empty tanks. This is exactly what I did as soon as I heard about the shortage. I had half a tank, but I went to my local gasoline station and filled up. I found that there was no premium gasoline available. That was not a problem, since I use unleaded regular. But I did note that there was a shortage of premium, and this encouraged me to fill up my tank.

The public refuses to learn. The public is incensed against people who raise prices in a crisis, that is, people who respond to increasing demand by large numbers of buyers. The critics do not like the principle of the auction: high bid wins. The critics prefer another principle: first come, first served. The second principle offers no incentives for suppliers to increase production.

Once again, we learn that the free-market principles of open competition and high bid wins cannot be thwarted without negative repercussions.

 

[Red 250]

So basically your saying that only the people who can afford the item have the right to buy that item. Rather than allowing the price to remain the same and allow all user access to that item. Do I have that right??
Then it is just the folks with the fat bankroll that can get the supply they demand. Then what???

 

[truespode]

So basically your saying that only the people who can afford the item have the right to buy that item. Rather than allowing the price to remain the same and allow all user access to that item. Do I have that right??
Then it is just the folks with the fat bankroll that can get the supply they demand. Then what???

The people with the means get the product (i.e. Mercedes).

Supply and demand in a free market is a good thing.

I said a few years ago on this very forum that I hope gas prices increase dramatically because it would be the only thing that would force any kind of change because higher gas prices would change the demand of the buyers.

Guess what? It's happening. We now have more hybrid's... they didn't just suddenly pop up. They have been in the works for years and years but the demand for them wasn't there.

Gas prices have caused me to cut back on some of my riding destinations and I am more particular about my routes and even my trips to the grocery story (make sure I go to get what I need in one single trip). If I had unlimited money I'd make unlimited trips but I don't.

Yet I don't feel that prices should be low just because I can't afford to keep up with the Jones'.

Ivan

 

[2-Strokes 4-ever]

The "big bankroll" folks will not be around long without the average people having spending money. Unless the big bankroll people are the government... hello communism.

 

[Red 250]

The people with the means get the product (i.e. Mercedes).

Supply and demand in a free market is a good thing.

I said a few years ago on this very forum that I hope gas prices increase dramatically because it would be the only thing that would force any kind of change because higher gas prices would change the demand of the buyers.

Guess what? It's happening. We now have more hybrid's... they didn't just suddenly pop up. They have been in the works for years and years but the demand for them wasn't there.

Gas prices have caused me to cut back on some of my riding destinations and I am more particular about my routes and even my trips to the grocery story (make sure I go to get what I need in one single trip). If I had unlimited money I'd make unlimited trips but I don't.

Yet I don't feel that prices should be low just because I can't afford to keep up with the Jones'.

Ivan

How about when the average Joe cant afford to buy fuel to get to work to deliver your food or your gas then what. Then guess what. I'd like to see that fat cat trying to drive that big rig. He as soon sit on his butt and starve as to lower himself to that standard. The fat cats all have what they have simply because the working man busts his ass going to work everyday to deliver it. When fuel prices get so high he cant afford to go then we shall see I guess. The rich and poor will die of starvation. The poor man cant afford to go to work and the rich man wont.

Oh and those hybrid cars you spoke of. The highest rated one on the market today cost more in terms of energy to produce than a Hummer. So they aren't all that either.

 

[2-Strokes 4-ever]

Perhaps someone here can confirm or correct me on this one, but I have "heard" that everyone seems to be overlooking the environmentaly un-friendliness of a Hybrid. There are extremely high levels of toxic waste created when making a battery. I heard it takes like 10 years of owning/driving your hybrid to work off the environmental damage done as compared to todays incresingly "air friendly" fossil fuel vehicles.

 

[whenfoxforks-ruled]

Uh oh, now we are going to blast the "Gore" side of hybrid cars? Lies + lies= even more lies!

 

[XRpredator]

How about when the average Joe cant afford to buy fuel to get to work to deliver your food or your gas then what. Then guess what. I'd like to see that fat cat trying to drive that big rig. He as soon sit on his butt and starve as to lower himself to that standard. The fat cats all have what they have simply because the working man busts his ass going to work everyday to deliver it. When fuel prices get so high he cant afford to go then we shall see I guess. The rich and poor will die of starvation. The poor man cant afford to go to work and the rich man wont.

there you go with the fat cat bashing. :|

fat cats are people too. They have feelings. Sometimes they just need a hug.

 

[Xander Crews]

How about when the average Joe cant afford to buy fuel to get to work to deliver your food or your gas then what. Then guess what. I'd like to see that fat cat trying to drive that big rig. He as soon sit on his butt and starve as to lower himself to that standard. The fat cats all have what they have simply because the working man busts his ass going to work everyday to deliver it. When fuel prices get so high he cant afford to go then we shall see I guess. The rich and poor will die of starvation. The poor man cant afford to go to work and the rich man wont.

Oh and those hybrid cars you spoke of. The highest rated one on the market today cost more in terms of energy to produce than a Hummer. So they aren't all that either.

So now I am bad person because my parents died and left gazillions of dollars? I suggest you drive an economical car like a Scion tC.

As far as going to work, I will have you know that I go to work several times a month. I have to sit in a huge office with an idiot secretary who doesn't know the difference between Fred Dryer and Fred Hunter. I have to deal with my number 2, Stan, who is constantly trying to give me reasons why I can't spend billions of dollars on things that I enjoy. Like a toy train island. Or being a super hero.

 

[truespode]

How about when the average Joe cant afford to buy fuel to get to work to deliver your food or your gas then what.

If there is not enough product for the demand the price goes up and alternatives are created.

That is what happens in a supply and demand world... we can't make more of a dissipating resource.

When a resource like oil is hard to get then you have to modify your behavior and your lifestyle. So do business.

Supply and demand does not care what the product is. Whether it is oil, bread, drugs or CRF450's. The price is going to be priced at a rate to maximize profit for the business.

If Tic Tacs were of short supply and high popularity they'd be priced higher. Just because a product like oil impacts you directly doesn't mean it should be "protected" or taken out of the supply and demand world.

Supply and demand breeds innovation and competition.

Ivan

 

[Jamir]

I just try to not demand things as much. Just doing my part to keep the costs down.

 

[XRpredator]

Your words have moved me, Jamir. And I'm not a man easily moved. Mostly due to size.

This man, Barnaby Jones, may live.

 

[Jamir]

Your words have moved me, Jamir. And I'm not a man easily moved. Mostly due to size.

This man, Barnaby Jones, may live.

Welcome to You're "DOOM"!

 

[AwesomeX]

Those loans are for non-threatening educated women of color!

I need more information. A whole box more! And the villabouts of the whereain Kelly.

Did I say the villabouts of the whereain Kelly? 'Cause I've been doing that a lot lately. I wonder if it's a tumor. Anyone know a good cancer doctor?

 

[XRpredator]

It's Arizona all over again! :|

 

[whenfoxforks-ruled]

x-files!

 

[whenfoxforks-ruled]

Think the price of gas has bottomed out yet? Below 2 dollars is getting close, value of the dollar gone up, my landscaper tells me the U.S.A. has put limits on the dollars being sent to Mexico? And the roller coaster wall street, still treading water? The politicians sure have laid the ground work for early voter fraud. This week WILL be interesting!

 

[IndyMX]

Think the price of gas has bottomed out yet? Below 2 dollars is getting close, value of the dollar gone up, my landscaper tells me the U.S.A. has put limits on the dollars being sent to Mexico? And the roller coaster wall street, still treading water? The politicians sure have laid the ground work for early voter fraud. This week WILL be interesting!

Gas has been under 2 bucks here for a couple weeks!!

 

[whenfoxforks-ruled]

Cook county Illinoise( Chicago) still near 3 bucks! Suks to live there, still!

 

[Dirtymotonut]

Walla Walla WA Still $3.80 what have ya dude's on us?????Our ^()&*_ Govenor still Christine Gregoir must be a democrat...vote in DINO ROSSI (republican) GOP NOVEMBER 3rd HELP!!!!!!!!!

 

[whenfoxforks-ruled]

3.80, Who did you people piss off? That is going to be one expensive trip to visit Lou!

 

[Dirtymotonut]

GAWD... maybe he could ride up and pick me up???? I would give him few bucks for gas..........Saves us poor people in Wahington state....Possibly burger king for the effort,, to pick me up...Wait no wonder you hardly hear of us riding here....Donations please....

 

[Patman]

$2.06 for branded unleased and $1.87 for E85!

 

[BSWIFT]

$1.89 for non-ethanol. Price dropped a dime since Friday.
$1.52 for E85.