Gas prices

[Oto-Man]

I posted that other thread about price hysteria...


Prices didn't go up here, but hysteria did. Every Tom, Dick, and Henry filling up 5 gallon cans.

Lines for miles, FIGHTS, and police stationed at the pumps...


Ridiculous hysteria and just goes to show you how totally unprepared the sheep are.....

x2. 3.71 per Gal. (same as yesterday) and lines down the street...

[DJB]

The funny thing is how loud people scream about gas being so high, but they do nothing about it. They still hop in their 10mpg truck and drive to the movies or the mall, spend a few hours doing nothing productive, then drive back home in their 10mpg truck and all for nothing. STAY HOME, enjoy the family, I hope the price of gas goes over 10$ a gallon. Im close enough I can run to work.
Now as far as the impact on consumer goods......thats gonna suck.

So True. Its because people respond to incintives. I never believe what people say, I believe what they do. If someone says "Gas prices are too high" and then they show no effort at conserving gas, then gas clearly is not too high.

And in reality its not as bad as it has been.



I would also like to point out that this graph almost gives you the most accurate representation on prices. Price changes over time are best describe by average number of work hours need to purchase. This would give a better idea of cost than percentage of per capita disposable income, but it is still very telling.

[ANGRYCivilian]

I posted that other thread about price hysteria...


Prices didn't go up here, but hysteria did. Every Tom, Dick, and Henry filling up 5 gallon cans.

Lines for miles, FIGHTS, and police stationed at the pumps...


Ridiculous hysteria and just goes to show you how totally unprepared the sheep are.....

x2. 3.71 per Gal. (same as yesterday) and lines down the street...

Why don't people understand that this type of behavior is a self-fulfilling prophecy?

[smokn38]

Fayetteville: $3.55 to $4.59
Time to buy a bicycle. Seriously.

That is fucking criminal! price gouging at its finest right there!

In Michigan it is. As the storm was preparing to come on shore the Michigan Attorney Generals office put a message out to all LE agencies in the state. If you see stations pricing gas unreasonably (gouging) obtain evidence of said practices, and forward all information to them. When they did this after 9/11 stations had to send money back to consumers for fucking with the prices when everyone started sheep mode. The attorney general constantly monitors market price, and retail price to watch for problems.

We had a number of "foreign" owned stations change their price to 6 a gallon. We took pictures, made contact with the stores, advised them they were in fact breaking the law, showed them the web site explaining the 25,000 dollar fine. and told them have a nice day. Almost instantly they brought their prices back down to 3.89.

[DJB]

So well stated, I wish I could present things this way.

Many people think that price is determined by historical cost. Price is never, ever, determined by historical cost. Price is determined by supply and demand. If supply or demand change then the price changes regardless of historical cost. Last year's fashions? The price falls regardless of cost. Chopped up dead sharks? If demand is high, the price is high regardless of historical cost. If the demand for gas were to suddenly fall, the price of gas would fall too, regardless of cost. In the present situation the supply of gas has been reduced and the price has gone up. Historical cost is always irrelevant.

Is the high price due to supplier gouging? Not at all. If you want to blame anyone for the high price blame your fellow buyers not the suppliers. A high price means that some other buyer is outbidding you to obtain the limited supply. It's buyers who push up prices in a competitive market and it's suppliers who push prices down!

It's true that some suppliers are making big profits but people have the cause and effect backward. It's not the high profits which are causing the high price. It's the high price which is causing the high profits. If you were to tax the high profits, for example, you wouldn't reduce the price. Indeed, quite the opposite because the high profits motivate suppliers to increase the quantity of gasoline as quickly as possible.

The last point brings us full circle because as the situation stabilizes suppliers increase the quantity supplied until price is pushed down towards long-run costs (which are also historical costs). Thus, in the usual situation it appears that price is determined by historical cost. It's only in the brief time period when a shock shifts (short-run) supply away from historical cost that we can see the truth. Price is determined by supply and demand.

[Warriorwife]

Great post DJB. I wonder if the people will ever "get it"? I hope so.

I'm blonde.

And if I get, there's hope out there.

:D

[elle]

Ranger DJB, understanding the basic economic principles of supply and demand, and the latest report from the Gulf area that 14 refineries have been shut down for the next 8 days (+/-), the price of fuel will continue to rise. :(

Though we refine our own fuel up here north of the border we are currently paying $5.06/US gal, I expect we will see this go up as well.

[DJB]

Elle, Yeah it will likely raise transiently, gas is not a regional commodity. It can be transported. If the demand for gasoline rises in one region the supply will shift. So just because refineries up north are still working doesn't mean that the gas produced there will not be transported to areas where demand is higher. Remember you are competing with other customers across the nation or across nations for that gas. Those other customers are driving up the price. Not the oil or gas suppliers.

One thing that will decrease the liquidity of gas is state additive requirements. Gas made for transport to Nebraska cant necessarily be diverted to California due too regulatory measures. Though refineries are pretty good at making quick changes it can take a few days. This is one reason for state to state discrepancies in prices.

[Jenny Lynn]

Fayetteville: $3.55 to $4.59
Time to buy a bicycle. Seriously.

That is fucking criminal! price gouging at its finest right there!

In Michigan it is. As the storm was preparing to come on shore the Michigan Attorney Generals office put a message out to all LE agencies in the state. If you see stations pricing gas unreasonably (gouging) obtain evidence of said practices, and forward all information to them. When they did this after 9/11 stations had to send money back to consumers for fucking with the prices when everyone started sheep mode. The attorney general constantly monitors market price, and retail price to watch for problems.

We had a number of "foreign" owned stations change their price to 6 a gallon. We took pictures, made contact with the stores, advised them they were in fact breaking the law, showed them the web site explaining the 25,000 dollar fine. and told them have a nice day. Almost instantly they brought their prices back down to 3.89.

I was wondering is Michigan the only state that asked it's LE Agencies to keep an eye out for unfounded inflation in gas prices due to the hurricanes, storms etc? If anyone has proof of it here in WA State I'll be willing to call or drive down to the WA State Attorneys office and share with them Michigan's practice. Thanks, Jenny

[Oto-Man]

I was wondering is Michigan the only state that asked it's LE Agencies to keep an eye out for unfounded inflation in gas prices due to the hurricanes, storms etc? If anyone has proof of it here in WA State I'll be willing to call or drive down to the WA State Attorneys office and share with them Michigan's practice. Thanks, Jenny

My Gov. (Chain Gang Charlie) will personally go over to the home of anyone "price gouging" --FL has a law...and beat the shit out of them...

Charlie has no shame and will smoke 'em all...

[K.Ingraham]

Ranger DJB, understanding the basic economic principles of supply and demand, and the latest report from the Gulf area that 14 refineries have been shut down for the next 8 days (+/-), the price of fuel will continue to rise. :(

Though we refine our own fuel up here north of the border we are currently paying $5.06/US gal, I expect we will see this go up as well.

Your example doesn't really apply here Elle, gas prices there are higher due to an artificial imposition on the economy - over there the government tries to encourage or discourage chosen behaviours through taxation. Higher taxes support one or another program or subsidy the voters want the gov' to provide.
Many ecologists call for high gas taxation specificaly to make it too expensive to continue our driving habits. Europe has done this from the beginning, but then they also have reasonable alternatives, such as a subsidized public transportation system that is actually a usable, practical alternative to driving yourself.
Which in turn is supported by transportation taxes and the cycle rolls on..

Thanks DJB for the common sense facts which transcend individual politicians. Except for George Bush of course, he's the devil's spawn after all

[McD]

Iteresting that the price per barrel has drop ~35% in the past couple months but the price at the pump has dropped only 8%.

Guess the suppliers are in no big hurry to lower the price of gas.

[Silverback]

Iteresting that the price per barrel has drop ~35% in the past couple months but the price at the pump has dropped only 8%.

Guess the suppliers are in no big hurry to lower the price of gas.

If you could legally sell a product for a larger profit margin what motivation would you need to lower the price?