Gas Prices

[Big Blue Machin]

I think the energy bill that Congress passed is a good one, although it should have pushed for more fuel efficient cars.

 

[elephant]

Sure I understand that and agree for the most part.
However, even if mass transit became a reality, I as an oil company
CEO with close ties to the other few CEOs would simply agree to cut production and keep prices high to maintain that profit. Call it collusion or price leader, it doesn't matter nothing changes. This helps no one. So what we truly need is MORE competition..Be it alternative fuel
or new wells from different companies. IMO

I'll stick with your example. If mass transit were a reality, and I admit it currently sucks, this would change the demand for gas and one possible reaction would be price coordination on the part of the oil companies. Another possible reaction would be the development of alternative fuels or engines by new companies. I believe some of this currently happening.

If enough people decide to use non-gas powered methods of travel raising prices will no longer benefit the oil companies. Until that happens prices will increase because the market will bear it. Oil companies only profit if consumers are willing to buy.

Finally, you might be surprised to know that gas price coordination is much easier and more common at the retail level. It turns out the "little guy" is often just as likely to take advantage of the consumer's situation.

 

[Mr. P]

....

Finally, you might be surprised to know that gas price coordination is much easier and more common at the retail level. It turns out the "little guy" is often just as likely to take advantage of the consumer's situation.

Sure they can coordinate..a penny here and there..But in the end, they are the "little guy" and looking for their own profit, insignificant compared to the BIG 5 or so which set the stage..

Another possible reaction would be the development of alternative fuels or engines by new companies. I believe some of this currently happening.

This is happening and must continue.

...Until that happens prices will increase because the market will bear it. Oil companies only profit if consumers are willing to buy.

Here's the rub.. the market can't bear it..it's not just Joe Blow consumer out there buying gas.
All the companies that transport a product or use fuel for manufacturing must buy fuel too, and lots of it..those extra costs are passed back to the manufacture which then pass them back to the consumer with a price increase. So, how high does it go before that straw that breaks the camels back?

IMO this is an economic issue in need of immediate attention..it's what law prohibiting a monopoly is all about..Utilities due to their near monopoly and importance to the economy are price regulated by public service commissions, perhaps if the oil companies can't get a grip on reasonable profit they should be too. Until we get alternatives.

 

[elephant]

Sure they can coordinate..a penny here and there..But in the end, they are the "little guy" and looking for their own profit, insignificant compared to the BIG 5 or so which set the stage..


This is happening and must continue.


Here's the rub.. the market can't bear it..it's not just Joe Blow consumer out there buying gas.
All the companies that transport a product or use fuel for manufacturing must buy fuel too, and lots of it..those extra costs are passed back to the manufacture which then pass them back to the consumer with a price increase. So, how high does it go before that straw that breaks the camels back?

IMO this is an economic issue in need of immediate attention..it's what law prohibiting a monopoly is all about..Utilities due to their near monopoly and importance to the economy are price regulated by public service commissions, perhaps if the oil companies can't get a grip on reasonable profit they should be too. Until we get alternatives.

About monopolies:

First, it is no where near a monopoly, so Sherman, Clayton, and FTC Acts do not apply.

Second, it is not clear that the cost of monitoring and enforcing antitrust is any less expensive than simply allowing monopolies to exist. And the less government in my life the better.

Third, the market is called a "free-market" for a reason - you can change your purchasing habits. I do not need government regulation to tell me when I am not willing to pay for something, nor do I want it.

About the market bearing it:

The market clearly bears it, whether you like it or not. Consumers will actually have stop buying the products and only then will the gas companies have less market power - the oil producer's power comes from the consumers not out of thin air. Also, there will not be some grand economic collapse because of oil prices. The oil companies do not function in a vaccuum; they are in fact a part of a large complex economy which further diminishes their oligopoly power. And there will come a point where lowering prices will increase profits, because the percentage decrease in price will be outweighed by the percentage increase in quantity sold. Again, it is a "free-market". Just stop buying stuff if you cannot bear it.

And "a penny here and there":

Or how about a dime or even a quarter and not just on your gallons of gas but everyone's.

A $100 dollars a day X however many stations X however many days = BIG BUCKS.

The point here is the "little guy" is out for profits as well and he should be. Instead of complaining and asking for government help just take action. Be more efficient and increase your own personal profits.