Gas prices
First things first: I'm not surprised at the price of gasoline. I generally side with the environmentalists that some reduction in our consumption of gasoline is good for the environment. Maybe also good for many urban workers' daily commute.
However, much of conventional wisdon does put the blame at the price of oil per barrel in the market. Here are some comments/issues:
Much of the trouble with oil is in its "futures" prices. Much of that seems to be speculation. Some wonder if speculators should be shot. In some ways, it is a bit manipulative. Therefore deceitful. So I'm glad I'm not a speculator.
However,
You'd think that a firm that is facing rising costs ought to feel a squeeze. That is, unless they can easily pass that on to consumers. In fact, maybe a little more is passed on than is typical. You just don't find firms earning such large prices when their costs are rising.
So what are oil companies doing? They are price searching. They are looking for the price that maximizes profits. No shame in that. But just because it is maximizing profits doesn't mean it is efficient. In fact, it can be very inefficient.
Think of this scenario: Bush calls oil executives. "Hey, looks like congress wants to hit you with a windfall profits tax. Let's not see me have to veto this." Watch gas prices fall around 50 cents fast. But Bush won't. Why? No spine? Stands to gain? False hope in free markets that have actually been taken hostage? As an economist, I feel there are many reasons. Some more reasonable and compelling than others.
Give how I started this rant, I shouldn't be too upset. But I can handle this increase in fuel prices. But my concern is those on a lower income range. Our economy has indeed become dependent on transportation. Cheap transportation. The poor are more likely to have trouble buying gas and have trouble owning the most fuel efficient vehicles. They are the ones who are going to get hammered. And if these people play the "Ohio" card, voting republican because they are are scared their family values are in jeapordy, they get what they deserve... a whole lot of NOTHING.
Oh oh way to go Ohio. (The Pretenders, My City Was Gone, about my home town. Go find it and download it.)
Jack out.
However, much of conventional wisdon does put the blame at the price of oil per barrel in the market. Here are some comments/issues:
Much of the trouble with oil is in its "futures" prices. Much of that seems to be speculation. Some wonder if speculators should be shot. In some ways, it is a bit manipulative. Therefore deceitful. So I'm glad I'm not a speculator.
However,
You'd think that a firm that is facing rising costs ought to feel a squeeze. That is, unless they can easily pass that on to consumers. In fact, maybe a little more is passed on than is typical. You just don't find firms earning such large prices when their costs are rising.
So what are oil companies doing? They are price searching. They are looking for the price that maximizes profits. No shame in that. But just because it is maximizing profits doesn't mean it is efficient. In fact, it can be very inefficient.
Think of this scenario: Bush calls oil executives. "Hey, looks like congress wants to hit you with a windfall profits tax. Let's not see me have to veto this." Watch gas prices fall around 50 cents fast. But Bush won't. Why? No spine? Stands to gain? False hope in free markets that have actually been taken hostage? As an economist, I feel there are many reasons. Some more reasonable and compelling than others.
Give how I started this rant, I shouldn't be too upset. But I can handle this increase in fuel prices. But my concern is those on a lower income range. Our economy has indeed become dependent on transportation. Cheap transportation. The poor are more likely to have trouble buying gas and have trouble owning the most fuel efficient vehicles. They are the ones who are going to get hammered. And if these people play the "Ohio" card, voting republican because they are are scared their family values are in jeapordy, they get what they deserve... a whole lot of NOTHING.
Oh oh way to go Ohio. (The Pretenders, My City Was Gone, about my home town. Go find it and download it.)
Jack out.
posted by Atomic Kid at 7:20 PM
4 comments
