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Old 03-24-2008, 11:56 AM #43
graysonp
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Quote:
Originally Posted by Sir Raph View Post
I'll agree to a point. They're certainly entitled to their success. But to what point do we let the free market reign? If the price of gas rises to the point where its threatening to collapse the economy, do we still sit back and the the market run unabashed? I don't believe we're there yet, but I do believe that there will come a time when the government will have to step in.
I would say that most of it is because the government has already stepped in. A completely free market would be more efficient and the economy would not collapse because of oil prices. The price may rise to the point that it's more cost effective to use other forms of transportation and new fuels. But the market will shift to more cost effective products and everything will be fine.

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Originally Posted by Sir Raph View Post
But we need oil to keep the market going.
If you drive a truck for a living, you're certainly willing to pay a lot for gas if need be. But the price at which you're unwilling to pay is the same price at which you lose your job, and your customers lose your service. Reaching the point at which consumers are unwilling to pay for gas would be disasterous.

(Extreme analogy alert) If everyone in the world was diabetic, and the demand for insulin was constantly increasing, do we step back and say, "but everyone keeps paying for it. It's not the medical company's fault you're all diabetic."
Again, I do not think we will reach that point. The market will shift to other fuels. The same goes for your insulin example. The market will shift to another treatment for diabetes.

Even if there were absolutely no substitutes, how can the government step in? There's a limited supply of insulin and a massive demand? If the government lowers the price, we now have a huge shortage. Who decides who gets it? Is the government supposed to ration out insulin? The free market will do a better job of that. If people are willing to pay it, let them. The ones who aren't willing to pay will buy another good that another firm is willing to supply.

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Originally Posted by Adema3412 View Post
Here's the thing though, oil companies are an Oligopoly and demand for gas is relatively inelastic, thus they are capable of taking away all of the consumer surplus and putting it into producer surplus.

Is this corporate corruption certainly not, but corporate greed can quite easily be argued.

If this were a perfectly competitive market or closer to it and gas's price elasticity of demand wasn't nearly as inelastic I would agree with you.
I realize that there is some collusion among oil companies, but I think that the demand for oil is more elastic than people give it credit for. The entire world is now attempting to wean themselves off of oil. We're developing alternative fuel sources, new heating sources, regulating ourselves off of oil, and even trying to stop using as much fuel overall. High oil prices are just increasing the demand for cost-effective alternatives and speeding up the process of shifting away from oil.

Oil companies may be able to do some minor manipulations in prices for the next few decades, but they can't afford to price gouge much without running the clock out oil products.
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Old 03-24-2008, 12:04 PM #44
Adema3412
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Quote:
Originally Posted by graysonp View Post
I realize that there is some collusion among oil companies, but I think that the demand for oil is more elastic than people give it credit for. The entire world is now attempting to wean themselves off of oil. We're developing alternative fuel sources, new heating sources, regulating ourselves off of oil, and even trying to stop using as much fuel overall. High oil prices are just increasing the demand for cost-effective alternatives and speeding up the process of shifting away from oil.

Oil companies may be able to do some minor manipulations in prices for the next few decades, but they can't afford to price gouge much without running the clock out oil products.
I agree, but to think that they are selling at the perfectly competitive market price or relatively near it is naive.
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Old 03-24-2008, 01:42 PM #45
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Europe pays $6+ a liter, stop complaining
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Old 03-24-2008, 01:43 PM #46
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Europe pays $6+ a liter, stop complaining
Europe is taxed to the teeth.
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Old 03-24-2008, 01:50 PM #47
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so be glad we aren't
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Old 03-24-2008, 02:07 PM #48
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Oil is based on the dollar, the dollar is at record lows, oil is at record highs. See any correlation there? Fix the economy and oil prices will be fixed.
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Old 03-24-2008, 04:16 PM #49
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Originally Posted by Adema3412 View Post
I agree, but to think that they are selling at the perfectly competitive market price or relatively near it is naive.
I would say it's relatively close. They can't just double the price of oil because it's going to speed up the transition into alternative fuels and a smaller demand for oil. They also can't drive it up to the point that it's cost effective to use the other technologies and fuels. Pretty soon, the substitutes for oil are going to become cost effective and the oil companies are going to take a big hit. I think that they're well aware of this happening and they're not going to get too extreme with price gouging.

Of course I don't have any real numbers, and it's anyone's guess as to what would happen, but I wouldn't expect a decrease of more than a few dollars per barrel if OPEC were to split up. I personally think that the other factors mentioned in the thread have a much greater affect on the price than what OPEC has done to manipulate it.
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Old 03-24-2008, 06:01 PM #50
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Originally Posted by graysonp View Post
I would say it's relatively close. They can't just double the price of oil because it's going to speed up the transition into alternative fuels and a smaller demand for oil. They also can't drive it up to the point that it's cost effective to use the other technologies and fuels. Pretty soon, the substitutes for oil are going to become cost effective and the oil companies are going to take a big hit. I think that they're well aware of this happening and they're not going to get too extreme with price gouging.

Of course I don't have any real numbers, and it's anyone's guess as to what would happen, but I wouldn't expect a decrease of more than a few dollars per barrel if OPEC were to split up. I personally think that the other factors mentioned in the thread have a much greater affect on the price than what OPEC has done to manipulate it.
http://www.nytimes.com/2007/12/06/bu...ss/06opec.html

Pretty decent article, OPEC has an effect on prices; they are a cartel, they collude to make sure that prices don't rise too high or fall too low if they can help it.

I agree with your last statement though.
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Old 03-24-2008, 10:40 PM #51
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They maybe having record profits, but look at their profit margins, that is where the true test is.

Also, not drilling in AK is not helping the gas prices...
And its also smart. As many environment activists in this country as there are, it would piss off way too many people. Almost to the point of civil war or riots.

And its also a very large reserve in case anything should go wrong.

I still blame high gas prices on 9/11. Well to an extent. Before 9/11 the gas prices were ~.90 per gallon. Immediately after they go up at astonishing rates. Our economy has also gotten weaker and weaker. Im not very educated on The World Trade Centers, but what did they exactly do? Because to my eyes, I see the destruction of them causing the destruction of this country.
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