Complete CNN Story

 

When an oil company profits from the sale of a gallon of gasoline it produced it's called gouging. When a government taxes both the profit from producing the gas and the sale of the gas itself with the intent to spend the taxes on something other than roads, I feel gouged. I don't want taxes from gas going as a subsidy to some corporation researching alternatives, higher prices will sort that out.

Are you talking about the person in denial that public transportation is generally a huge money and energy loser?

 

You need to reread where it says his Ford Explorer gets 12mpg (I made that easy - it's in boldface ) The orginal post did not mention in any way shape or form public transportation. I've been told a Ford Explorer typically gets 16mpg. He chose to drive a gas guzzler. Not sure on this one, but he probably has a lead foot to boot. He needs to take responsibility for his actions.

 

Gouging means the commodity is in short supply. Oil and gas are not in short supply. That's why the govt. found no evidence of price gouging. Jacking up prices to see how much the market will bear, is capitalism. I'm not saying I like it. I'm just saying what it is.

 

There is no such thing as "gouging" in a free market. For gouging to work, every seller would have to agree to maintain a high price regardless of how much business they lose. All it takes is one seller undercutting the others and the cartel collapses.

Interesting how gold & silver have risen far higher in percentage terms than oil, but no one whines about the "greedy, gouging" mining companies, even though higher prices flow to their bottom lines in exactly the same manner. Nor do I see anyone demanding an investigation of skyrocketing home prices, or proposing a "windfall profit tax" on home sellers. Just another example of the economic illiteracy of the American sheeple, courtesy of the public school system.

 

I've always been mystified about the notion of gouging as a crime. Gouging is a natural response when supply is short and demand is high. High prices regulate the market and reduce the likelihood of shortage. It also sends a signals to existing producers to increase output and correct the situation. However, I have to disagree with the notion that the oil industry is a functioning competitive market. In my opinion oil companies have been tacitly coordinating to limit the expansion of refining capacity to keep supplies short in this country and prices high. They can do this because the market is a tight oligopoly with a reasonably standardized (homogenous) product where supply and capacity decisions are readily observable by competitors. Thus, no refiner in the united states would aggressively expand existing capacity because they know that their refining margins would drop immediately if they did and realize that any such attempt to take share this way might spur their competitors to do the same. New entry is unlikely because it would take a huge investment and because it is typically cheaper and less risky to add small amounts of capacity to an existing refinery than building a new large refinery that is likely to depress prices before it even gets to market.

Norris

 

Back to Delta's original point.... about the Denial. It is interesting how when the local paper does stories about gas prices they always interviews someone filling up his large SUV or Pickup. Said person typically makes some comment about being helpless.

Sad commentary on the typical American. It does not occur to these people that even switching from their Explorer to a CR-V or Rav-4, they will not loose much in the way of utility and save thousands per year in gas money.

 

As Americans have become plush and fat, we have become less and less accountable for our own actions.

Fast food obesity is the restaurants' fault.
High gas prices are the oil companies' fault.

Sheesh.

 

Transportation is starting to look very Darwinian these days. My thinking is that attitudes will change when people finally realize that there is nothing anybody can do about the increasing cost of gasoline except to use less of it. This is a new thing for many of us. People like me weren't around in the 70s to experience the oil crisis, and others who were around have dismissed it as a thing of the past. The relatively low prices of the 1990s were like the 1950s ad 60s all over again. So for now we're stuck in "WTF?" mode. Hold prices at $3 plus nationally and factor in the associated inflation that will probably come with the fuel prices, and a choice will have to be made: do I continue to buy fuel-hungry vehicles or do I convert to more efficient transportation? The wealthy may "keep on truckin'" since they can afford it, but mainstream America will have no choice but to drive more fuel efficient cars of all types. It won't be "I drive a small hybrid because I care about the earth" so much as "I drive a small hybrid because otherwise I won't be able to retire."

The denial, I hope, is a temporary thing.

 

For those who might remember:

Welcome to the addiction.

Bob Wilson