See Blimey! Americans sicker than Brits

Originally the survey was to prove the poor were sicker, until they found out the poorest third of the British population was heathier than the richest third of the American population. No, I don't think sausage and eggs is their secret. Americans spend twice the British in health care.

More stress and isolation is suspect, but obesity is thought to be the leading factor. Brit ex-pats notice less walking, more driving when coming to America.

 

Let me begin with four words from your 11th grade economics text book: price inelasticity of demand.

But that's not the whole story:

Refiners aren't in competition because all the gas you buy at this country's 170,000 gas stations are all refined at the same 160 refineries. Exxon doesn't refine the Exxon gas that's sold at their branded stations. Gas is a fungible commodity that is commingled all along the distibution chain. Because of this, the large players, i.e., ExxonMobil, BP/Amoco, Shell, ChevronTexaco, ConnocoPhillips, Valero/Diamond Shamrock/Beacon can control prices without ever explicity price fixing, and there's nobody to step in and undercut them because the small guy is buying gas refined at their refineries and shipped through their pipelines. The whole system is so interconnected this "competition" you speak of is about as real as the tooth fairy or easter bunny. You might not want to perpetrate being so pompous, because you clearly don't understand the gasoline market nor how it works.

Watch http://www.consumerwatchdog.org/ener...ebehaviorvideo and get back to me.

 

The basic problem with refiners is a lack of refining capacity. Right now our refiners are running near full out. In such an environment $1.50 gasoline would like result in shortages. Shortages in my opinion are worse than $3 gasoline because shortages don't efficiently distinguish those with truly inelastic demand from those who are capable of reducing their demand somewhat. Also keep in mind that while demand for gasoline is relatively inelastic in the short run, it is moderately elastic in the long run. that is, the price increases of today may induce consumers to make the long term investments to reduce their consumption. That's not necessarily a bad thing.

As for refiner competition, you are right that refiners basically transfer refined products to each other -- mostly in exchange agreements. However, that does not mean that refiners aren't in competition with each other. Why? because it is supply that determines price. Thus if one refiner decides to restrict output in an effort to firm up industry prices, if another refiner replaces that output restriciton by producing more...the price impact would be neglible. The problem in this country right now is that almost all the refiners are running full out. In such an environment no one can effectively defeat a price increase by increasing output.

I would say, that refiners at least in some parts of the country, are tight oligopolists who tacitly coordinate on capacity expansions. That is, they only slowly increase capacity to keep supplies tight. I think that is the marjor problem.

Norris

 

Sigh. Your point about moderate elasticity in the mid-term, is, of course well taken. I'd say reliance on petroleum will have to be completely elastic at some point, because we're going to run out of it. But with respect the the assertion that refiners are running near full out,

 

The refinery in Coffeyville Kansas was shutdown and not re-opened:

http://www.coffeyvillegroup.com/

The sad tale of woe:
http://www.rurdev.usda.gov/rbs/pub/mar05/perfect.htm

The last time I was home, I could still see the waste gas pipe, inert.

Bob Wilson