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Somehow I'm not really Surprised.

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Postby Mookie4ever » Thu Oct 27, 2005 2:02 pm

RugbyD wrote:news item: "Private company makes large profit on product that makes the world, especially the US, an awesome place to live."

news item: "Principle of supply and demand operating exactly as it should."

am i missing something here?


Well I'm not sure what it is like in the States but in Canada it certainly is a problem. The oil companies may be breaking our anti-trust laws. There is a big investigation into price fixing. Up here all of the gas stations raise and lower their prices in unison. There is never any competition for customers because it seems like they all have an agreement to keep their prices the same. The gas companies deny it but we will see what the investigation digs up.

Another thing is that there is a misconception that there are actually individually owned small gas stations. The fact is (and this was news to me) that the smaller name gas bars (up here Beaver, Econo-gas etc) are actually owned by the big gas companies. They did this to make it seem like there was actually competition. It appears as if the gas companies own the distribution centres effectively shutting off free market competition.

The last thing that they are investigating is the claims of the gas companies that the price at the pump is actually directly linked to the price of crude. Nobody really believes this. As soon as there is any upward movement in the price of crude the price at the pump jumps within hours. If the price of crude drops however it takes weeks to make its way to the pump. So if there is just a downward spike that is corrected, the price never goes down at the pump. But if there is an upward spike that is corrected, the price does go up at the pump.

and btw - I hope that there is more than oil that makes the US an awesome place to live.
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Postby Mookie4ever » Thu Oct 27, 2005 2:04 pm

Coppermine wrote:I was being sarcastic.

Seriously, if there's one nationality I'd like to avoid, it's the dutch.

WTF?

People from Holland, which is also called The Netherlands, are the Dutch?

Pretentious bastards!


The Netherlands may be the best place in the world to live. If only they had hockey.

You mention that you are from Canada and they buy you beer all night.
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Postby Coppermine » Thu Oct 27, 2005 2:20 pm

That's not so bad... why are the Dutch such big fans of Canuckleheads???

;-) ;-) ;-)
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Postby StlSluggers » Thu Oct 27, 2005 2:21 pm

Mookie4ever wrote:and btw - I hope that there is more than oil that makes the US an awesome place to live.

Sorry to burst your bubble, but it's in the Declaration of Independence:

life, liberty, and the pursuit of cheap oil

:-D
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Postby RugbyD » Thu Oct 27, 2005 2:22 pm

Mook-

Briefly, gas is a commodity, so it is natural for the price quoted by any company to move in relative unison since there is no product differentiation. Collusion is certainly anti-capitalistic and I am against it. The fact that outsize profits are being made in the current environment is no surprise though.

Filling station are individually owned (just in general, not all of them). The owner can set the gas price wherever they want. Of course they do have a common cost of supply dictated by whatever company they have a contract with to buy oil from. The market-clearing prices are relatively easy to figure out in a normal situation for someone who business is to sell at the market-clearing (highest accounting-profit) price. Price spikes and gradual ebbs make perfect sense to me b/c we're dealing with a scarce product. There's no reason to drop your price until you are reasonably assured that the supply problem is totally fixed. It's a lot easier for a hurricane to knock a refinery down than it is to build it back up. The slower price drop trnasfers risk from the producer to the buyer, which makes perfect business sense and happens in all sorts of industries at all stages of production process depending on if a company is in a price-taking or price-making environment.

and btw - I hope that there is more than oil that makes the US an awesome place to live

easy access to an MRI is just the tip 'o the iceberg :-D
TennCare rocks!!!!
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Postby Mookie4ever » Thu Oct 27, 2005 2:33 pm

The gas stations are almost all franchises. So yes they are individually owned but they are told what price to sell at by a district office.

I'm not against the free market or capitalism. Hell, I own Exxon, Imperial and Talisman (Talisman of Nigerian genocide fame). They can make their profits so long as they do it according to the law. I'm against oligopolies that take advantage of natural disasters as an opportunity to make record profits. If they are breaking anti-trust laws then nail them to the wall.
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Postby Coppermine » Thu Oct 27, 2005 2:58 pm

What are you paying per gallon for gas up there in the United States of Canada?

(BTW, I love Canadians politically speaking)
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Postby Mookie4ever » Thu Oct 27, 2005 2:59 pm

Something else occured to me.

You know how on the pumps they tell you how the price of gas is broken down x% for crude, x% for marketing and profit, x% taxes and x% for refining costs?

The gas companies were still getting the same percentage it was just that the size of the pie got bigger because of the jump in the cost of crude. The same must also be true for the State and Provincial governments that get a piece of the pie. Those guys must have taken in record taxes from the gas tax. I wonder what they are doing with our money :-?
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Postby Mookie4ever » Thu Oct 27, 2005 3:00 pm

Coppermine wrote:What are you paying per gallon for gas up there in the United States of Canada?

(BTW, I love Canadians politically speaking)


Right now it is at about $0.88 per litre. It was as high as $1.35 a little while ago. You do the math :-D
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Postby Coppermine » Thu Oct 27, 2005 3:04 pm

I did the math with Google (I love Google so much!)

1 US gallon = 3.7854118 liters

.88 times 3.7854118 = 3.33116238

So Mookie, you're paying more than I am. I filled up at $2.39/gallon yesterday.
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