Gasoline Finally Might Cost More Per Gallon Than Bottled Water
Besides reports of the devastation of New Orleans, newspapers, radio, and television news has not been able to get off "price gouging" by gas companies. This is nonsense. Gasoline retailers should be able to charge whatever they want, and let the market figure it out. Ever since the demise of standard oil, there has been competition among gas retailers. There is always another gas station to go to.
On the other hand, colluding gas retailers who artificially set a higher price and agree not to sell gas for less than that should be fined. Whats the difference?
As long as at least one customer is willing to pay whatever outrageously high price a retail station is selling gas for, its a fair market price. The competing gas station isn't going to raise the price of gas to woo the one customer over-- they are going to lower their price in order to sell gas. However, if two gas station owners get together and agree not to lower the price, they are essentially acting as one, monopolistic station.
So again, we ask, what's all this talk about price gouging?
If a few little kids set up a Lemonade stand and sell lemonade during their summer vacation, maybe they make a lot of money. Then they decide to do the same thing during winter recess, and wonder why they didn't sell a single Lemonade. Well, because when its 20 degrees outside, the demand for Lemonade is very low. All summer long when its 90 degrees or hotter outside, they sell a lot of Lemonade because its hot, and Lemonade is cold. The demand is high for a cold beverage when its hot out. The following summer, the same little kids set up their lemonade stand, expecting to make a lot of money. But then little kids from the other neighborhood set up and start selling lemonade on the block next to them. Suddenly, their sales go down. While demand in the summer is high, the supply of lemonade is also high.
Right now, demand for gasoline is very high. Its labor day weekend, where people are going to drive off to the shore and to barbeques and other places. The demand is very high. Meanwhile, the gulf coast has reduced output as a result of Katrina. So the supply is low and the demand is high. So why is everyone upset over high gas prices?
Its probably time people confronted the fact that their Escalade or Suburban uses too much gasoline. You don't want to spend $70 dollars to fill up your tank? Get a Civic. Get a fucking Insight.
So the next time you want to punch a gas station owner because the price of regular gas is $4.78 a gallon, just remember you did this when you bought the 7 mpg SUV.
On the other hand, colluding gas retailers who artificially set a higher price and agree not to sell gas for less than that should be fined. Whats the difference?
As long as at least one customer is willing to pay whatever outrageously high price a retail station is selling gas for, its a fair market price. The competing gas station isn't going to raise the price of gas to woo the one customer over-- they are going to lower their price in order to sell gas. However, if two gas station owners get together and agree not to lower the price, they are essentially acting as one, monopolistic station.
So again, we ask, what's all this talk about price gouging?
If a few little kids set up a Lemonade stand and sell lemonade during their summer vacation, maybe they make a lot of money. Then they decide to do the same thing during winter recess, and wonder why they didn't sell a single Lemonade. Well, because when its 20 degrees outside, the demand for Lemonade is very low. All summer long when its 90 degrees or hotter outside, they sell a lot of Lemonade because its hot, and Lemonade is cold. The demand is high for a cold beverage when its hot out. The following summer, the same little kids set up their lemonade stand, expecting to make a lot of money. But then little kids from the other neighborhood set up and start selling lemonade on the block next to them. Suddenly, their sales go down. While demand in the summer is high, the supply of lemonade is also high.
Right now, demand for gasoline is very high. Its labor day weekend, where people are going to drive off to the shore and to barbeques and other places. The demand is very high. Meanwhile, the gulf coast has reduced output as a result of Katrina. So the supply is low and the demand is high. So why is everyone upset over high gas prices?
Its probably time people confronted the fact that their Escalade or Suburban uses too much gasoline. You don't want to spend $70 dollars to fill up your tank? Get a Civic. Get a fucking Insight.
So the next time you want to punch a gas station owner because the price of regular gas is $4.78 a gallon, just remember you did this when you bought the 7 mpg SUV.
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