Profits and High Prices
I recommend reading this article if you are interested in accurate information on how the economy works as it relates to the recent oil prices and oil company profits.
Anyone with even a basic understanding of economics should have seen it coming: our leaders are threatening oil companies for making money off higher prices. In the aftermath of hurricanes Katrina and Rita, gasoline prices shot up, as large chunks of US refining and transportation operations were shut down or severely curtailed. In the wake of higher prices, which already had politicians riled, oil company profits are up.
Continue reading at: http://mises.org/story/1958
Supply and demand. In our open market, prices are influenced by demand. If demand for apples went up on Friday cause Donald Trump touted them on ‘The Apprentice’, you’d bet the price would go up and the supply would go down! That’s not directly related to the apple orchard owners. It would be nonsense to go after them. Moreover, when the demand for apples goes back down to a reasonable level after the hype, prices would then fluctuate back down to a reasonable level as it relates to the supply and demand.
If there is evidence of price fixing among oil companies, refineries and/or gas stations… then yes there should be consequences. However, if there is no evidence of that, the government needs to stay out of it. The last thing we want is the government applying direct control over the free markets.
Supply and demand have been allowed to work — at least in a limited way — in energy markets, resulting in ups and downs in gasoline prices. Strong demand coupled with regulatory supply restrictions that were worsened by several hurricanes caused gasoline prices to go up. Then as hurricane-damaged refineries were repaired, gas prices began to plummet.
Continue reading at: http://www.mises.org/story/1962
The government could start digging into OPEC. That would probably be a better use of our taxpayer dollars.
Please leave comments if you are better at economics that I, as I do not have all the answers.
Kudos for linking to mises.org, one of the best sites on the ‘Net. It’s sad how many people don’t seem to understand the concept of supply and demand and why it’s actually good for the price to rise when supply is limited.
Personally I’d rather they just give us our money back instead of using it to dig into anybody.
Get their noses out of the energy and automotive markets and let the free market supply the answers… we’ll have more efficient vehicles and better alternate energy sources in a quicker timeframe than under government regulation.