Drivers To Feel Pinch Of Gasoline Prices

[Earthling]

Originally Posted by Robert Lastick

Price Collusion.
Price Fixing.
Violations of anti-trust regulations.
Restraint of free trade.
Congressmen & Special interest groups
Congressmen & lobbying.

All true.

The first four on the list are OPEC's stock-in-trade. That cartel can get away with that now with impunity because of Peak Oil.

I don't know how to correct the last two points, but I'll pitch in and do my part if I can.

Harry

[GrendelKhan]

Originally Posted by Earthling

All true.

The first four on the list are OPEC's stock-in-trade. That cartel can get away with that now with impunity because of Peak Oil.

I don't know how to correct the last two points, but I'll pitch in and do my part if I can.

Harry

I don't think OPEC is the only part of the industry that's colluding to fix prices. I think there's some shady stuff after that as well, by the importers. (This is the part where someone explains Capitalism101 to me, and how competition ensures that could never happen... *yawn*)

I'm sure Congress fits in here somewhere, but I'm much more suspicious of the Executive Branch:
http://en.wikipedia.org/wiki/Energy_task_force

-Gren

[koreberg]

@Robert_Lastick
You're off on a lot of that rant.

If you're going to claim collusion on oil prices, there are a lot of prices that are fixed the same across competitors in multiple sectors, any argument you make for collusion against oil companies could easily be made for car prices, computer prices, food prices etc. Its not like the price of gas at the pump magically went up, after some major meeting between exxon and conoco.

Ultimately its simple economics, supply and demand. Less supply from opec who produces 50% of oil. More demand from china and india.

You're right about the mining, however it sounds like you're assuming that it is the US companies, which is incorrect. Most opec contries have state run oil operations, so yes they're companies but they aren't exxon and conoco. Thats how they're able to control the supply. Suing them in US court system won't fix the problem. In fact they'd probably laugh and drop supply even lower.

http://en.wikipedia.org/wiki/List_of...leum_companies

Notice the top of that site that list the companies by reserve, not 1 of those companies is a US company.

Even in countries where the US companies are in charge of the oil field, that local government takes a decent percentage of the profits from that field. In the mean time the oil companies have spent 100s of millions of dollars a month to develop these fields over 5-10 years. All the while wondering if the government will take them back like what happened in venezuala.

The public expectations which apparently match your expectations are that the oil companies are doing this. Unfortunately you're incorrect in that assumption. They're benefitting for sure but they have very little control. Ultimately the revenue has not gone up as much as some would think it has.

Should you get rid of the lobbying and special interest groups, yes.
Should you drag the oil companies into congress on trumped up charges? What problem do you think that solves? While you're doing that the futures market would be forcing oil to go higher and higher. In the mean time your impedeing the 1 group of companies in this country that is looking for other oil reserves to increase peak oil numbers and help remove some of the control from opec.

The opec cartel is the 1 with control, they have most the oil and make the most money from it. Good luck dragging them into court.

@GrendelKhan
If you're going to go after oil companies for having similar prices on imported goods, then you have to go after everyone, because across all industries prices for similar goods are pretty much the same.

Why do ps3 xbox wii, all cost the same at every retail chain in the US? Just like the retail chains the oil companies take their cut, but they have no control over what the price coming in is at, that is dictated by the manufacturers/exporters.

[Earthling]

I'll admit that it is a little suspicious that every time cold weather descends on the Northeast, the price of oil worldwide goes up.

I think that part is directly tied to a nest of speculators who bid up the price of oil for personal gain. Still, the price of oil is set more on world supply/world demand.

Those of us here who use as little gasoline as possible are doing what we can to lower the price of gasoline, but we are outnumbered greatly by gas-hog drivers. The gas hogs are winning the pricing war at the moment.

Harry

[GrendelKhan]

Originally Posted by koreberg

If you're going to claim collusion on oil prices, there are a lot of prices that are fixed the same across competitors in multiple sectors, any argument you make for collusion against oil companies could easily be made for car prices, computer prices, food prices etc. Its not like the price of gas at the pump magically went up, after some major meeting between exxon and conoco.

It's a little bit "like the price of gas at the pump magically went up, after some major meeting":
http://en.wikipedia.org/wiki/Energy_task_force
Maybe not definitively, but suspiciously so.

It's much harder to make said argument for some of the products you mentioned, at least in some markets, because of what appears to be competition (certainly computer prices). I don't know about car prices, but I have seen food prices higher (and selection poorer) in areas with only one grocery store. So, while I think your analogies are poor, and that you present them to show how ridiculous our points are, I do actually think there is some price fixing in some other industries, in certain areas. And I think it's allowed. And I think it's wrong.

(Anyone here from an area where a WalFart came in with great selection and prices, and then after all the small shops were gone, raised it's prices, and selection was not what it once was?)

But whether or not the prices of some other products, in some other unrelated industry, are driven to some number by competition, or by some cartel-like agreement by suppliers, has absolutely no bearing on whether or not this industry has done it. I'm not buying the "everyone does it", and even it was true, it would be wrong.

And it just doesn't matter if the price of something is the same across suppliers; what matters is whether a group of suppliers, who control enough of the product or means of supply, got together and agreed to raise the price, anti-competitively.

I think that it probably did, and you think it's absurd. Fine... But why is the Energy Task Force a big secret then?

Originally Posted by koreberg

Ultimately its simple economics, supply and demand. Less supply from opec who produces 50% of oil. More demand from china and india.

Ah, always the "simple" economics... If it was "simple" economics, they would be competing harder, and the profits would be lower.

Originally Posted by koreberg

Should you get rid of the lobbying and special interest groups, yes.

So, you can believe that the industry, separately by company, colludes with Congress via lobbyists and such; but not that they collude with each other? Or the Executive Branch?

Originally Posted by koreberg

@GrendelKhan
If you're going to go after oil companies for having similar prices on imported goods, then you have to go after everyone, because across all industries prices for similar goods are pretty much the same.

Why do ps3 xbox wii, all cost the same at every retail chain in the US? Just like the retail chains the oil companies take their cut, but they have no control over what the price coming in is at, that is dictated by the manufacturers/exporters.

First part addressed above. Second part: Well, that's certainly examples of companies fixing a price. But it seems to me that there is some pretty major competition amongst game consoles, and other types of games (PC, etc...) and that they compete (to some extent) with other forms of leisure. And being only a form of entertainment, I really don't see much of an issue, even if you had videotape of the CEOs meeting to force prices up.

But that we're actually talking about oil, something everyone needs, I think it warrants investigation. But I can only dream of that...

I'm not saying that "simple" economics don't play a part in the price. Certainly part of the price is dictated by supply and demand, I just think it might be a little higher than it ought to be.

And as we slide down the other side of peak oil, I think other things will dominate the economics of the industry. Namely "war".

-Gren

[Robert Lastick]

Back to Koreberg & Grendelkahn;

Thanks for the great dialog on this very slippery issue. I would like to summarize the important points I am carrying away from our discussion here.

1. It seems like we can all agree that price collusion and price fixing is present in our country to a great extent. Many examples can be given.

2. I think we can all agree also that it is bad in a capitalistic country for it reduces or eliminates competition which is the core of a capitalistic society.

3. Reducing or eliminating competition has a profound effect on supply and demand economics. As Gren pointed out, healthy competition stimulates supply and demand for it encourages the consumer to buy from the lowest cost and "windfall profits" would definitely be less.

4. There was also a lot of discussion on the effect of price fixing with differing commodities. Fixing prices on something that is not an absolute necessity such as computer games, or diamonds, does not have the same effect as fixing the price of oil. I would be hard pressed to come up with any commodity more central and critical to our country and our way of life. As a consequence of this, fixing the price of oil, because it is so pivotal, profoundly effects every ones standard of living to a varying degree. The richer you are the less it affects you, the lower you are on the totem pole, the more it hurts.

5. The oil companies are price fixing prices and "encouraging" the auto industry to make low mileage cars and keep high mileage cars out of this country, so that they may make "windfall profits. Because oil companies are also refiners, the cheaper they can buy or mine oil, the higher their profit. The important fact though, is that they most always pay much less than what the going rate on the stock (world) market is, for that is the price that determines what we pay for gasoline. The oil companies make the most profit from wells they have on property they own in countries that has no fear of being nationalized. They make the least profit buying from OPEC countries or countries that extract heavy taxes on their oil. Being able to fix the price of oil gives oil companies the ability to determine their own profit ,to a great extent. It also denies the consumer the greatest benefit of capitalism. No competition = no choice = high cost.

The problem is that these activities are also, to a large extent, illegal. That is why they must "influence" Congress thru the legal procedure of lobbying and special interest groups. The way Congress is influenced is by bribery. Special interest groups and lobbying is just simply legal bribery.

Thanks for good insights Koreberg & Grendelkahn!! Please come back to me and point out to me the "error of my ways"!!

Bob.

[GrendelKhan]

Originally Posted by Robert Lastick

Thanks for the great dialog on this very slippery issue. I would like to summarize the important points I am carrying away from our discussion here.

I like your summary. My only thought was re #4, see below. Not criticism, just a thought I had.

Originally Posted by Robert Lastick

4. ...I would be hard pressed to come up with any commodity more central and critical to our country and our way of life....

Check out The Cochabamba Water Wars for how crazy things can get when... well, draw your own conclusions about causation.

Originally Posted by Robert Lastick

Thanks for good insights Koreberg & Grendelkahn!! Please come back to me and point out to me the "error of my ways"!!

You spelled my name wrong!

Best regards,
-Gren