They used to make fun of us…

[GuyV]

No, because the American producers sell it to the highest bidder. It's supply and demand, common sense really. Scarcity pushes up prices, a glut of a product or service pushes prices down. That's how the system responds to what people want and need, at prices they are willing to pay. Because things aren't free. When there is a shortage of oil, it affects everyone who needs oil, regardless of where they live (because oil is a global commodity with global demand).

You say "capitalist response" as if capitalism is a bad thing. Do you know of a system that improves upon capitalism? Capitalism has brought more people out of poverty than any other economic system. Because it rewards those who provide the things people want and need. It's a very common sense way to raise the standard of living because it provides incentives to create goods and provide services. Communism doesn't do that which is why the shelves go bare and food is rationed. No incentives to work (short of avoiding punishment).

No, it's gouging. They are not set up to sell more than a tiny fraction of the oil and gas they are raising the price of so dramatically more than any cost increase to the highest bidder. It's windfall profits at the expense of the consumer who, by geography, cannot purchase competitively at the best market price. That's one of the many reasons capitalism needs to be regulated for its own good as well as society's.

Sponsored

 

[HaulingAss]

No, it's gouging. They are not set up to sell more than a tiny fraction of the oil and gas they are raising the price of so dramatically more than any cost increase to the highest bidder. It's windfall profits at the expense of the consumer who, by geography, cannot purchase competitively at the best market price. That's one of the many reasons capitalism needs to be regulated for its own good as well as society's.

It’s common sense that when there isn’t enough of a product available at a low price, the price has to go up to prevent shortages. Higher prices help reduce demand when supply is tight. In the case of oil shortages, gas stations keep the same margins they had before supply was restricted, but refiners pay more per barrel and charge more per gallon of gasoline they deliver to stations. Stations HAVE to charge more just to stay in business.

With less oil flowing through the Strait of Hormuz, demand for the remaining supply rises. Without higher prices, there wouldn’t be enough oil to meet demand. Those higher prices not only curb consumption but also motivate producers to increase output. Not all oil wells run at full capacity, since that could flood the market without enough refining capacity. It’s a self-regulating system driven by price and demand elasticity—one of the reasons capitalism works so effectively. When the government steps in and starts telling suppliers how much they can charge it distorts markets which causes the system to be out of balance and there are almost always unintended negative consequences. Markets work best when they rule themselves (short of anti-competitive behavior like collusion between "competitors" to fix prices). That's already illegal.

 

[Outdoors]

I will be teaching Econ 101 Thursdays at 9am in the auditorium.

 

[GuyV]

It’s common sense that when there isn’t enough of a product available at a low price, the price has to go up to prevent shortages. Higher prices help reduce demand when supply is tight. In the case of oil shortages, gas stations keep the same margins they had before supply was restricted, but refiners pay more per barrel and charge more per gallon of gasoline they deliver to stations. Stations HAVE to charge more just to stay in business.

With less oil flowing through the Strait of Hormuz, demand for the remaining supply rises. Without higher prices, there wouldn’t be enough oil to meet demand. Those higher prices not only curb consumption but also motivate producers to increase output. Not all oil wells run at full capacity, since that could flood the market without enough refining capacity. It’s a self-regulating system driven by price and demand elasticity—one of the reasons capitalism works so effectively. When the government steps in and starts telling suppliers how much they can charge it distorts markets which causes the system to be out of balance and there are almost always unintended negative consequences. Markets work best when they rule themselves (short of anti-competitive behavior like collusion between "competitors" to fix prices). That's already illegal.

You are pushing the fantasy the oil companies tout. They are not selling any significant portion of West Texas Intermediate to countries dependent on Middle Eastern oil. Cut to the bottom line: The hundreds of billions from higher prices is going directly from consumer pockets to oil company profits. That's a windfall pure and simple. If that were sufficiently taxed the incentive to gouge consumers would be gone. No price controls needed.

This is not a matter of normal market supply and demand balancing; it is a one-off geopolitical event. The last time we went through this the irresistible profit-gorging ultimately was a disaster in the long run for the oil companies themselves in addition to the businesses and consumers who paid for it.

 

[soonerdy]

You are pushing the fantasy the oil companies tout. They are not selling any significant portion of West Texas Intermediate to countries dependent on Middle Eastern oil. Cut to the bottom line: The hundreds of billions from higher prices is going directly from consumer pockets to oil company profits. That's a windfall pure and simple. If that were sufficiently taxed the incentive to gouge consumers would be gone. No price controls needed.

This is not a matter of normal market supply and demand balancing; it is a one-off geopolitical event. The last time we went through this the irresistible profit-gorging ultimately was a disaster in the long run for the oil companies themselves in addition to the businesses and consumers who paid for it.

You are wrong and haulingass is correct. What you believe causes less supply for what's needed all in the interest of short-term, self-serving relief.

Oil is globally priced—when supply tightens anywhere, prices rise everywhere. Blocking exports or price pass-through doesn’t fix it, it reduces supply incentives.

Higher prices during a supply shock aren’t “gouging”—they’re the mechanism that allocates limited supply. Interfere with that, and you don’t get relief—you get shortages.

 

[DaBagBoy]

Not really. Oil is a global market and even the US imports (and exports) plenty of oil, because refineries are engineered to run on specific grades of oil......

Such a capitalist response.

No, because the American producers sell it to the highest bidder.....

It’s common sense that when there isn’t enough of a product available at a low price, the price has to go up to prevent shortages....

You are pushing the fantasy the oil companies tout. They are not selling any significant portion of West Texas Intermediate to countries dependent on Middle Eastern oil. Cut to the bottom line: The hundreds of billions from higher prices is going directly from consumer pockets to oil company profits. That's a windfall pure and simple. If that were sufficiently taxed the incentive to gouge consumers would be gone. No price controls needed.

This is not a matter of normal market supply and demand balancing; it is a one-off geopolitical event. The last time we went through this the irresistible profit-gorging ultimately was a disaster in the long run for the oil companies themselves in addition to the businesses and consumers who paid for it.

Wow, maybe @GuyV needs that Econ 101 course @Outdoors offered?
clearly the "gouging" argument better fits his victim narrative, just hard to understand, when so many of us better understand markets and supply and demand. Please read a book or take a class or just STFU

 

[Outdoors]

Americans don't sell oil to Americans for an American price. When y'all going to understand this.

 

[GuyV]

You are wrong and haulingass is correct. What you believe causes less supply for what's needed all in the interest of short-term, self-serving relief.

Oil is globally priced—when supply tightens anywhere, prices rise everywhere. Blocking exports or price pass-through doesn’t fix it, it reduces supply incentives.

Higher prices during a supply shock aren’t “gouging”—they’re the mechanism that allocates limited supply. Interfere with that, and you don’t get relief—you get shortages.

LOL, you are the ones who wrong. The current global oil pricing system, including cartels and ownership of politicians worldwide, is a scheme of the oil producers, a profit maximizing scam on consumers. It is anything but a free market!

Do you not understand that it is designed by them to receive the highest price paid anywhere while allowing consumers no way to purchase beyond their local market rate?

 

[GuyV]

Americans don't sell oil to Americans for an American price. When y'all going to understand this.

When are you going to understand that is because the producers designed it that way in their own interest, against consumers? It is not a natural system or any kind of free market. It is a system rigged by them 100% on their behalf.

 

[GuyV]

Wow, maybe @GuyV needs that Econ 101 course @Outdoors offered?
clearly the "gouging" argument better fits his victim narrative, just hard to understand, when so many of us better understand markets and supply and demand. Please read a book or take a class or just STFU

It's sad when the victims don't recognize when they are being victimized and by whom. Buyers at the pump have a pretty good idea though. The system created by the oil producers doesn't give them much opportunity to fight back though beyond the disposable politicians bought and paid for by the industry. You know, Elon explained this back when he was championing green energy against them. Buying our EVs is one of the ways we have been empowered to fight back.

 

[Outdoors]

When are you going to understand that is because the producers designed it that way in their own interest, against consumers? It is not a natural system or any kind of free market. It is a system rigged by them 100% on their behalf.

So the tar sands producers in Alberta. They have it rigged as well. The market will bear the price. I'm not going to give a class on the economics of oil, but I definitely could. Unfortunately I'd have to remove you from the classroom because your rationale and arguments as far from reality as they are don't make any sense.

I'm not going to understand but I already understand everything that you don't.

 

[DaBagBoy]

Do you not understand that it is designed by them to receive the highest price paid anywhere while allowing consumers no way to purchase beyond their local market rate?

finally closer, you are correct that the market matches buyers and sellers at the best possible price for both (i.e highest for sellers but also the lowest for buyers).

What you are failing to understand is that if your fantasy became real tomorrow I and many others would buy all of that "West Texas Crude" at the former price ~$60/barrel and ship it to the Middle and Far East to sell it for what would probably be $200/barrel over there (i.e. a "world market")

It's sad when the victims don't recognize when they are being victimized and by whom. Buyers at the pump have a pretty good idea though. The system created by the oil producers doesn't give them much opportunity to fight back though beyond the disposable politicians bought and paid for by the industry. You know, Elon explained this back when he was championing green energy against them. Buying our EVs is one of the ways we have been empowered to fight back.

Buyers vote with their wallets as well, that's what a market is "willing buyer and willing seller" only when gov't steps in to regulate with FORCE have we lost freedom.....I've been scalping tickets for decades before StubHub was a word, learned about markets at 12 yrs old...Buyers can either go elsewhere or stop buying the product.

At least we agree that those on this forum

...have been empowered to fight back.

 

[soonerdy]

LOL, you are the ones who wrong. The current global oil pricing system, including cartels and ownership of politicians worldwide, is a scheme of the oil producers, a profit maximizing scam on consumers. It is anything but a free market!

Do you not understand that it is designed by them to receive the highest price paid anywhere while allowing consumers no way to purchase beyond their local market rate?

And your solution is more power to the politicians and even less free market. Your argument just collapsed on itself.

 

[HaulingAss]

I will be teaching Econ 101 Thursdays at 9am in the auditorium.

Are you accepting referrals?

 

[devdrone6]

It's sad when the victims don't recognize when they are being victimized and by whom.

Wait till you get to the chapter on Property taxes, death tax, medicare tax and so on that you can’t get out of. But you have to get through @Outdoors university econ 101 first.

Sponsored