Bubba-
THIS IS FOR YOU, and ITS MY LAST POST ON THIS SUBJECT, if you dont get it by now, you wont.
Your first sentence of the post is entirely false so lets begin there. You stated.....
"Don?t get mad. I understand all of your points. I understand that our gov doesn?t control OPEC, but also understand that I don?t buy gas from OPEC. I buy gas from a retailer who is very much under the jurisdiction of the government."
So you buy gas from a retailer. Did it ever occur to you that maybe that retailer buys gas from a refiner that buys gas from OPEC, or at least, that the refiner he buys gas from, competes with twenty others that buy from OPEC. So, what if your retailer is under the jurisdiction of the government. Do you expect them to charge you less than what they have to pay for it? The fact is, YOU DO BUY GAS FROM OPEC, albeit not directly.
Secondly, in order to further demonstrate the fault in you logic. Imagine if your "retailer" was not buying oil from OPEC. You assume incorrectly that this retailer, "if not buying from OPEC", that it would be paying less than if it were buying from OPEC. That is entirely false. Prices are "set" by degrees of SUPPLY, OPEC can control this aspect of the game, and therefore price. NON OPEC firms are operating at full capacity. Do you expect them to charge LESS than OPEC, when they are selling all they can produce at a higher price?
If you do, you lack any concept of successful business practice. OPEC is the ultimate decider of price, as a function of their desicions on production/supply.
For the benefit of clear discussion, lets use your "definitions".....
Three definitions
-cost(1):what it takes a company to get gas from its natural habitat to the retailer
-cost(2): what the retailer pays for the product
-price: what the retailer charges me
You stated....
"If OPEC raises prices it affects cost(2) which in turn raises price, but does it raise the cost(1)? The primary vendor of the Exxon gas station is the Exxon refinery. Cost(1) should remain relatively constant marginally moving up. Cost(2) changes based on worldwide supply. Price changes along with cost(2). So while Exxon keeps its profits razor thin on the difference between cost(2) and price, they make their money on the difference between cost(1) and cost(2)."
There are some problems with the above statement, but it is relatively close to the truth. The only thing lacking in that analysis is that, COST #1 IS IRRELEVANT!!!!!!!!!!! Do you think the price of DIAMONDS if based on the cost of mining them?????? It is NOT. It is based on the SUPPLY versus the DEMAND. Why is this so hard to comprehend. THere are countless examples in the world. SECONDY, Price #2 is totally dependant on the price of CRUDE OIL, and OPEC is the largest producer of CRUDE OIL, therefore, they set the supply, and subsequently the PRICE..... You act as though the smallest player in the market has the largest say on price.
For arguments sake, if 90% of the crude was produced by OPEC, and 10% by USAPEC, USAPEC would be operating a full production, full capacity, producing and selling as much as they could at the price set by the supply/demand curve...entirely dependant on OPEC..... Do you suggest that although USAPEC sells all its CrUDE at the current price level, that simply on the basis of "good will to BubbA ", he should lower his price and accept profit reductions. Is that the AMERICAN way of doing business. Is that the logical thing to do? Is that how you want all our businesses to run themselves? Or does freedom matter more than the price of fuel? yeah, you as a government bureaucrat could set the price of just about anything in the world, but you would utterly destroy the free market and the low prices that are inherrently its result.
As I said earlier, the moral/democratic/american thing to do would be to beat these mother****ers at thier own game, either by influencing supply, by drilling for oil, or by reducing demand, and using less fuel. You dont simply PENALIZE the only companies we can control, "AMERICAN ONES", because of the actions of OPEC.... It is the free market, and their is a reason it is the dominating system....IT FUKIN WORKS!!!!!!!!!!!
You stated.
"Here?s what we know
-OPEC limits supply which does effect cost(2) and price
-Income for the American Oil Companies are at record highs
-Exxon charges their gas stations the market price.
-Cost(2) changes have no effect on cost(1)
Because there are not that many suppliers of gasoline due, American Oil Companies benefit from this price setting by OPEC and have indirectly benefited from the price that is set. Price setting is illegal according to the FTC."
The first logical statement. Who cares what is illegal/legal. OPEC is price setting, thats why they are called a CARTEL. American CRUDE companies,(NOT RETAILERS, or REFINERS) may beneifits by the reductions in supply, but they are not "price fixing"....
You stated>>>>
"tax breaks and preferential treatment in Alternative Minimum Tax laws. Due to this form of subsidy, the government has a right and a duty to have a say in what gas prices should be. They have a say in electricity, telephone rates, and supply water at no cost. It?s because all of these are a necessity or border on a necessity."
Please refer to you Economics 101 book for an explanation of why the governement actively regulates these industries. Have you ever heard of the term, BARRIERS TO ENTRY, or NATURAL MONOPOLY, well....these are what you are dealing with. THEY NEED TO BE REGUALATED. Most importantly, how much of the gas that we consume is PRODUCED(crude) by the UNITED STATES OF AMERICA??????? And you want to try to enforce PRICE CONTROLS on an industry entirely dependant upon foreign sources. THAT IS AN IDIOTIC STATEMENT TO SAY THE LEAST.
You stated:
"My point about the TV was that yes, my information comes from a multitude of media outlets, but so does yours. This type of knowledge is not something any of us are born with. Your information maybe as slanted as mine."
I agree, but you failed to support any of your accusations with fact or logic. see below.....
You stated:
"All I know about the oil industry is that since Bush became President, I am paying more for gas, their profits are at record highs,"
LMFAO
LOL Comical. If I use your logic then the following would be true. Since Bush became president, I am paying more for cocaine, the drug dealers profits are at record highs....IT MUST BE BUSH. or....SINCE bush became president, the CUBS are leading their division, THANK GOD FOR BUSH!!!!!!!
Simply because two events happen to coincide, does not mean they are connnected, dependant, or related in any way at all. In order to draw correlation, you must state a connection, TIME IS NOT ONE!!!!!!!!!!Please try again, or I will begin to blame Clinton for NORTH DAKOTA FLOODS!!!
"and nobody is doing anything about it, and Senators and Congressmen are jumping over each other to say that it?s not the oil companies? fault but just due to ?market forces?, which is comical."
Yeah, they are all idiots, so are all the economists in the world that say the same thing. Bubba has the answer...PRICE CONTROLS...
I apoligize if this post seemed crude, but my frustration in dealing with some harsh inability to conceive the free market is at a max.
Iron.
[This message has been edited by ironlock (edited 04-30-2001).]
