Ideas to keep Gas Prices Fair

[TheHead]

Double post

 

[TheHead]

Nevermind I found the stats. Europe has 1% of the worlds reserves and some Europeon countries pay triple the taxes the Americans do on gas.

Could the Europeons also be paying more due to countries like Russia/Middle Eastern ones charging them more for the gas.  Canada exports 99% of its oil exports to the US and I'm speculating that we most likely give them a pretty sweet deal.

 

[Redeye]

  We are getting raped at the pumps and government is allowing it.  We have the 2nd largest proven oil reserves in the world are you telling me Oil Companies even if they were forced to sell gas at lower prices wouldn't tap into it?  Give me a break. Most of it is fearmongering look at the Alberta royalty review that caused such a piss fest in oil companies. They said if we raised taxes they would stop surverying and drilling, well kids they didn't. 

Yet another one who's missed a few too many economics classes.  The government has no means to influence gas prices, unless you want to revisit the days of the NEP.  Basic economics will tell you that anytime the the government interferes with prices then the public on the whole is not better off (it's called "dead weight loss" in economics).  Prices are where they are because that's what the market has determined is the efficient outcome.  Time and again with the exception of one incident in Quebec on a small scale no evidence of collusion has ever been found.  Want prices to fall?  Buy less fuel.  Carpool.  Walk, bike, use public transit.  Reducing demand for gasoline is the only thing that will bring down prices on the whole, and even then events like hurricanes will still impact them.

 

[NL_engineer]

Yet another one who's missed a few too many economics classes.  The government has no means to influence gas prices,

So that 35 cents of tax doesn't affect the price at the pump?  Or are you referring to the price per barrel?

 

[Redeye]

So that 35 cents of tax doesn't affect the price at the pump?  Or are you referring to the price per barrel?

The price per barrel, to be sure - and if the government was to do something about that tax we'd just end up paying somewhere else, because the massive amount of tax revenue that the government takes in from fuel taxes are something they cannot possibly give up - and given that taxes are a relatively effective way to influence consumer behaviour it suits the government's goal of reducing fuel consumption and thus air pollution, etc.

 

[TheHead]

So the ONLY way to lower gas prices is to cut demand?  Why has global gas prices not risen at the same rate demand has until the last 6 years.  What credentials in economics do you have.

 

[Redeye]

So the ONLY way to lower gas prices is to cut demand?  Why has global gas prices not risen at the same rate demand has until the last 6 years.  What credentials in economics do you have.

The only long term effective way to lower prices is to cut demand yes.

As for credentials - a business degree with special emphasis in economics and some post grad work as well.  But price mechanics is first year stuff.

 

[SeaKingTacco]

So the ONLY way to lower gas prices is to cut demand?  Why has global gas prices not risen at the same rate demand has until the last 6 years.  What credentials in economics do you have.

Yes.  Or increase supply.  It amounts to the same thing.  We are finally getting somewhere.

Look- here is how it works- on a demand/supply curve, prices will not rise dramatically until there is a shortage of something (ie, more buyers than sellers)  Once you cross the threshold, prices will go nuts until a new supply/demand equilibrium is established, (unless some dumba$$ messes with the situation). This is basically what happened in the last couple of years when Asian demand for oil crossed threshold of available supply.  Plus, Asia has a ready, ample supply of US dollars from trade surpluses and don't mind using them to buy oil at prices we consider to be high.  Eventually, if left alone, a system where high prices exist will either destroy demand or attract new supply.  Both of these things have happened over the last 6 months and the amount of supply has now exceeded the amount of buyers- in effect, there are no bidding wars going on for the next tanker load of oil coming out of Saudi Arabia, so prices are plummeting.

A final point (and I will type this slowly  and loudly for everyone)- GOVERNMENT INTERVENTION IN MARKETS NEVER WORKS.  if you don't believe me, I give you:

1. The Soviet Union
2. North Korea
3. China under Mao
4. Cuba

In all cases, price management invariably (that means always, every time) dries up supply.

I rest my case.

 

[Greymatters]

Time and again with the exception of one incident in Quebec on a small scale no evidence of collusion has ever been found.  

Although there is a lack of evidence, it doesnt mean that it doesnt occur - it can also mean that companies practicing collusion, insider trading, price-fixing, or other questionable practices are very good at keeping such things hidden from view.  Possibilities include: a) having excellent corporate security measures in place, b) regulatory agencies lack the manpower, ability or authority to monitor the actions of companies, or c) that the government in place has no will to uncover the dirty secrets of the business world.  Pretending that all businesses (or leaders of business) are all clean and shiny has been proven wrong again and again with many major corporations over the past 20 years prosecuted for everything from tax evasion, to unethical/illegal HR practices, to defrauding customers.  Over the past 100 years, governments have in the past been known to turn a blind eye to questionable business practices, and most of the activities uncovered are found to have occurred only through biographies and historical research, by which time it is far too late to take criminal or civil action.

 

[TheHead]

Thank you.

 

[Greymatters]

GOVERNMENT INTERVENTION IN MARKETS NEVER WORKS.

You could probably find a few success stories, but the examples I can think of are tied to wartime control measures (i.e. rationing systems).  

A successful government intervention requires a thorough understanding of the market and the potential affects.  Very few such experts work for the government, and certainly not the smartest ones, who usually are in private practice.    

 

[Redeye]

Not just China under Mao - even up until recently gasoline was highly subsidized in China, only recently has that been reduced.

Yes.  Or increase supply.  It amounts to the same thing.  We are finally getting somewhere.

Look- here is how it works- on a demand/supply curve, prices will not rise dramatically until there is a shortage of something (ie, more buyers than sellers)  Once you cross the threshold, prices will go nuts until a new supply/demand equilibrium is established, (unless some dumba$$ messes with the situation). This is basically what happened in the last couple of years when Asian demand for oil crossed threshold of available supply.  Plus, Asia has a ready, ample supply of US dollars from trade surpluses and don't mind using them to buy oil at prices we consider to be high.  Eventually, if left alone, a system where high prices exist will either destroy demand or attract new supply.  Both of these things have happened over the last 6 months and the amount of supply has now exceeded the amount of buyers- in effect, there are no bidding wars going on for the next tanker load of oil coming out of Saudi Arabia, so prices are plummeting.

A final point (and I will type this slowly  and loudly for everyone)- GOVERNMENT INTERVENTION IN MARKETS NEVER WORKS.  if you don't believe me, I give you:

1. The Soviet Union
2. North Korea
3. China under Mao
4. Cuba

In all cases, price management invariably (that means always, every time) dries up supply.

I rest my case.

 

[Redeye]

Economically speaking, you really cannot.  Anytime governments interfere with prices the overall impact on society is negative.

Look at what happened in Nova Scotia when they began to try to regulate prices - gasoline remains very expensive, and to ice the cake a lot of independent gas stations went out of business.  When gasoline prices surged after Hurricane Katrina, wholesalers refused to ship gasoline to PEI because they couldn't sell it at a price suitable to recover their costs.

In the case of gasoline, since it seems all governments have an interest in the environment, there's no reason any government in Canada would see reason to encourage consumption of gasoline so there's no incentive to try to manipulate prices.  Moderating demand for gasoline serves social ends.  And then there's the supply issue...

You could probably find a few success stories, but the examples I can think of are tied to wartime control measures (i.e. rationing systems).  

A successful government intervention requires a thorough understanding of the market and the potential affects.  Very few such experts work for the government, and certainly not the smartest ones, who usually are in private practice.    

 

[Teeps74]

Read Toxic Sludge is Good For You. It is an expose on just how badly big corp manipulates society today. Big oil is simply the worst single offender out there.

Unfortunately, billions of tax revenue is generated every year at the pumps. Taxes and calculated at current "market values" not on a per litre value. So, more tax revenue when the price of gas goes up.

Another example would be the movie Thank You For Smoking. It is fiction yes, and compresses greatly the marketing ins and outs employed, but it gives and excellent insight into how bad it could be. As an aside, the movie is also highly entertaining.

Price of gas will continue to rise. Big oil will continue to say they need to raise the prices. And yet again next year, big oil will once again post record profits. Banks are folding left right and centre down south, and yet, big oil is unphased.

(Tho this year, may change... Not that I feel sorry for billionaires)

Suncor

Shell

Esso

 

[SeaKingTacco]

So stop buying gas.  Seriously.  No one can make an "obscene" profit off something they cannot sell.

 

[Teeps74]

So stop buying gas.  Seriously.  No one can make an "obscene" profit off something they cannot sell.

It is actually that simple. 

It is also that difficult.

How many of us could break our addiction to cars?

 

[SeaKingTacco]

I'm actually reasonably close, at least in the summer. My bike gets a lot of kms. 

I haven't found a good solution for those -30C days yet.

 

[Redeye]

I'm actually reasonably close, at least in the summer. My bike gets a lot of kms. 

I haven't found a good solution for those -30C days yet.

And it's not a matter of stopping buying gasoline altogether, it's just a matter of everyone using less of it that will have the desired effect - and continuing to demand more fuel efficient vehicles.  When my TDI finally dies (probably years away) I'm hoping that there will be a reliable plug-in hybrid on the market - since almost all of my driving is commuting to work it would work perfectly to have something like that available...

 

[Teeps74]

And it's not a matter of stopping buying gasoline altogether, it's just a matter of everyone using less of it that will have the desired effect - and continuing to demand more fuel efficient vehicles.  When my TDI finally dies (probably years away) I'm hoping that there will be a reliable plug-in hybrid on the market - since almost all of my driving is commuting to work it would work perfectly to have something like that available...

Bingo 

And the "reduce, reuse, recycle" mantra is having effect. An unfortunate cost though, just ask workers at GM's Ontario plants. Not a good time to be working in a truck factory. There will always be a demand for them, but not nearly as wide spread now.

Lot's of good 4 bangers out there, that get really good milage, and can still haul ass around that 18 wheeler too.

Reducing my dependancy on my own car... Eeep! That is difficult at best. I love my car. Doesn't always look like it, but I do love her. I am gonna have to try to find more ways to love her in my drive way me thinks tho.

 

[a_majoor]

Collusion isn't even necessary. Consider that there are only four oil refineries in all of Ontario; where would a retailer go to get the lowest price? Now consider that the oil business is vertically integrated, even many of the "independent" retailers are marketing arms of one of the major oil companies.

This is very much like living in a company town, or a socialist nation. Given the very limited sources of supply, normal market mechanisms have a very difficult time operating ....