If it weren't for the housing crash, I would boldly assert that no one who had claimed that the oil companies were deliberately gouging would have any credibility. However, since we have recently seen an industry integrally involved with economic reality collapse from simple, readily apparent economic realities which undercut its own imprudent practices, with dissent from few insiders, perhaps no one in the oil companies noticed the truth:
While it is certainly true that oil demand is relatively inelastic, due to fixed expenditures people (primarily Americans) have built into their lives (i.e. work and school commutes), it is not completely inelastic (as no demand is), and eventually, high enough prices will motivate the elimination of such fixed expenditures (by moving closer to work, telecommuting, getting work closer to home, etc.) and demand will return to the same level that would exist for the same commodity with a truly elastic, freely-floating demand (or at least much closer to it, growing closer the longer the prices remain high and/or the higher the prices go, driving more people to eliminate fixed expenditures). Why? The same reason everything in the world happens: When the price exceeds what demand justifies, people seek to reduce their expenditures on an item, and reducing fixed expenditures on an inelastic-demand commodity such as oil is the *only* way to reduce expenditures commensurate to the reduced demand at an artificially-inflated price.
Clearly, this chart proves conclusively one thing: GOUGING DOESN'T WORK. Therefore, the evil corporations have to not only be evil corporations, but evil, incredibly stupid corporations. Especially with a product with relatively inelastic demand, such as oil, because the only thing that would reduce demand would be just the kind of lifestyle changes that would only be prompted by dramatic or extended spikes in price. Gouging to the extent the Left alleges is the worst thing the oil companies could have done for the long-term health of their business.
Where are all the people NOW that were crucifying the evil oil companies and their ability to inflate prices?
ReplyDeleteHas anyone in congress called for bail-out hearings yet for BIG OIL?
Crazy, the pendulum has swung to far back..... Not good for us either.
This is obviously because the oil men Bush and Cheney are leaving office. Their shredder parties are going on 24 hours a day.
ReplyDeleteDon't you realize that? :)
All the states which had good economies are all energy and commodity producers. It's now time for the rest of the country to enter recession.
If it weren't for the housing crash, I would boldly assert that no one who had claimed that the oil companies were deliberately gouging would have any credibility. However, since we have recently seen an industry integrally involved with economic reality collapse from simple, readily apparent economic realities which undercut its own imprudent practices, with dissent from few insiders, perhaps no one in the oil companies noticed the truth:
ReplyDeleteWhile it is certainly true that oil demand is relatively inelastic, due to fixed expenditures people (primarily Americans) have built into their lives (i.e. work and school commutes), it is not completely inelastic (as no demand is), and eventually, high enough prices will motivate the elimination of such fixed expenditures (by moving closer to work, telecommuting, getting work closer to home, etc.) and demand will return to the same level that would exist for the same commodity with a truly elastic, freely-floating demand (or at least much closer to it, growing closer the longer the prices remain high and/or the higher the prices go, driving more people to eliminate fixed expenditures). Why? The same reason everything in the world happens: When the price exceeds what demand justifies, people seek to reduce their expenditures on an item, and reducing fixed expenditures on an inelastic-demand commodity such as oil is the *only* way to reduce expenditures commensurate to the reduced demand at an artificially-inflated price.
Clearly, this chart proves conclusively one thing: GOUGING DOESN'T WORK. Therefore, the evil corporations have to not only be evil corporations, but evil, incredibly stupid corporations. Especially with a product with relatively inelastic demand, such as oil, because the only thing that would reduce demand would be just the kind of lifestyle changes that would only be prompted by dramatic or extended spikes in price. Gouging to the extent the Left alleges is the worst thing the oil companies could have done for the long-term health of their business.
Blame China and India for high oil price. Now where the blame?
ReplyDelete