[OT] Gas companies report record profits (old energy thread)

Michael L Torrie torriem at chem.byu.edu
Mon Jan 30 11:31:35 MST 2006


On Mon, 2006-01-30 at 11:19 -0700, Dennis wrote:
> > Maybe the prices dropped a bit because of these discussions?  Now that
> > things have settled down, they are slowly rising again.
> >   
> What I want to know, is who REALLY sets prices..  The comments and 
> consensus is that the market has a lot to do with setting the prices.  
> Well, each day some gas station employ goes outside and uses a long pole 
> to change the price of the gas they sell.. Who told that employ to 
> change the price?  Not the market.  There is an actual entity, whether 
> computer, human, or computer with human review that says to each company 
> what the price ought to be.   Perhaps it's driven by the market, but 
> there is an actual physical process somewhere that happens and that is 
> the part I'd like to know more about.

I think the market "approves" the prices, but doesn't really set them.
The prices are set by the seller who sees if the market is willing to
absorb the price.  So while the consumer may not be happy about the
price, their willingness to still buy the good at a higher price
validates this higher prices.  If the prices are too low, then obviously
demand will outstrip supply.  Too high and there is an oil surplus.
However we've never seen an oil surplus.  Further the people who feel
like they are most affected by high oil prices (the car owners) are only
a small percentage of oil consuming entities in the country.

I still have a hard time feeling overly upset about high prices at the
pump.  We're still as wasteful as ever.  SUVs are still selling well.
Ironically, our vehicles are still burning the same amount of MPG they
did in the early 70s (the muscle car era), only we now drive smaller
vehicles with two to three times the horsepower.  I suppose that if we
all cut back on our gasoline usage, the prices would go up even more to
compensate for the lack of demand at the pumps...

Of course only a small percentage of our oil consumption goes to
automotive uses.  The majority of it goes to industry, so maybe
complaining about our cars is a moot point.

And to set the record straight, no Josh I didn't ever claim IP was more
reliable than TCP/IP.  

Michael

> 
> -Dennis
> 
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