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

Andy Bradford amb-plug at bradfords.org
Mon Jan 30 11:57:24 MST 2006


Thus said Jeff Schroeder on Mon, 30 Jan 2006 11:06:38 MST:

> While I believe  they're using some of their profits  to invest in new
> technology,  always  remember they're  a  business...  and the  reason
> they're in business is to make  money. It's a safe bet that ExxonMobil
> doesn't  want to  deliver cheaper  gas to  us lowly  consumers because
> they're just a bunch of nice  guys-- the only reason they want cheaper
> gas is  so they  can (1)  undercut the  competition, and  (2) increase
> their profit margins.

While  they are  clearly in  business to  make a  profit, one  must also
consider that in a free market, if the profits become attractive enough,
other entrepreneurs will want to profit  from the gains and thus provide
competitive  pricing. This  competition will  serve to  lower prices  in
general  of  the commodity  in  question.  It  is only  when  government
intervenes  by imposing  restrictions on  output, ``windfall  taxes'' or
other such market  tampering nonsense that the prices will  be skewed in
favor of the producers.

Andy
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