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

Nicholas Leippe nick at byu.edu
Mon Jan 30 11:28:19 MST 2006

On Monday 30 January 2006 11:06, Jeff Schroeder wrote:
> Dennis wrote:

Exactly.  The gasoline market has a nearly perfectly inelastic demand curve 
(meaning it's nearly vertical).  This means that almost 100% of any price 
increase (incurred because of new taxes, higher production costs, or just 
plain because they want a new Ferrari) can be passed on directly to the end 
customer.  This also means that the profit-maximization-point on the 
supply-demand curve is really only capped by taxes, internal tactical 
decisions regarding competition, and politics.  *If there were an oligopoly 
on oil, they could all just raise the prices together and we'd all just have 
to pay it.  

* Oh yeah, there is isn't there--it's called OPEC, no?


Nicholas Leippe
Sales Team Automation, LLC
1335 West 1650 North, Suite C
Springville, UT  84663 +1 801.853.4090

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