![]() |
If this is your first visit, be sure to check out the FAQ by clicking the link above. You may have to register before you can post: click the register link above to proceed. To start viewing messages, select the forum that you want to visit from the selection below. |
|
|
Thread Tools | Display Modes |
|
#1
|
|||
|
|||
![]()
Jay Honeck wrote:
Heh... and this is really the punchline. Think about it: crude oil is far and away our civilizations most precious natural resource and it's being sold for less than drinking water (or it had been up until now). I don't think anyone really believes that prices like that are sustainable, especially given that the oil supply is finite and non-renewable. Interesting. a. In one corner we've got folks saying that the big, bad Oil Companies are making obscene, HUGE profits at current prices. b. In the other corner, we've got guys like you saying that the price is too low, and shouldn't be so cheap. If supply and demand is in action here, (a) and (b) can't co-exist. It's safe to say, however, that both of these analyses are overly simplistic. In fact, a) and b) can coexist and here's how: a) While it might be true that the oil companies are making record profits at the current time, I can promise you they're sweating bullets right now about the price of gas and other petrolium products. Why? Well, they know, like any other business owners/ops know, that there's an upper limit to the price of their products. This works like any other business - you want the highest possible price for your product that does NOT reduce demand for it. In fact, any time you bump up the price of your product you're taking a risk in this regard. You know how all this works so I won't go into it. But I think the dynamic going on here should be obvious. This was an ugly, ugly lesson for the oil companies back in the 70's when US production peaked, causing prices to skyrocket and shocking the economy into conservation. I promise you this experience is still fresh in their minds and a lot of sleep is being lost over it. b) The obverse is true as well - you don't want your product priced excessively _low_ either. There are two consequences of this: 1) excessively low margin and 2) possibly excessive demand. Up until now, the margins and supply have been permissive enough to allow selling gas more cheaply than H2O here in the US. That's no longer true, for reasons that I think are obvious. The need for more refining capacity (big cost!), increasing shipping/processing/etc costs, gubbamint regulation and questionable supply (this is a dissertation-long issue here) have made the old cheap-as-hell pricing scheme simply unsustainable. So, you can see the rock/hardplace situation he cheap gas is not sustainable, but TOO high of a price hike might shock the economy into conservation which NO business would EVER want for its products.... Truth is, I wouldn't want to be an oil company right now, because they're fixin' to get into some really hard times. The current drama going on at the gas pumps right now speaks directly to this issue... As I said, we're lucky to only be paying 3 bucks right now... LS N646F Jay Honeck Iowa City, IA Pathfinder N56993 www.AlexisParkInn.com "Your Aviation Destination" |
Thread Tools | |
Display Modes | |
|
|
![]() |
||||
Thread | Thread Starter | Forum | Replies | Last Post |
Gas Prices Coming Down | Jay Honeck | Piloting | 15 | September 10th 05 03:07 PM |
Our local fuel prices just went up again! | Peter R. | Piloting | 17 | May 28th 04 06:08 PM |
AIRNAV not publishing fuel prices... | Victor | Owning | 77 | February 22nd 04 12:02 AM |
AIRNAV not publishing fuel prices... | Victor | Piloting | 81 | February 22nd 04 12:02 AM |
Web site for fuel prices? | Frode Berg | Owning | 3 | July 11th 03 02:38 PM |