by GreyZone » Fri 07 Oct 2005, 12:21:02
$this->bbcode_second_pass_quote('The_Toecutter', 'T')o be fair, price gouging IS part of it. Just because a few hurricanes knock out some drilling infrastructure and rigs, DOESN'T make the other sources of oil more expensive to produce each barrel. Taking out refinaries doesn't make the remaining gasoline production capability more expensive to produce each gallon in the other refinaries either.
This statement demonstrates core misunderstandings of markets. People pay what they are willing to pay. When something is plentiful, some other producer can and will undercut you thus forcing prices to stay relatively low. When there is more demand than supply though, a seller can simply sit on his higher price while the lower price guy gets bought out and he knows that the higher price will still be bought simply because there is not enough supply to go around. Basic economics. Cost of production has zip to do with retail price of anything. It didn't in the past and doesn't now. This is why prices have gone up.
You can call this "gouging" but it's just the market at work. The market is telling all of us that this stuff is scarcer than it was, and thus more valuable than it was. As supplies improve, refineries come back online, and demand drops due to higher prices, we'll start to see prices drift downward some. When that starts to occur on a widespread basis then we'll know there is some surplus back in the system.
Your comment seemed to indicate a basic misunderstanding of how markets work (and have worked for centuries). I certainly do not mean to sound harsh, and if I do, I apologize for that in advance. However, I did feel compelled to address what seemed a basic misunderstanding.