again with the gas prices..., http://www.dailynews.com/Stories/0,1413, Options

[mikester]

http://www.dailynews.com/Stories/0,1413,20...2119362,00.html

What we have here...is someone making a profit...who decides when you're charging too much for something?

Well - these guys are capitalists and they will CHARGE WHATEVER THE MARKET WILL BEAR.

So the only solution is to find some other way to work making fuel in less demand than it is right now.

I say we start a pool - winner gets a 914 hat or something...

Guess what the highest $ per gallon will be on labor day (end of summer).

I'm just saying...

[lapuwali]

The laws of supply and demand DO work, they're just fairly elastic. If gas prices permanently rose to, say, $5/gallon, would you buy a more fuel efficient car? Or move closer to work? Or consider taking the bus instead? Most people would do one or all of those things. All of those things, if enough people did them, would reduce demand, thus nullifying the price increase from the point of view of the supplier. This is why gas only costs what it does here, and not $5/gallon.

People have to eat, too, and yet food prices don't spiral up out of control because of that. There's been a huge consolidation in the food business over the last 100 years, but food hasn't gotten hugely more expensive (in real terms). There's still enough competition to keep prices low, and keep grocery store margins down below 2%.

Increasing gas prices indirectly affect the price of nearly everything else, since nearly everything you buy has built-in transportation costs, of the goods themselves, and the materials used to make those goods. Drastically increasing the price of gas would also raise the price of food, clothing, etc. This would cause serious price inflation, which would eventually cause wage inflation, and pretty soon it's 1972 again (for all you young 'uns, that was the first major "oil shock" caused by OPEC, which caused an inflation rate of better than 10% in the US, rather than the 2% it's been for the last 10 years). This sort of economic damage puts a lot of noses out of joint, and OPEC hasn't dared do that again since. Countries do eventually go to war over such things. The Nixon administration introduced price controls, and for awhile things looked pretty dicey. Had such a thing happened today, post-Cold War, I have no doubt there would have been a lot more saber rattling on our part to force OPEC to back down again. As it stood, there was instead a sudden surge in the construction of nuclear power plants, fuel efficient Japanese cars suddenly became popular, and OPEC saw the possibility of reduced demand. An little incident in Harrisburg PA put the nukes on hold, everyone started to buy SUVs with half the mileage of the Accords they used to love, and now demand is high again. Until the next time the cycle repeats.

I note that falling oil prices have hurt the US economy (or portions of it) in the past, too. The US oil bidness used to be pretty healthy, with plenty of economical reserves in Texas the and Gulf Coast. Falling oil prices in the late 70s nearly killed that industry, and a lot of Texans found themselves out of work as a result. None of those jobs have returned, although some of them would if the world price for oil rose enough for those reserves to become economical again.