Don’t worry, just a little bump - $70 is just around the corner. Short traders just keep making those margin calls, mortgage the house if you have to. Fortunes await you! PO is for pansies and doomers. At $70 short some more ..... it is going back to $22 .... the world is awash with oil ........ reality has nothing to do with it, its all in those charts!!!!!!!!!!
Posted: Wed Sep 07, 2005 11:13 pm Post subject: Price Gouging - Does It Exist? Can it exist?
We certainly hear a lot about "price gouging" by oil companies, refiners, OPEC, gas station owners, etc.
My question is this.....
In a free market capitalist economy (ostensibley what we have here in the USA).....is there indeed such a thing as "price gouging"?
I have always thought that in an environment of free market competition, price gouging can only exist in conjunction with "price fixing" or collusion by companies to set prices.
Just wanted to open this up for discussion, since many out here know a lot more about economics than I do.
It is interesting that when oil/gas/gasoline prices go up, people cry "price gouging" and even many free marketers call for tighter government oversight/policy.
However, when real estate/housing prices skyrocket, everyone applauds and no one calls for new federal "real estate" policy.
If Ford, GM, or Intel make recors profits....people cheer. If Exxon and Chevron make record profits, people call for an "investigation".
What are the differences?
So, can price gouging exist in a free market? And how would someone know when gouging is occurring?
Posted: Wed Sep 07, 2005 11:31 pm Post subject: Re: Price Gouging - Does It Exist? Can it exist?
Texas_T wrote:
We certainly hear a lot about "price gouging" by oil companies, refiners, OPEC, gas station owners, etc.
My question is this.....
In a free market capitalist economy (ostensibley what we have here in the USA).....is there indeed such a thing as "price gouging"?
I have always thought that in an environment of free market competition, price gouging can only exist in conjunction with "price fixing" or collusion by companies to set prices.
Just wanted to open this up for discussion, since many out here know a lot more about economics than I do.
It is interesting that when oil/gas/gasoline prices go up, people cry "price gouging" and even many free marketers call for tighter government oversight/policy.
However, when real estate/housing prices skyrocket, everyone applauds and no one calls for new federal "real estate" policy.
If Ford, GM, or Intel make recors profits....people cheer. If Exxon and Chevron make record profits, people call for an "investigation".
What are the differences?
So, can price gouging exist in a free market? And how would someone know when gouging is occurring?
I believe legally price fixing is defined as gouging.
Posted: Wed Sep 07, 2005 11:31 pm Post subject: Re: Price Gouging - Does It Exist? Can it exist?
Texas_T wrote:
We certainly hear a lot about "price gouging" by oil companies, refiners, OPEC, gas station owners, etc.
My question is this..... In a free market capitalist economy.(ostensibley what we have here in the USA).....is there indeed such a thing as "price gouging"? I have always thought that in an environment of free market competition, price gouging can only exist in conjunction with "price fixing" or collusion by companies to set prices. Just wanted to open this up for discussion, since many out here know a lot more about economics than I do. So, can price gouging exist in a free market? And how would someone know when gouging is occurring?
We do not, even ostensibly, have a free market in the United States. If we did, then the government wouldn't give money to corporations. Also, in a truly free market economy, we would not have the Federal Reserve.
Monopolies can price gouge as much as they want.
Posted: Wed Sep 07, 2005 11:44 pm Post subject: Re: Price Gouging - Does It Exist? Can it exist?
insurgent wrote:
Monopolies can price gouge as much as they want.
So maybe we need to understand where monopolies come from; perhaps the best definition is a privelege created by a grant of a king or government.
There are few "natural" monopolies, and those can only exist for a short period of time until they become inefficient and die in the face of competition. The monopolies that keep on going are those that have the power of the state continuously enforcing their priveleged position, protected against the free market.
So all you supporters of government intervention in the free market are really supporters of privilege for some in defiance of freedom. No wonder you are easy prey since you fail to understand the system; instead of eliminating the government privelege system, you want more government intervention in freedom in the mistaken belief that somehow you will become the priveleged group.
Posted: Wed Sep 07, 2005 11:45 pm Post subject: Re: Price Gouging - Does It Exist? Can it exist?
insurgent wrote:
Monopolies can price gouge as much as they want.
Price gouging is just raising prices. In the free market economy raising prices is only profitable up to point beyond which you lose too many consumers. The key to success in the economy is to the find the price that is "just right", bringing you the maximum profit. Even monopolies face competition from every other producer looking for the dollars of consumers. It doesn't mean anything to be a carrot monopoly for example, if consumers just switch to broccoli after you raise prices on carrots.
A market is a rationing mechanism. It selects the buyers with the greatest willingness to pay and matches them with the available supply. The supply can be expanded or shrunk depending on the profitability of supplying. In a crisis however the supply is mostly fixed (it takes time to resupply) and demand shoots up rapidly. To prevent a shortage the current suppliers hike their prices and sell their available supply to the neediest. People obviously aren't happy about having to pay more for an item that in non-crisis condition would be much cheaper. What they ignore is that they wouldn't demand these goods in non-crisis conditions, and neither would most other people. The price situation before the crisis is irrelevant. The new price is the only reasonable price.
Anti-gouging laws make no sense. It is tantamount to forcing owners of emergency supply to give away their stock in case of a crisis. It is expropriation without compensation.
Posted: Thu Sep 08, 2005 12:38 am Post subject: Re: Price Gouging - Does It Exist? Can it exist?
Texas_T wrote:
It is interesting that when oil/gas/gasoline prices go up, people cry "price gouging" and even many free marketers call for tighter government oversight/policy.
Is it because, having swallowed the 'free market = good life' equation, and seeing that it hurts them to buy gas, they expect some crook to fix the prices ?
It tells you that people don't really care about 'free market'. They really want 'good life'. _________________ Freedom is up to the length of the chain.
Posted: Thu Sep 08, 2005 1:15 am Post subject: Re: Price Gouging - Does It Exist? Can it exist?
jaws wrote:
insurgent wrote:
Monopolies can price gouge as much as they want.
Price gouging is just raising prices. In the free market economy raising prices is only profitable up to point beyond which you lose too many consumers. The key to success in the economy is to the find the price that is "just right", bringing you the maximum profit. Even monopolies face competition from every other producer looking for the dollars of consumers. It doesn't mean anything to be a carrot monopoly for example, if consumers just switch to broccoli after you raise prices on carrots.
A market is a rationing mechanism. It selects the buyers with the greatest willingness to pay and matches them with the available supply. The supply can be expanded or shrunk depending on the profitability of supplying. In a crisis however the supply is mostly fixed (it takes time to resupply) and demand shoots up rapidly. To prevent a shortage the current suppliers hike their prices and sell their available supply to the neediest. People obviously aren't happy about having to pay more for an item that in non-crisis condition would be much cheaper. What they ignore is that they wouldn't demand these goods in non-crisis conditions, and neither would most other people. The price situation before the crisis is irrelevant. The new price is the only reasonable price.
Anti-gouging laws make no sense. It is tantamount to forcing owners of emergency supply to give away their stock in case of a crisis. It is expropriation without compensation.
This is bs, Jaws. When you have constrained supply and heavy demand for a commodity or product with few or very poor substitutions, the system of market balance you describe, doesn't work. The free market ideology/religion has let the wolf in the door, in the energy sector. If some dude's recently privatized electricity provider is gouging him for electricity, does he purchase his electricity from another company?
The free market system of balance, may not even apply to the manufacture of widgets and doo-dads that the market cranks out en masse, if weaker companies collapse, leaving only one monopolistic or two or three oligopolistic players in each sector. Market share, in this case, isn't a consideration.
Monopolies abandon desire for market share and pursue the deepest pockets. Oligopolies can do pretty much the same in an atmosphere that encourages collusion. Peak oil, high interest rates, a drying up of liquidity in the middle and lower class, provides just such an atmosphere.
Isn't that what capitalism is all about? May the best company/ or man win? The next question is--And then what? If the strongest survives, you have to live with economic, gouging Godzillas. I'm not looking forward to it, myself.
Posted: Thu Sep 08, 2005 1:39 am Post subject: Re: Price Gouging - Does It Exist? Can it exist?
I guess you guys have heard the story of the European city state under seige and blockade in one of the many "wars". A few brave souls sneak out at night and bring in food for which they charge a high price. The people are outraged at the high price and complain to the king who hangs a few "price gougers" and prohibits the price to be anything other that it was before the seige. Of course nobody risks sneaking out anymore and the city starves.
So much for interference by government in the free markets, whether it be in times of extreme shortages or to rig the markets in favor of their friends. In either case people suffer.
Of course, government objection to price gouging is popular with the masses, and the politicians use this quite freely to continue their confidence game.
I guess what irks me the most is how many people suck up to their masters rather than recognize the reality. No wonder the government wants to run the school system and condition the minds of the youth. I guess you can say the public school system is a great success, at least from this point of view.
Joined: Apr 21, 2004 Posts: 508 Location: Republic of Texas
Posted: Thu Sep 08, 2005 10:40 am Post subject: Re: Price Gouging - Does It Exist? Can it exist?
Oil, gasoline, etc are commodities traded throughout the world. The US governerment or an single company can't set the price. Every study or investigation on price setting has come up empty. _________________ The road goes on forever and the party never ends - REK
Posted: Thu Sep 08, 2005 6:02 pm Post subject: Re: Price Gouging - Does It Exist? Can it exist?
You might not be able to beat the market in the long term but governments and corporations are always trying to manipulate it in the short term for their own interests.
As Adam Smith so succinctly put it
"People of the same trade seldom meet together even for merriment and diversion, but the conversation ends in a conspiracy against the public or some contrivance to raise prices." _________________ Peak Oil reduces
Your expensive technology
To a simple stone
Posted: Thu Sep 08, 2005 6:23 pm Post subject: Re: Price Gouging - Does It Exist? Can it exist?
savethehumans wrote:
Quote:
Price Gouging - Does It exist? Can it exist?
Yes. Yes.
You can't just say yes. You have to define it, or your answer makes no sense.
threadbear wrote:
Isn't that what capitalism is all about? May the best company/ or man win? The next question is--And then what? If the strongest survives, you have to live with economic, gouging Godzillas. I'm not looking forward to it, myself.
Liberalism is a lot like biological evolution. It's not about the 'best' man winning, because how do you establish who the best is? Different buyers have different preferences. Some people like Microsoft, some people like Apple, some even like Linux. You could say that Microsoft is the best because it has a much bigger market share, that doesn't mean Apple and Linux are going away. They've secured their little corners of the world and keep on existing, just like most lifeforms on this world.
Monopoly isn't fate. That idea went out with the 19th century. There is an optimal size to a business beyond which the costs become too high to manage. One day dinosaurs (or Godzilla) rule the world, the next day they fall victim to their own size while the little mammals just keep on living.
Posted: Fri Sep 09, 2005 12:48 am Post subject: Re: Price Gouging - Does It Exist? Can it exist?
jaws wrote:
savethehumans wrote:
Quote:
Price Gouging - Does It exist? Can it exist?
Yes. Yes.
You can't just say yes. You have to define it, or your answer makes no sense.
threadbear wrote:
Isn't that what capitalism is all about? May the best company/ or man win? The next question is--And then what? If the strongest survives, you have to live with economic, gouging Godzillas. I'm not looking forward to it, myself.
Liberalism is a lot like biological evolution. It's not about the 'best' man winning, because how do you establish who the best is? Different buyers have different preferences. Some people like Microsoft, some people like Apple, some even like Linux. You could say that Microsoft is the best because it has a much bigger market share, that doesn't mean Apple and Linux are going away. They've secured their little corners of the world and keep on existing, just like most lifeforms on this world.
Monopoly isn't fate. That idea went out with the 19th century. There is an optimal size to a business beyond which the costs become too high to manage. One day dinosaurs (or Godzilla) rule the world, the next day they fall victim to their own size while the little mammals just keep on living.
Of course monopoly is fate. That's the driving force behind corporations cozying up to political power. When the govt. refuses to enforce anti-competitive practise laws, you have a player or very few players with the most power "winning".
Marx was absolutely correct, and the future will illustrate it, in technicolour. If there is an optimal size to business, beyond which the law of diminishing returns kicks in, please explain the existence of huge corporations. Mergers and acquistions of huge corporations should never have been allowed.
I DO hope your scenario eventually plays out, though, with the tree shrews taking over where the lumbering corporations leave off. That would show monopolism and oligopolism to be inevitable but their power limited in time.
Posted: Fri Sep 09, 2005 3:09 am Post subject: Re: Price Gouging - Does It Exist? Can it exist?
Since cheap oil is absolutely fundamental to our industrialized societies, we can expect just about any behaviour from people when depletion sets in. Just about any behaviour except logical and rational behaviour. My humble guess is that we have just seen tiny, tiny sparkles of what eventually will become a magnificent firework of irrationality. All that fancy talk about "market forces" will soon go out the window in a rush, to be replaced by attempts at "strong government". And most people will cheer and applaud it.
Posted: Fri Sep 09, 2005 4:50 am Post subject: Re: Price Gouging - Does It Exist? Can it exist?
MacG wrote:
Since cheap oil is absolutely fundamental to our industrialized societies, we can expect just about any behaviour from people when depletion sets in. Just about any behaviour except logical and rational behaviour.
The will be rational behaviour, it's just that it will be only a small part of a whole spectrum of varied behaviour. Interesting, eh?
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