2.27 a gallon. I wish it was that much. Were over 3.15 in good ol Fresburg, Ca.
BP shuts largest U.S. oil field due to damaged pipeline - Aug. 7, 2006
New worry for drivers: BP shuts oilfield
Damaged pipeline in Alaska affects about 8% of U.S. oil production.
August 7 2006: 8:34 AM EDT
NEW YORK (CNNMoney.com) -- In a blow to drivers already struggling with high gasoline prices, BP was forced to shut off about 8 percent of the nation's oil supply after discovering "unexpectedly severe corrosion" in the Alaskan pipeline.
BP announced early Monday that the pipeline problems had caused it to begin the first shutdown ever in the biggest oilfield in the United States, Alaska's Prudhoe Bay.
U.S. light crude surged $1.13 to $75.89 a barrel in electronic trading early Monday, while Brent crude trading in London rose 99 cents to $77.16. Gasoline futures rose 3.85 cents to $2.27 a gallon.
Oil analyst Peter Beutel, president of Cameron Hanover, said shutting down an oil field is an expensive and risky step that is only taken in extreme circumstances. He said that suggests the 400,000 barrels a day produced in Prudhoe Bay could be shut off for some time to come.
"They wouldn't be shutting down Prudhoe Bay if this wasn't absolutely necessary," said Beutel. "Once you shut it down, you don't know what will happen when you come back. It could cause all types of problems."
Beutel said he expects about a 5 cent a gallon rise in gasoline futures due to the pipeline problems.
2.27 a gallon. I wish it was that much. Were over 3.15 in good ol Fresburg, Ca.
Ugh...that is awful.
Doesn't matter to them...if the supply goes down they push the price up and - surprise - record profits.
We are screwed.
News like this makes me insanely glad that I only have a 3 minute drive to get to work. Gas where I live is $1.15 a litre right now, you Americans don't realize how good you have it when it comes to gas prices!
If the supply goes down the price will go up to curb consumption. This means no shortages which is a good thing. The prices are set freely on the market like the prices of all other commodities. Oil companies cannot make profits simply by spiking prices without any change in supply or demand. If they do so their total revenue goes down, not up. If there is no concurrent significant drop in cost from the lower production their profits would go down, not up. The profits they do make are the incentive for BP and every other oil company to bring more product to market. This is also a good thing. That they might have difficulty bring such product to market would tend to make the demand schedule more inflexible, which would contribute to a price rise. Oil companies do not make it more difficult to bring their own product to the market, the government does. That a lack of alternatives exists would also tend to lead to inflexibility in demand and a rise in prices. Once more this is the fault of the government with its myriad restrictions on what gas can be sold where and when.Originally Posted by Jack of Shadows
The reason some insane CEO can't come in and spike Wonder Bread prices is because so long as there is even one competitor out there the market will be more flexible. And so long as entry into the market is relatively easy potential competition lends flexibility to the market. It is the government that artificially destroyed the fungible nature of gas. It is the government that made entry into the field hard and costly as hell, giving protection to existing firms at the expense of consumer choice and lower prices.
Do rising prices really have that much of an impact on overall consumption? I'd be interested in seeing sales figures versus sales cost to verify what trend that has. We as North Americans love our cars, and with so many people reliant on motor vehicles for transportation I really can't see a rise in gasoline prices cutting consumption that drastically.
They don't have to be drastic. By definition if the price goes up fewer people will buy, or everyone will buy less or some combo of the two. Anything else assumes a perfectly inflexible demand curve which is impossible. The fall in consumption is not important. The fall in total revenue relative to cost is what matters. By definition, excluding any government intervention to cap prices some how, prices will always fall within the flexible portion of the demand schedule where the greatest difference between total revenue and cost can be found.Originally Posted by max silver
Put simply the tendency is to maximize profits not prices. If you can lower your price and sell more and recoup the additional cost of production+ you will, meaning the price will go down naturally. If you can raise prices and people will buy only a slightly lower amount you will do so because the rise in price (usually) means less production cost and so higher profits. So prices always tend to be pushed to that point where selling more at a lower price and less at a higher price leads to a decrease in profits, or a smaller difference between total revenue and cost. So the really relevant figures when addressing prices are costs and how they scale with an increase or decrease in production and what total revenue at any given price point will be. You can know the former but not the latter, that has to be discovered.
Now why weren't these guys charging up the wazoo all the time? I recall a time not so far past when gas prices were very low. If it were possible to simply raise prices on a whim and make more money, why didn't they do that then? This a relatively screwed up situation because the government is involved at all levels doing seemingly contradictory things. At the very least the cost of regulation compliance gets passed on to consumers. All told though what they're doing inevitably leads to a more inflexible demand for gas. If they make it real cheap our economy expands but they can't fight market pressure forever. Making gas cheap means inevitably the price will adjust upwards and probably quite dramatically. What's more, making its uses very regionally and temporally specific means substitutes are harder to come by and so demand becomes inflexible, meaning a price rise is inevitable. Remember, when demand is inflexible it means prices can be rasied without losing too many sales, and they will be raised in such a way naturally. It's not out of spite, doing anything else leads to inefficient resource uses or loss of potential profits.
All told in no other market can CEOs simply spike prices and make massive profits. Competition prevents it. If they can do it with oil/gas the government has caused the situation or somehow enabled them. No matter how dependent we are on oil you have to realize a couple things: we are just as dependent on a lot of other things, computers for example, yet CEOs can't simply raise those prices. If Dell decided to double their prices tomorrow Gateway would sell more and Dell would be in the can. If they tried to collude other manufacturers could make out and get market share the other two lost. They would also most likely still try to compete with each other in secret which would mean the relatively quick end of any attempt at collusion. Unless of course the government some how enables the collusion.
Another thing to keep in mind is that gas should be fungible, should be easily substituted, should be easily reallocated to make up for increased demand here or there. If you look at the price of any other commodity as universally used and demanded it tends to regularize in relevant trading areas. While there are differences regionally in the price of bread, they aren't that pronounced and are almost always very low unless you're buying some specialty stuff with perceived higher value. Yet gas prices are extremely variable across the country. The only thing that can cause that kind of variance is regulation, restrictions that lead to drastic differences in regional costs.
Now I'm no fan of oil companies, like every other business they're always begging for a government hand job that should be denied. But in the end that's the point. If they are taking advantage of consumers then the government is enabling them to do so.
Last edited by CDB; 08-07-2006 at 04:57 PM.
CDB - my man!!
Just to illustrate what he said - in 1999 gas was like 75-90 cents per gallon in much of the South. Oil companies were making 5-8 billion.
Now - gas is $3 and profits are 25-40 billion.
What the hell?!?!?!? Why didn't they just go and raise prices in 1999? Did someone forget?
I've said it once on this board - I'll say it again - YOU PEOPLE are retarded.
Don't go making statements of fact about oil companies and profits.
You will inevitably be wrong.
Max - the recent increase in prices hasn't seemed to change gasoline consumption last time I saw the data. Folks just adjusted and stopped eating out as often - but they still are making unnecessary trips and driving retarded SUV's that get 4 mpg (note - I drive a car that gets 30 mpg on the interstate/22 in the city).
Supply and demand doesn't work as freely with OPEC as it does with Wonder bread unfortunately. Although it is a crazed market that, for the most part, fuels the fires of oil increase.
Although, the oil market seems to be one of few that like to come out and so freely announce problems it may have and shutdowns that have to occur.
BP would have filed the leak with the state DEQ. Analysts know how to get that information, I'd guess.
I think BP would also have to notify the ADEQ of the shutdowns - as that would lead to flaring.
Stuff gets out.
Oh I know officially but how many corps are getting busted from hiding their real assets and debt etc? My point is that if the leaks and downtimes and oil shortages had a negative impact on their wealth as much as something like shortages in something else did. It wouldn't find its way out so easily.
But I guess that's more of a topic lined with tin foil. I guess I just don't trust big business.
I don't understand.Oh I know officially but how many corps are getting busted from hiding their real assets and debt etc? My point is that if the leaks and downtimes and oil shortages had a negative impact on their wealth as much as something like shortages in something else did. It wouldn't find its way out so easily.
Of course a downtime impacts profit - it's less product.
Supply and demand works the same no matter what. OPEC puts a restriction on supply no doubt, but the same rules apply to the environment and prices are set in the same way given that supply.Originally Posted by Jayhawkk
Because if prices just went up people would have kittens. It's called keeping people informed so they don't flip out and, oh I don't know, blame greedy CEOs for price increases.Although, the oil market seems to be one of few that like to come out and so freely announce problems it may have and shutdowns that have to occur.
Not many relative to the amount of corps on the market.Originally Posted by Jayhawkk
When it's linked with the government you shouldn't. When it's left free of government hinderance and government 'help' you can trust they'll bend over backward to get your dollar voluntarily. No one believes, nor should they, that corporations are headed by angels with the purest of intentions. It's just that left to their own devices and absent government enabling they can't do anything to get you money except offer you a better product.But I guess that's more of a topic lined with tin foil. I guess I just don't trust big business.
Now if what jmh said is correct and consumption hasn't dropped all that much then we're dealing with a situation where the government has managed to push the price into the inflexible range of the schedule, either by forcing cheap gas and allowing an economic expansion and infrastructure to develop around it or through a more direct price controling policy. Either way this is not the kind of thing that tends to happen when the market is left to its own devices. Current demand and future speculation tends to smooth out price fluctuations over time in other areas, oil as been screwed to the point where that doesn't work anymore.
In a way it's similar to national forrests as a resource. Some of those forrests get logged out completely, others sit there and rot and become fire hazards, and no one owns much if any of it so there's no long term interest in preserving the capital value of the resources. As a result they are either neglected or overused.
But bottom line is a rise in gas prices, if it were the result of corporate greed, would have happened a long time ago. No one was complaining when those same CEOs had companies offering gas at less than a dollar per gallon and some how no CEO said, "Hey, let's spike the price and make billions!" Why? Because it just doesn't work that way.
Now OPEC is a problem, but that's once more a government org. Not our government org, but a state creature none the less. The answer isn't more goverment. To offset any power they have we need less government and to unleash our own companies and let them get oil elsewhere.
Last edited by CDB; 08-08-2006 at 08:50 AM.
Sorry. But that is simply false. That is Utopia. Just ask Ralph Nader where he got his millions $$ Also, remember the Ford Pinto case? Do a search on topics such as consumer fraud, product liability, tort, mal-practice etc etc etc. Unfortunately, not every businessman/woman went to Economics school.Originally Posted by CDB
I have recently been involved in the management of 2 restaurants, and have also witnessed 2 other cases of health inspection of restaurants. Those operators gave new meaning to cutting corner. lol I have stopped eating out, except at the high end restaurants, for sanitary reason. On the good side, I am rather convinced that the human body is very resilient to dirt, chemicals and contamination. Else there would be lots of health catastrophy among the restaurant patrons. It would definitely be disastrous, if not for the deligent work of your local health inspectors.
At least in the restaurant business, we need MORE STRINGENT regulation and ENFORCEMENT. Not less. I am sure there are dumb regulations and bureacratic interferences in our society. But to state that 'absent government enabling they can't do anything', except ONLY resort to compete via better products and better services, is free market utopia. Unrealistic and does not reflect reality. It also implies that corporate wrong doings are ENABLED by government interference. That is also not reflecting reality.
If anything, it is govenment enabling, that promotes competition based on better products and better services. Not the other way around. Where there is problem the system, the solution is not eliminating government. The solution is BETTER government.
But what do I know... I didn't goto Journalism school...
Ok.. This is a pre-emptive vaccination against a very possible long and tedious rebuttal/argument that I would very likely not inclined to decipher and chew on.
CDB's idealistic free market utopia works IF AND ONLY IF, consumers have perfect information regarding the goods and services they purchase. Since we all know that assumption, perfect information, is unrealistic pie in the sky, there goes the whole thing.
To illustrate the obvious. Take Vioxx. Without government to establish and enforce a set of rules and regulations, then a lot of consumers would have to die, before the problem with the drug is known, IF at all. If the consumers have perfect information, yeah sure, we don't need government to implement a system to detect, monitor and bring forth the information.
When consumers have perfect information, then businesses would have no choice but to resort to compete based on the merits of their products and services. Because, the consumers would know everything that is not kosher. But we all know perfect information is another pie in the sky.
P.S. For those who still think that all our problems are the result of the goverment we have, then I say, GO EAST, BRO! To China! The Wild Wild East!! Everything there is for sale. Laws and regulations are subjected to negotiation, connection, interpretation and the rather binding arbitration by the mighty Green $$. Welcome to modern day robber-barron capitalism. Little to no government regulation. Whatever interferences can be 'greased' away with the mighty Green $$ (HK$ would work too) Oddly, the people there, are crying out for rules and regulations and enforcement, to protect the consumers...
P.S.S. Don't forget to hit up BK for tips on where to get nice cheap suits.
They don't have to, nor is it a utopian point of view, no more so than the idea that the government can protect people from such incidents. It's simply a matter of incentives. Because the system is based on people there will always be mistakes whether the market is free or totally socialized. The incentives to correct such mistakes and to not let them happen to begin with are greater in the free market because they are in the end the result of consumer demand, and my guess is most consumers would rather not die or be hurt.Originally Posted by BioHazzard
Contrarily the government knowingly put infants in danger when it required air bags and disallowed off switches for them. GM had presented evidence for the danger air bags presented to small people and kids. It was dismissed. Nor is there any move to offer cars without air bags now, even though it should be an option for various reasons. Not the least of which I suspect is the added cost of fixing an air bag equipped car over one that isn't equipped with airbags. The consumer shoulders more costs and the insurance companies and auto makers pull in more through hidden costs. I would never argue that the free market would produce a utopia where no one ever dies or gets hurt intentionally or unintentionally. It is just better at minimizing those things than the government, especially over time and it is especially better at adapting to new situations and disregarding old standards in favor of new ones.
The case of the Pinto is arguable to hell and back. Any trustworthy estimates of how many people died as the result of its design flaw are ridiculously low, and Ford doing the cost benefit analysis is, in the end, the only way to determine whether or not a safety feature or recall is worth it. Not to mention this cost benefit analysis was actually in response to the NHTSA focus on fuel system safety, and it was specific to roll over accidents, not rear impacts, and it was made regarding the whole industry, not just Ford.
It was the NHTSA's initiatives studying fuel system safety that led Ford to do the study, it was the NHTSA's definition of the worth of life that was used, and Ford was subsequently condemned for, it was the NHTSA's standards that allowed for the gas tank 'problem' which apparently killed around 30 people for a few million models on the road. I'm sure each one of those deaths mattered a lot to their loved ones, but in the end that doesn't seem like a level of safety and risk most people would define unacceptable. The NHTSA certainly thought so in their regs previous to '77.
That being said, there are thousands of safety features and steps that could be taken to make cars and driving a lot safer than they are now. They are not taken because the costs of doing so are ridiculous considering the benefits. Why do we not limit the speed of all vehicles, or border all roads with cement walls that can withstand high speed impacts to protect civilians? These measures aren't taken because people do a cost benefit analysis and decide they are not worth it.
Word of the Pinto's design did get out and the information was fairly common knowledge soon enough. NHTSA was changing its requirements seemingly nonstop during the years when the Pinto was introduced, and Ford did meet the government requirements. They accepted and used a previous set of standards while the NHTSA was developing new ones. The recall was to make all previous models comply with the '77 standards. If somebody needs to be blamed for the Pinto, why is it not the government who was and did lay down safety standards for the early years of Pinto production, standards which Ford did meet? Probably because lawyers like Nader spent years misinforming and outright lying about the situation and the public, gullible as ever, ate it all up.
So they are not complying with government standards and the government has not enforced those standards and that is therefore the fault of... the free market. Good reasoning, I follow it all the way.I have recently been involved in the management of 2 restaurants, and have also witnessed 2 other cases of health inspection of restaurants. Those operators gave new meaning to cutting corner. lol
No, it is not. I guess there are some people who would rather kill their customers as long as they made a quick buck off of them. If however these deaths were the result of negligence or recklessness, even in a free market that is prosecutable on a criminal level. And there are also civil remedies to such situations. And even absent those incentives I find it hard to believe such businesses with a consistently and mostly dead customer base would survive very long. Corpses don't make many return visits. It is utopian to think the government is the only and best way to avoid such things in fact, not to mention naive as you flat out stated that the government isn't doing anything to enforce their so called safety regulations in two situations you are personally aware of. The world of the free market is by no means perfect. It is simply better than the government alternative. Better in its ability to accomodate all people's value scales, better at adjusting to shifts in consumer desires, and better at producing consistently improving results.At least in the restaurant business, we need MORE STRINGENT regulation and ENFORCEMENT. Not less. I am sure there are dumb regulations and bureacratic interferences in our society. But to state that 'absent government enabling they can't do anything', except ONLY resort to compete via better products and better services, is free market utopia.
See the works of George Stiggler, Dominick Armentano, Thomas DiLorenzo, Karen De Coster, Adam Young, Gene Callahan, etc. for demonstrations otherwise. By definition in the free market all exchanges are voluntary, acts of coersion are illegal The only way a corporation in those circumstances can hurt you against your will in any way is through government enabling and force. Likewise in our current system where property rights and self ownership are supposedly respected, the only way a corporation can hurt you against your will is through government enabling.Unrealistic and does not reflect reality. It also implies that corporate wrong doings are ENABLED by government interference. That is also not reflecting reality.
See the above authors again. Stiggler, Armentano and DiLorenzon in particular have a lot of documentation as to just how wonderfully the government makes competition 'better'. Sarcasm aside the government cannot by definition enable competition, nor can it make better products. To do so it would have to be subject to some kind of profit loss test to see whether people would voluntarily pay for the 'better' products, which it isn't and can't be subject to. There is no such thing as better government because it is by definition a consumer of productivity that does not reliably produce anything itself. That something productive and useful comes out of its existence is likely, what that may be is indeterminable.If anything, it is govenment enabling, that promotes competition based on better products and better services. Not the other way around. Where there is problem the system, the solution is not eliminating government. The solution is BETTER government.
As for the private sector providing safety, below is a list of such organizations.
Accreditation Council for Continuing Medical Education (physicians)
Accreditation Association for Ambulatory Health Care, American Association for Accreditation of Ambulatory Surgery Facilities, Joint Commission on Accreditation of Healthcare Organizations (health care facilities)
American Gem Society, Gemological Institute of America (jewelry)
American National Standards Institute (standards-developing organizations)
Clinical and Laboratory Standards Institute
Consumer Reports (everything under the sun)
Consumers CHECKBOOK (everything under the sun, including federal employees’ health plans)
Good Housekeeping Institute & Good Housekeeping Seal Directory (consumer products)
HealthGrades, WebMD, Subimo (physicians, hospitals, and nursing homes)
Insurance Marketplace Standards Association
Sporting Arms and Ammunition Manufacturers’ Institute (firearms, ammunition, and components)
Underwriters Laboratories (the big cheese; thousands of potentially dangerous products, including dozens that you use every day)
United States Pharmacopeia Drug Information (”off-label” uses of pharmaceuticals)
Worstpills.org (information on pharmaceuticals for those who think the FDA’s standards are too lax)
Perfect information is a prerequisite for any and all utopias. I have not suggested a utopia, I've suggested that absent the ability to use government force for protection or coersion that corporations are much more limited in their ability to do harm. Perfect information is in fact one of the assumptions underlying the mathematical models used to model perfect competition which are used to justify the idea that the government can enable competition and protect consumers from monopolies, a point of view you seem to have advocated in your previous post here, so it would seem knowingly or unknowingly you're the one advocating for a society which has this condition, not me. Austrian economists never assume perfect information, and never assume ex ante judgements will be the same as ex post judgements. The bottom line axiom is that people will act purposefully to improve their situation in life, and it's those actions that give rise to economic systems, systems of law and morality, etc.Originally Posted by BioHazzard
With government to enforce and establish rules a lot of potential consumers have to die or endure extreme pain while waiting for drug approval. The costs of the regulations you seem to approve of seem to be on the same level as your claimed costs of the free market. However in the free market people have the choice to take that pill or not, whether or not the government approves. And, the list of private safety organizations previously given belies the idea that the government is the only entity capable of delivering such services. There's even one for dietery supplements ConsumerLab.com - independent tests of herbal, vitamin, and mineral supplements. The government is merely the only entity which can force people to abide by its rules, for better or worse, and thus the only entity which can deny people the choice to take a risk.To illustrate the obvious. Take Vioxx. Without government to establish and enforce a set of rules and regulations, then a lot of consumers would have to die, before the problem with the drug is known, IF at all. If the consumers have perfect information, yeah sure, we don't need government to implement a system to detect, monitor and bring forth the information.
Now I do not doubt there are those people who only want to take the most rigirously tested and approved medications. There are also those who, having their death at hand, or who are dealing with extreme pain, who might want to accept a higher level of risk for potential cures and pain relief. They are denied that choice in this current system, the one you apparently approve of. Those who involuntarily suffer and die while waiting have to be accounted for too.
Actually several authors, including Hans-Herman Hoppe, would point out that it is precisely the Chinese government's actions that have created this environment, not leastwise through legal inflation which has very much the same effect as monetary inflation, a devaluation of the 'currency' or laws in the this case. But this is in the end a complete straw man. The free market does not mean everyone goes and does whatever they want, nor does it mean a libertine society where the most disgusting whims are taken to extremes.P.S. For those who still think that all our problems are the result of the goverment we have, then I say, GO EAST, BRO! To China! The Wild Wild East!! Everything there is for sale. Laws and regulations are subjected to negotiation, connection, interpretation and the rather binding arbitration by the mighty Green $$. Welcome to modern day robber-barron capitalism.
The free market means protection of private property, both in one's person and material possessions, and the protection of the right to engage in voluntary exchanges and actions so long as you don't violate someone else's equal and opposite right to do the same. Conditions which do not exist to any significant degree in China which make it irrelevant. China as a Communist government in fact is the ultimate violator of the conditions for a free market, in that Communism by definition asserts a collective ownership (oligarchal in practice) over all property. To point to a society founded on the violation of the very thing which makes a free market work, private property, as an example of a free market failing is rather strange.
Last edited by CDB; 08-08-2006 at 04:52 PM.
What a winded read this was. Scholastic achievments and records of history past used to protect or shape ones perception of realiity. Man has always been man. Technology and time changes very little. Easier access and faster distribution of material and or information. Things are truly simple in nature as man is himself as well. We try to muddy waters with so called intelligent views and vision of honest men and deeds. But we all must aknowledge that man is his own worst enemy. Give him the opportunity to pervert or abuse and he will. Need we list the 7 deadly sins as some percieve? Who amongst you refuse to aknowledge the gross neglect of our humanity. Our profit at all costs attitude of corporate America, which by the way is no longer bound by our borders but by the acceptance of Monies in one form or another. Do not be so shallow to only see what they choose to let you see. To measure only what they give you to measure with. Listen to no government that tells you they are your answer and salvation to all. Freedom is LESS government never more. When and where did we stop caring for ourselves. The average farmer or man understands he must live in a real world. Buy from a neighbor and sell to a friend. Honor your alliances and respect your customers. Fair price for a fair deal. In the name of money our world crumbles before us. There is no government of this world that has stood the test of time. Every one has fallen.
I think it best summed up by -Lord Acton, in a letter to Bishop Mandell Creighton, 1887. 'Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men.'
No amount of money or education changes wrong into right. History has proven only, they that win get to write the history book.
In a nutshell it is never as it appears and almost always is corrupt when monies are involved.
Pessimist?? No just a realist....