Thursday, April 27, 2006

Rising Gas Prices---I call it price gouging

My first question I ask myself when I hear that gas prices are rising is How can prices climb so much, seemingly overnight, when the gasoline in the tank beneath the station was bought by the retailer a day or two before and was probably refined from crude oil weeks or even months ago?
I would classify the rising prices gouging where particular states have passed laws against "price gouging," their different definitions reveal how slippery and arbitrary the concept is. What all this boils down to is that prices higher than what observers are used to are called "gouging." In other words, prices under normal conditions are supposed to prevail under abnormal conditions. This completely misunderstands the role of prices. Why do prices exist at all? To cause things to be produced and made available to the public -- and to cause consumers to limit how much they consume. Why then do prices suddenly shoot up? Because there is either less of a supply available or more of a demand, or both. What do higher prices do? Force people to restrain their own purchases more so than usual. What do higher profits do? Cause more money to be invested in producing whatever is earning higher profits, and this in turn expands output. Isn't a larger supply of oil and a reduced consumption of it what we want? Thats the question Im still pondering when all this gas discussions arise.......

1 comment:

Katie Bodden said...

I believe it to be simply a part of the market functions.
Also I believe that their is a reasonal reason for prices ot have jumped because of the time of year it happens to be. People have more time off, and want to travel. Most summers are subject to higher gas prices.