bishop:stolen from: Oil Price History & Analysis
"On March 19, 2003, just as some Venezuelan production was beginning to return, military action commenced in Iraq. Meanwhile, inventories remained low in the U.S. and other OECD countries. With an improving economy U.S. demand was increasing and Asian demand for crude oil was growing at a rapid pace. The loss of production capacity in Iraq and Venezuela combined with increased production to meet growing international demand led to the erosion of excess oil production capacity. In mid 2002, there was over 6 million barrels per day of excess production capacity, but by mid 2003 the excess was below 2 million. During much of 2004 and 2005 the spare capacity to produce oil has been under one million barrels per day. A million barrels per day is not enough spare capacity to cover an interruption of supply from almost any OPEC producer. In a world that consumes over 80 million barrels per day of petroleum products that adds a significant risk premium to crude oil price and is largely responsible for prices in excess of $40 per barrel. "
K: which doesn’t take into account the political factor."
B: as for the price per barrel, when you factor in inflation, it was higher in 1981 as referenced in Wikipedia
K: I don’t this is particularly relevant in regards to political matters
K: every single oil company is following the game plan.
Each one is raising their prices and lowering their prices
with each other. There doesn’t seem to be any kind of
competition of any kind via gas prices. Thus there is
monopolistic forces at work. And that boys and girls is
illegal and needs to be investigated, but they won’t be because
the white house is full of oil people, loyal to and paid by oil
companies."
B: if every one’s prices are falling, then why would we assume a monopoly? prices should go UP if they are fixing prices, not down. the downward fall is a sign that competition is alive and well. sometimes the simplest answer is the right one. supply and demand. summer months are typically the busiest travel months of the year. July is number 1. obviously other days throughout the year are high, but for entire months, it’s always in the summer. so, come the autumn months, coincidentally the election season as well, we have less travel, therefore less oil consumption and demand, therefore more supply, therefore more companies trying to reduce the excesses by reducing prices. economics 101.
K: You are missing a big point. What if it is in your economic
advantage to keep a certain party in power? You are getting
huge tax breaks from the GOP and allowed to keep massive
record profits without investigation. If I was the oil companies
I would do whatever it took to keep the GOP in power, EVEN
if it meant a temporary hit in profits. The oil companies have already
had a record profit taking year, by some estimates over 78 BILLION
DOLLARS this year. So what if you get slightly lower then estimate
for a couple of months, that pales to your record profits already
in hand.
B: where is the evidence for the election related gas prices? are there actual economists that support this idea? if so, i would like to read their position papers."
K: the evidence is actions taken. Don’t read position papers.
Look at the facts yourself. Did we or did we not have
record breaking price of gas per galleon this summer?
Did or did not the price of a barrel of gas reach record high
this summer?
In your experience, when prices fall on items, don’t they
fall marginally, to a slightly lower level of prices. They
don’t fall to a point of of over a 25% drop in prices as
gas prices have fallen in the last month. In other examples,
you get a two or maybe 5% drop in prices, when
prices fall in other instances, so why did gas prices fall
so steep? and in regard to oil companies monopolist
practices, it seems clear that they are operating together.
Otherwise you would have had a wide variation of prices
during the summer, but you didn’t get that. All the oil companies
were within pennies of each other even with massive price
increases. If you could steal a share of the market (which is
the name of the game when companies have established
their market shares, for example tobacco and beer or wine
companies fight it out, it is about the movement of market
shares they fight for, trying to get a bigger share of the market
via prices being lower is a standard practice in the business world,
why do oil companies ignore this basic tenant of the business
world?) The simple way to get market share in a frenzy
price increase is simply lower prices below the competition
and then advertise the hell out of that fact.
It only takes a decrease of pennies to gain market shares,
but not one single oil company did that, even if it standard
business practice everywhere else in the world.
And that is your proof. They ignored standard business
practice every other company in the world practices which
is to try to gain market shares.
simple common sense leads one to the
proof that oil companies are tying to reelect the GOP and
are acting in a monopolistic manner that is illegal.
Kropotkin
), so he’d certainly blow the whistle if there was one to blow.