Wednesday, November 09, 2005

These Are Not the Droids You Are Looking For...


Oil Profits

How stupid do they think we are? How stupid are we?

36 Comments:

Blogger garrett provided this enlightening comment...

You, sir, are a troll.
But I'll take the bait.

You can't seriously be proclaiming yourself a Viking libertarian on the one hand and then be upset about a business making a profit on the other. If you think you're getting gouged at the pump or on your electric bill, try some conservation.

Also, please note -- the oil and gas industry is one of the most heavily regulated of all industries. If you have a beef with the price that fuel commands in this country at the moment, wield your battleaxe against the bureaucrats in the EPA (among others) who have prevented construction of infrastructure, including refineries and so on.

Also, for a more cogent analysis of this issue, please see: this Ron Paul article.

That is a cool picture you picked for this entry, by the way.

3:25 PM, November 09, 2005  
Blogger FLAMINGO1 provided this enlightening comment...

I am a troll and I do support free trade. I am certain you are correct that the oil industry is heavily regulated...but that doesn't mean it is free trade. Halliburton was heavily regulated also...

I do not begrudge any business making a profit - since that's why they are in business. I do begrudge an industry such as this making OBSCENE profits based on what I suspect is very limited real competition.

3:34 PM, November 09, 2005  
Blogger Eddie provided this enlightening comment...

Goddamn right. I'm sick n tired of the big oil companies makin all that money. Just sick. Its time we take our country back and get rid of all these slick corporate types. I say F em.

3:54 PM, November 09, 2005  
Blogger garrett provided this enlightening comment...

What are you saying?

Heavy regulation is anathema to free markets. I am saying that the prices we are currently experiencing are, in large part, the product of the heavy regulation under which the industry labors. And that if regulations weren't there prices would be considerably lower.

As to the magnitude of the profits, one man's obscenity is another man's rainy day fund. Prices of these commodities go up 100% in six months also go down. It's a cyclical industry.

You damn bankers.

3:56 PM, November 09, 2005  
Blogger garrett provided this enlightening comment...

Eddie - I love that picture. Great choice. I see you're new to Blogger. Welcome.

If you want to know what America (the world) would be like without the slick corporate types read Atlas Shrugged (instead of the phone book) tonite.

How many working headlights does your car have? I love Council Bluffs.

3:58 PM, November 09, 2005  
Blogger Eddie provided this enlightening comment...

Both of my headlights function just fine. But there's a lot of WT here that don't even bother to register there car and pay the wheel tax. Pisses me off.

I'm gonna go beat Rhonda now.

4:09 PM, November 09, 2005  
Blogger FLAMINGO1 provided this enlightening comment...

Garrett, you ignorant slut. I am afraid I just do not follow your logic.

1. I agree that the industry is highly regulated which leads to additional cost to the consumer. But that regulation money does not flow into the pockets of Exxon. How does that explain Exxon's obscene (AND YES THEY ARE OBSCENE) profits.

2. The oil industry is NOT regulated on pricing. So we can't use that to explain why the Big Oil profits are obscene. Back in the day (until Regan ended it, I believe), the airline industry was regulated - and that included pricing. You would be correct in that situation - once they de-regulated the industry, prices fell dramatically...as did airline profits.

It is plain and simple - Big Oil is earning more for each gallon it sells than it did last year...by a lot. They aren't selling more - in fact, they may be selling less, but they sure are earning more.

I don't think the supply and demand curves react rationally when you have a very small group of people controlling the supply - especially when there is a concerted effort to keep the price of the product up. I believe that is called Price-fixing and it is supposed to be prohibited.

4:20 PM, November 09, 2005  
Blogger FLAMINGO1 provided this enlightening comment...

Additionally, Sir Garrett, the second question remains relevant even if I submit to your twisted logic. How stupid are we to continue to line the pockets of Exxon by purchasing petroleum products at inflated prices.

Everyone needs to sell their car and start riding a motorcycle today.

4:23 PM, November 09, 2005  
Blogger garrett provided this enlightening comment...

My breed of libertarianism believes that there ain't very many things commercial that should be "prohibited" - including price fixing. If you know anything about cartels, you should know that they don't work. The applicable ancient wisdom this ain't, but it's close: Three can keep a secret, if two are dead. (Benjamin Franklin)

On your point about the profits - you are right about one thing. I don't think I was speaking to your points very directly. I'll try to do better this time.

Prices may be high and oil companies may be high.

But when you blame the oil company for that, YOU ARE BLAMING THE WRONG PARTY TO THE TRANSACTION. Supply and demand is the right place to focus your attention, but your analysis is faulty.

In voluntary transactions, there is a buyer and a seller. The seller wants to get absolutely the highest price possible for his product but will accept some price south of that. This is logical and morally acceptable. The buyer wants to get the lowest price possible for the product but will pay some price north of that (generally).

In the case of petroleum products, demand for petroleum products has continued to rise significantly as prices have continued to rise (at least it did up until we hit $3 gas, then I think it softened a bit - not coincidentally at the same time as supply increased AND PRICES FELL). This is somewhat unusual, I think, as a matter of textbook economics, but it is a fact.

So logically (and morally correctly) the oil companies sold their petroleum products for the prices that the market would bear.

Don't you sell yourself (your product) for the maximum price you can get for the product you are willing to deliver?

If you don't, you are a giant fool! (Gratituous ad hominem (damn spelling) attack courtesy of the late hour and the need to be begin the commute to the poopy baby.)

I'll put up an article by Lew Rockwell on my blog in the next day or two that will do a better job of explaining just how stupid your complaint and implicit complaint about gouging is.

4:39 PM, November 09, 2005  
Blogger garrett provided this enlightening comment...

In the third paragraph, insert "profits" after "companies" and before "may".

Cheers!

Damn proff (sic) reading!

4:40 PM, November 09, 2005  
Blogger Drea provided this enlightening comment...

Hey u took me off your fav's. I'm hurt

6:46 PM, November 09, 2005  
Blogger Hairy Prison Guard provided this enlightening comment...

I THINK YOU ARE PRETTY STUPID AND VERY MEAN. AND I AM BOYCOTTING YOUR BLOG, FLAMINGO.

AND I AM CALLING ON EVERYONE ELSE TO BOYCOTT YOUR BLOG TOO.

YOU MADE ME CRY TODAY. WHICH IS FINE. I DON'T MIND THAT I CRIED. OF COURSE.

BUT I AM STILL BOYCOTTING YOU. YOUR BEHAVIOR WAS VERY OFFENSIVE.

8:14 PM, November 09, 2005  
Blogger crallspace provided this enlightening comment...

They think we are stupid. We are very stupid.

I have cut way back on gas since moving up here. And I only buy gas at ARCO, where it's cheapest and not Saudi import oil.

Shell and Exxon are 2 companies to avoid... Shell imports the most Saudi oil.

I really hope we develop new energy ways, and bankrupt these snakes.

8:56 PM, November 09, 2005  
Blogger crallspace provided this enlightening comment...

Garrett is one of those people who will ask, "How far?" when the government and big business say, "Bend over."

9:06 PM, November 09, 2005  
Blogger NowhereGirl provided this enlightening comment...

Dan, these posts are too long to actually read =).

Yes, gas and oil prices are astronomical. Why no regulation? Because the oil companies have our Pres by his balls, keeping him happy by stuffing money in his pocket.

Fuck it, shall I strap the kiddos car seats to my bike tomorrow morning?

9:29 PM, November 09, 2005  
Blogger NowhereGirl provided this enlightening comment...

I meant "damn"

9:29 PM, November 09, 2005  
Blogger lula provided this enlightening comment...

Vikings didn't use oil. Maybe we should stick up sails and pop oars out the windows.

9:53 PM, November 09, 2005  
Blogger FLAMINGO1 provided this enlightening comment...

Amen, Lula. Amen.

10:13 PM, November 09, 2005  
Blogger Cooter provided this enlightening comment...

Hey y'all. Take it easy on them oil companies. Standard Oil's always been square-dealin with me. I pay em a nickel and they give me my gallon of petro. Every man's entitled to name his price for his wares.

6:25 AM, November 10, 2005  
Blogger PDD provided this enlightening comment...

Eddie,

Take your country back where? To hell?

Pinky,

To answer your two questions:

Very. Very.

7:25 AM, November 10, 2005  
Blogger t_cole provided this enlightening comment...

Forgive the intrusion on what is a hugely enjoyable and educational discourse on free trade and politics for a small bit of human interest info - which may interest you not...

My brother is employed by Exxon - not upper management but one of the grunts who is off-shore every other week while his wife & 2 kids carry on without him at home. He is not the anti-Christ. He lives in South MS - Long Beach - ground zero for Katrina.

Post-Katrina, Exxon immediately gave him and all the other employees he knows a generator and 45 gallons of gas. Liquid gold at that time, in that area. Shortly after, they gave him and his family a 'grant' of $5,000 - survival funds. finally, they paid him for 6 weeks - his regular salary - while he was NOT working - instead cleaning up and taking care of home and family.

FEMA, the Red Cross nor their private home insurance didn't come close to providing them with this type of aide.

The cynics among you may say "There you have it - this generosity has contributed to petrol profits skyrocketing." I doubt it but I am too busy raising three kids to claim I understand the ins and outs of this trade situation.

This HUGE, bloated, CASH-Flush entity provided for my family when no one else could, would or did. As a result, I have bought fuel ONLY from Exxon since then - coasted in on fumes twice - cussing my brother the entire ride. This is what I call gratitude of the heart. For me, this gratitude supersedes all the profiteering, money-grubbing, politico mumbo-jumbo I (regretfully) haven’t been able to keep up with since I had kids.

7:37 AM, November 10, 2005  
Blogger FLAMINGO1 provided this enlightening comment...

Whether your brother works for Exxon or not is not the determinative fact as to whether he is the Anti-Christ. He very well may be - but it isn't tied to his employment with Exxon, you can rest assured of that.

I am not trying to single out Exxon - it is the industry that I think is screwing us. Garrett would argue that they are screwing us because the market will bear the screwing. Whatever...if that is the case, shame on us - we are stupid.

10:19 AM, November 10, 2005  
Blogger PDD provided this enlightening comment...

Sluts are fun. Whores are even funner because they make more money... and do drugs, the expensive kinds.

10:44 AM, November 10, 2005  
Blogger garrett provided this enlightening comment...

There is no shame to be doled out. The situation simply IS. Business is business. Come on. What the hell? You are a sorry excuse for a Viking.

Arguing in the alternative ... if there is shame it is OF COURSE to be borne by the consumer. Consumers can buy petroleum products or not. Notice of course that any individual consumer is not free to buy petroleum products at the price of that particular individual's choosing. But that is again not the fault of the oil companies.

I really don't understand the position you are advocating - at least to the extent you claim to be in favor of free markets or less government intervention.

It makes no sense to me at all. I am hoping you're still just trolling. But I am growing concerned. For you.

10:45 AM, November 10, 2005  
Blogger FLAMINGO1 provided this enlightening comment...

I am simply raging against the machine, Garrett.

And if you care to recall, one of my two original questions was "How stupid are we?" We is the consumer. How long are we going to continue to buy these petroleum products at greatly inflated prices?

We may be even more stupider (see, Psychic, it works!!) than I first thought.

10:59 AM, November 10, 2005  
Blogger garrett provided this enlightening comment...

Well your flock here appears to be confused by you talking out both sides of your mouth. As am I.

Please formulate a public service announcement that clarifies your position on these matters.

Business - fine.
Consumers - fine also, but willing to pay fairly high prices for petroleum products.
Government - turd in the punch bowl.

11:05 AM, November 10, 2005  
Blogger FLAMINGO1 provided this enlightening comment...

I think the finaly analysis should look more like this:

Business - the oil industry sucks and is artificially manipulating the price of petroleum products through market manipulation and price fixing.

Consumer - stupid gluttons gorging themselves on petroleum products while the oil industry laughs all the way to the bank and the environment is destroyed.

Government - turd in the punchbowl and co-conspirator with the oil industry.

11:19 AM, November 10, 2005  
Blogger Jesus Toast provided this enlightening comment...

We pay $1 for a bottle of water. We're pretty stupid.

12:53 PM, November 10, 2005  
Blogger PDD provided this enlightening comment...

My husband is also inclusive to this consumption of petroleum - that wine gum story day after halloween, but they weren't halloween candies, just a really bad habit my husband finds hard to kick. You remember pinky??

The problem with society today is there are too many candies made with petroleum, and our luxury of convenience and variety has made us dumb and not fun, funner, funnest, or more funner.

1:04 PM, November 10, 2005  
Blogger FLAMINGO1 provided this enlightening comment...

Petroleum candy?

By the way, what is in those marshmallow circus peanut things? That ain't marshmallow.

1:21 PM, November 10, 2005  
Blogger PDD provided this enlightening comment...

pork.

1:34 PM, November 10, 2005  
Blogger FLAMINGO1 provided this enlightening comment...

MMMM...pork...

1:54 PM, November 10, 2005  
Blogger Chris provided this enlightening comment...

The people who are so offended by oil profits should go buy stock in ExxonMobil. Welcome to capitalism.

6:28 PM, November 10, 2005  
Blogger FLAMINGO1 provided this enlightening comment...

Increased oil prices impact those unable to invest in oil securities significantly more than the upper middle class.

Besides, I have all my money tied up in pork bellies....mmmmm....pork.

7:10 PM, November 10, 2005  
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