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Old 03-03-2008, 06:59 AM   #31
beala
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They deregulated the power industry and prices went up and continue to do so. No part of the petroleum industry is regulated and you see how that's been going.
The power industry? Are you referring to public utilities? Public utilities and the grain market aren't analogous at all. Utilities are subject to strange things like natural monopolies, while the grain market isn't. Also, I'm not really sure what deregulation you're referring to, or how you've drawn any causation between the two events other than that they happened at the same time. Same goes for your argument about the petroleum industry.

As far as oil prices, the recent increases have nothing to do with a lack of regulation. Middle eastern tensions and natural disasters (ie hurricane Katrina) have limited the supply and increased prices. I'm not sure exactly what you're suggesting, but if the government were to regulate the price at the pump, it would only result in shortages to the consumer. Instead of expensive gas, there would be no gas. Why would any foreign producer of oil sell to the US if the government imposed a price cap? This is all simple econ 101.
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Old 03-03-2008, 07:55 AM   #32
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As far as oil prices, the recent increases have nothing to do with a lack of regulation. Middle eastern tensions and natural disasters (ie hurricane Katrina) have limited the supply and increased prices. I'm not sure exactly what you're suggesting, but if the government were to regulate the price at the pump,
Wrong- Iraq is producing more oil than ever- Oil prices rise because its winter, spring, summer, OJ Simpson is in jail, mars is in retrograde......

Oil is high because they want more profits and America and China are handicapped because we have built our entire infrastructure on oil reliance.

In Alaska they pump the oil out of the ground and then sell it to China- Why not the US? Because they can charge more and make more profit.

Oil prices go up because oil speculators make billions doing that.
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Old 03-03-2008, 08:16 AM   #33
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In Alaska they pump the oil out of the ground and then sell it to China- Why not the US? Because they can charge more and make more profit.
So you're suggesting that prices have risen because consumers in china are willing to pay more? Well, certainly that's true. The superficial explanation is that prices rise because someone is willing to pay more. The more important question is why are they willing to pay more? With these statements, it sounds like you're suggesting it's because of price gouging:
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Oil is high because they want more profits[...]Oil prices go up because oil speculators make billions doing that.
That simply wouldn't make sense. Raising prices in a market as competitive as oil wouldn't benefit anyone (consumer or seller). Firms make the most profit at equilibrium price (ie not price gouging).

Or maybe you're suggesting an increase in demand caused in part by china's high rate of development. I would agree that this could explain it in part, but I still maintain a decrease in supply has something to do with it. Wikipedia: "Helping to fuel these increases are reports from the U.S. Department of Energy and others that show a decline in petroleum reserves, and analysts reporting that petroleum production is at[4][5][6][7] or near full capacity[122][8] [123]. In June 2005, OPEC admitted that they would 'struggle' to pump enough oil to meet pricing pressures for the fourth quarter of that year.[124]"

But really, this discussion is moot because I have yet to hear how regulation could fix this, and how that same logic could be applied to the grain market.
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Old 03-03-2008, 08:57 AM   #34
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So you're suggesting that prices have risen because consumers in china are willing to pay more?
No but exporting oil they dont pay the same taxes- Therefor more $ per barrel goes into the oil companies.

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Raising prices in a market as competitive as oil wouldn't benefit anyone (consumer or seller).

Wrong- Raising prices indeed benefits the seller- They have yet to see a decline in consumption yet their production cost have not increased at all. They used to turn a profit at 30$ a bbl, guess what- They are turning quite a profit at 100$ a bbl.
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Old 03-03-2008, 09:33 AM   #35
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No but exporting oil they dont pay the same taxes- Therefor more $ per barrel goes into the oil companies.
They don't pay the same taxes? Who is "they?" Are you saying oil producers are taxed less in china, so they choose to export more there? Well, this seems an awful lot like an argument for deregulation. If the taxes in the US weren't so high, the supply of oil in the US would increase, and the price would decrease.
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They used to turn a profit at 30$ a bbl, guess what- They are turning quite a profit at 100$ a bbl.
The prices have increased, and so have profits, but it's through no fault of the oil producer's. They are simply selling at the market equilibrium price. Producer's don't decide the price, the market does. If supply has decreased forcing prices up, producer's are helpless to stop it. If you're suggesting that they should simply lower their prices and cut us consumers a break, then you have a very profound misunderstanding of economics. If one altruistic company were to simply lower their price back down to $30 a barrel, demand would quickly out pace supply, and there would be a shortage. That company wouldn't turn as high a profit as others, and they would quickly be put out of business. If all companies were to lower their prices (say, though government price capping), there would be a nationwide shortage, which is also clearly undesirable.
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They have yet to see a decline in consumption yet their production cost have not increased at all.
Yes, you're right. Consumption has, in fact, increased, further justifying the price increase. As far as production costs, that's not the only factor effecting supply.

And I'm still not sure what you're arguing for. Are you arguing for regulation? Against regulation?
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Old 03-03-2008, 09:55 AM   #36
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Im just saying you believe what the oil companies want you to believe.

The inflated prices are synthetic and we are paying for it. If there truly was an issue oil companies would be doing more to find an alternative to oil for thier futur survival instead of bankrolling billions a month.

Exxon makes $75,000 a second in profit. Thats something to think about.

besides this is waaaaaaaay off target.

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Old 03-03-2008, 10:15 AM   #37
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Exxon makes $75,000 a second in profit. Thats something to think about.
Yes, they're making a profit. Is this such an awful thing? I've already explained why it's through no fault of their own.
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If there truly was an issue oil companies would be doing more to find an alternative to oil for thier futur survival instead of bankrolling billions a month.
Ensure their future? Is there reason to believe they'll be going out of business soon if they don't find an alternative to oil? It seems, finding an alternative will reduce their profits. Also, the economics of research is a very strange subject. There's good reason for corporations to leave this sort of work up to the universities. EDIT: One more thing. You seem to presuppose that finding a new energy source is as easy as giving some money to scientists. You then go on to say that because oil companies haven't made a revolutionary breakthrough in energy, they must be up to something. I find that argument very unconvincing.
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Old 03-03-2008, 10:36 AM   #38
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You then go on to say that because oil companies haven't made a revolutionary breakthrough in energy, they must be up to something. I find that argument very unconvincing.
A revolutionary breakthough would be worth 100s of trillions more than oil could ever produce.

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Yes, they're making a profit. Is this such an awful thing?
Its not a bad thing- Its capitalism. However what was thier profit per second when oil was $30 bbl.
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Old 03-03-2008, 04:12 PM   #39
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Originally Posted by beala
Why are you so apologetic for you're ideas? Surely you didn't mean them sarcastically, because they are exactly right. Subsidization of American farming produces inefficiencies that benefit the American farmer at the cost of harming the world market (including us consumers). Also, ideas such as capping the max amount of exports are shortsighted. Econ 101: A cap on exports is the same as a cap on imports (by virtue of the balance of trade, etc). That is, it may reduce the cost of grain, but at the price of hurting importers. Government intervention like that will simply shift the economic pressure. What needs to be done is that we need to face the reality that American farming is horribly inefficient, and a deregulation needs to occur. Tariffs on foreign agriculture need to to be lifted and subsidization of domestic agriculture needs to be put to an end. If this means the end for American farming, so be it. Preserving it simply comes at too high a cost.
I have to argue strongly against this statement. American farming is extremely efficient. More so than just about any where else which is why we can export so many agricultural products despite our very high labor costs. Like was mentioned in a post above, the costs of agricultural products have been decreasing for decades if you adjust for the effect of inflation. The only reason farmers are still in business is because then have increased productivity. The government price supports and assistance helps to maintain the agriculture in the states. Nearly all governments provide similar assistance for local farmers to prevent dependency of basic staples on foreign countries. The government price controls work to reduce the big swings in commodity prices and many programs have the long term effect of keeping prices low by keeping farms in business.
A doubling in milk prices or a tripling in wheat prices only brings the prices back to levels they were 10 or 20 years ago. The prices are not "historic" highs once you adjust for inflation.

Craig
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Old 03-03-2008, 04:33 PM   #40
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Producer's don't decide the price, the market does. If supply has decreased forcing prices up, producer's are helpless to stop it.
In your Economic analysis, you are supposing that the oil market is a perfect competition market. The main condition that isn't met is:
Atomicity: Each producer and consumer is too small to affect the market, which is NOT the case in the oil market, because first of OPEC act as one... and there are what, five huge companies who buy the oil and sell it in their domestic markets? (Shell, Exxon, etc.) Thus, each producer and each buyer are big enough to affect the market.

And now, before you come and defend such and such, I know, the FBI et al are ALWAYS watching the leaders of the different oil companies, to make sure there is no price fixing. I believe the phenomenon is "unconscious parallelism".
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