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Gas Prices are Lower Because American's Can't Afford Them
For the past decade we've been told the reason for high gas prices is SUPPLY and DEMAND. We now know this isn't true.
It was reported recently that the reason oil prices have dropped so dramatically since the Bailout was introduced is because Oil Producers decided the BULK of customers can't AFFORD to pay those high prices anymore and if they don't want to lose the billions in profits they've gained over the past 8 years, they'd best lower the prices FAST.
In other words folks -- it has nothing to do with demand or supply available -- it has everything to do with how much money you have on hand.
I wish I could remember the lady's name that reported this fact about oil producers deciding to lower prices for customers to keep buying but I can't. I can however, remember it was on Foxnews.
It was reported recently that the reason oil prices have dropped so dramatically since the Bailout was introduced is because Oil Producers decided the BULK of customers can't AFFORD to pay those high prices anymore and if they don't want to lose the billions in profits they've gained over the past 8 years, they'd best lower the prices FAST.
In other words folks -- it has nothing to do with demand or supply available -- it has everything to do with how much money you have on hand.
I wish I could remember the lady's name that reported this fact about oil producers deciding to lower prices for customers to keep buying but I can't. I can however, remember it was on Foxnews.
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I'm an economic dunce, but common sense tells me they've screwed the pooch already. Many of us have found new, better ways of travelling to work. For example, I found a public transit commute that costs a mere fifth of what driving the same distance costs. Additionally we've begun doing all of our grocery shopping on a single day, in a single trip. Even if gas prices went back down considerably, I probably won't revert from my new habits, and I imagine I'm not alone.
October 14, 2008 9:31 AM | Reply | Permalink
Actually that is the way supply and demand works. If people can't afford something the demand for it is lower, so the price needs to be lower before consumers will buy it. People do drive less and more slowly when gas prices are high; when the price goes back down they use more of it.
October 14, 2008 10:11 AM | Reply | Permalink
Of course they do Mahatma -- but, the Demand has dropped by almost 200% in just the past 4 wks.
Since the bailout that's approximately how much gas prices have dropped in my neighborhood. Sorry, but I still drive to work just like I did during the summer. I bet others do too. Demand DROPPED during the summer but prices INCREASED.
What's the cause of that? War? We're still there. Iran? Still got that problem. North Korea? Still there.
So what COULD it be, other then money is no longer available....more so than during the summer.
October 14, 2008 10:52 AM | Reply | Permalink
coonsey: we were told it was because supplies were tight owing to hurricanes, etc. and worldwide demand was up, esp. in China. GOK what the true reason is. It's not something I follow that closely, but gas prices are always used as an example of supply and demand in Econ101 (which I took in the now far-distant past).
October 14, 2008 11:08 AM | Reply | Permalink
Maybe it is stating the obvious, but here's a quote: It is in every oil supplier's best interest for prices to go up. Oil is a finite commodity. The world will eventually become more efficient and develop alternative energy sources. In the meantime, suppliers want to squeeze out as much profit as possible from their limited resources. from this artice in Time magazine on oil futures that was pretty interesting.
Alternative energy sources baby! ... Hmm, doesn't have the right ring to it.
October 14, 2008 11:37 AM | Reply | Permalink
Just saw a report on CNN that airlines don't plan on lowering ticket prices or eliminating any of the stupid extra fees even though they cited gas prices as the reason for the increase.
I can't wait for AA, Delta, United, Northwest, et. al, to all either fold or be forced to adopt the Southwest business model. I'm sick to death of these whining execs who think it's okay to bend us over whenever they need to boost profits.
October 14, 2008 11:52 AM | Reply | Permalink