Secret Squirrel has turned his attention to the massive and ever increasing cost of gasoline at the pumps,gas prices.Squirrel has pondered things from an economic standpoint, in an attempt to fathom the reason for the ever increasing price of gasoline.So here, as a firm basis,to establish a foundation, let us review of the Law of Supply and and The Law of Demand.
The Law of Supply
states that at higher prices, producers are willing to offer more products for sale than at lower prices
states that the supply increases as prices increase and decreases as prices decrease
states that those already in business will try to increase productions as a way of increasing profits
The Law of Demand
states that people will buy more of a product at a lower price than at a higher price, if nothing changes
states that at a lower price, more people can afford to buy more goods and more of an item more frequently, than they can at a higher price
states that at lower prices, people tend to buy some goods as a substitute for others more expensive
In short ,the law of supply and the law of demand,as stated above, are at odds.The law of supply is placed in effect by industry,and the law of demand,by that of,we,the people,the consumer. Misfortunetly, with respect to gasoline prices, the law of industry is at play, a monopolistic industry, and industry which actively engages in price fixing to their advantage, and having the supply, and knowing that there is a fixed,at the very worst, or growing,at the very best, demand and requirement, they,the oil companies, can effectively charge pretty much what they wish. While they cannot grandly increase prices, they have succeeded in affecting a great upwards influence in the price of gasoline at the pumps, with a continuing series of price increases, moderated, from time to time, with slight price decreases on occasion to assuage the general public,and then initiating a general rise in prices once more. So from 1970 where a fillup would cost $40, it now costs, $110.
No surprise really, in terms of economics, though it surprises you, at the pump on occasion. You see, what can you,the consumer of said commodity, gasoline, do about it? Nothing. And they know it, and so the industry reaps huge profits. Government encourages them actively,refuses to regulate them,nor prices, the oil companies here referred to, giving them certain tax breaks
as it were, subsidies as it is, in short,throws yet more money at them, to what end and purpose, nobody is really sure of in light of the ever increasing stated profits of said companies. Government is not disturbed by ever increasing profits raked in by the oil companies,as profits are a good thing, investors are happy reaping more money,all's well, and never mind that said increases in profits are realized at the fuel pumps, from the consumer.The consumer,at the pump, must pay the piper, the
bagpiper, not to play the damn sawing screetching things.The law of supply AND demand predicts that the price level will move toward the point that equalizes quantities supplied and demanded.....however this does not work in practice with respect to oil prices.We notice that oil companies raise their prices in unison, and that said price increases and fixed prices of sale at each
different oil company,vary in the slightest a cent or at the most, a whole two.
Wonderful isn't it.Looking for a whole nickel,unlikely to find it. A lousy dime perhaps?Never going to see it.We also notice that come the holidays,certain specific ones, say Thanksgiving,for example,the price is jacked up for the Holiday,a few cents, and then afterwards dropped back.Why?What is the reason for it all?Well,you see,The USA consumes 400 million gallons of gasoline every day. This red hot demand for gas has pushed gas prices to record highs,not lows.They make more charging more for the same or any increased quantity, they make less if less is consumed, and would then also compensate with increased prices at the pump.There is no beating the system for the consumer.In keeping with appearances,there are price differences between the states themselves, BUT, said prices within any particular state, vary a cent or two here or there.Prices constantly rise, oil company profits constantly increase,and are stated as such, NEVER falling,and the federal government refuses to regulate in any way shape nor form, an active participant in this huge monopolistic, price fixing corporate..............rip off..........gouging......usury,call it what you will.......all with your government's approval.
Previously all this was explained by various means, price increases of supply in the middle east and then countered with a statement by the President such as,"America is not dependent on foreign oil."So then comes a Lowering of oil availability in the middle east, but then America is oil self-sufficient, so on that basis prices increase just the same,and strangely there is no resultant shortage of gasoline.Stated prices of oil by the barrel are stated to have dropped, but prices at the pump don't reflect the change. Onwards and upwards go the prices,with no succor,no respite for the consumer,no mercy shown the consumer, and no governance by the government and no sane or logical explanation for the consumer beyond the most logical one indicated, the law of greed,unregulated greed, enforced on a captive audience.It figures, in 1960 the price of gasoline was 30cents a gallon...........in 2008 $3.60 a gallon..........in 2011 $3.81...........ever upwards,never downwards......the oil companies rule the government, and Jumpin' Jack Flash rules the gas,gas,gas.
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