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Gas prices solution? (1 Viewer)

MikeAlletto

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Why do people believe posts like this? It reads like a form letter, the only place it resides is in email land. Put just those 2 things together and its easy to assume urban legend. I got this sent to my email this morning, it must be making the rounds today.
 

Ashley Seymour

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Monopoly power is often defined as an ability to reduce output and raise price. A monopolist can be a single individual or group of individuals. That exactly defines OPEC. They get together every now and then to decide what to charge in the following months.

Charlie, you start off ok but then you say:

The only reason why gas price hasn't gone up the roof is because OPEC, as a group, does not want to do it and not because of the operation of a competitive market.

OPEC can get together all they want and say they have agreed on a price, but the fact that they are not charging the monopoly price is an indication that they do not have monopoly power. The competitive market forces arise when the various members of the OPEC cartel give lip service to limiting production, but then pump and sell above their quota.

A true monopolist would continue to raise the price of a barrel of oil which would result in the reduction of output and in increase in revenue. The point at which revenue would begin to fall because the price was higher than the consumer would or could afford to pay would start to reduce revenue. No further increase in price would benefit the monopolist.

OPEC is not at the point where they will see revenue fall off by raising the price of oil.

Lions eat wildebeasts because that is what lions do. OPEC derives revenue by selling oil for as much as they can. That is what OPEC does.

If gas costs too much and I pay it, then I am the fool.

At least in the 1970's the government could reduce the impact of oil increases by inflating the economy. Or was it that the oil companies raised prices to offset the the inflation going on in the world? I have my opinion, but that is for another thread.
 

Danny R

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This is the first time I've ever seen the price reach and then exceed $1.50 here in Georgia

Sams Club, Mall of Georgia: $1.36 (member price) last week. Usually the member price is always 5 cents or so cheaper than the QT and Speedways down the street, which have the cheapest gas in the city.

$0.05 saved each gallon X 11 gallons per fillup X 1.5 fillups per week X 52 weeks per year = $42.90. More than pays for the $25 membership each year.
 

Thomas H G

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OPEC can get together all they want and say they have agreed on a price, but the fact that they are not charging the monopoly price is an indication that they do not have monopoly power. The competitive market forces arise when the various members of the OPEC cartel give lip service to limiting production, but then pump and sell above their quota.

A true monopolist would continue to raise the price of a barrel of oil which would result in the reduction of output and in increase in revenue. The point at which revenue would begin to fall because the price was higher than the consumer would or could afford to pay would start to reduce revenue. No further increase in price would benefit the monopolist.
The reason their prices don't go throug the roof is cause the US Govt won't let them get outta hand.
 

TerryS

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Everything I've always read said that OPEC likes to keep prices right around $30/barrel. Any more than that and people will drastically curtail their use of gas, causing decreased revenues overall. Any less than that and they are simply wasting an opportunity to make more money.

The only way to regulate the price of oil is through production. Higher production causes increased supply and lower prices. Lower production causes less demand and higher prices. The game OPEC plays is to constantly re-adjust production limits of all member countries so that demand evens out at $30.

Prices spike during the threat of war because the market gets scared thinking that the middle east supply is going to be cut off, thus decreasing supply.

So once again, OPEC does not set a price, the market does. OPEC simply tries to manipulate market conditions through their near total control of the supply.
 

Ashley Seymour

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Everything I've always read said that OPEC likes to keep prices right around $30/barrel. Any more than that and people will drastically curtail their use of gas, causing decreased revenues overall. Any less than that and they are simply wasting an opportunity to make more money.

All consumers of oil products would love to believe this, but I fear that the demand is so inelastic that prices could go up 10% per year and in 2010 we would be pissed about paying $60 per barrel, but we would do it none the less. That is why I don't think OPEC has full monopoly power. There is a lot of room on the upside for prices.

The sad fact is that we wont do anything untill the oil prices increase to much higher levels which will spur us to find alternatives to our profligate use of gas.
 

Wayne Bundrick

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Sams Club, Mall of Georgia: $1.36 (member price) last week. Usually the member price is always 5 cents or so cheaper than the QT and Speedways down the street, which have the cheapest gas in the city.

$0.05 saved each gallon X 11 gallons per fillup X 1.5 fillups per week X 52 weeks per year = $42.90. More than pays for the $25 membership each year.
I'd have to burn half a tank just to get to the Mall of Georgia and another half a tank to get back.

Besides, I'm not keen on buying gas from Wal-Mart. OPEC ain't got nothing on Wal-Mart's heavy-handed business practices.
 

Dheiner

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The reason OPEC maintains prices where they are is to keep it more profitable for others to buy from them, rather than exploit alternative fossil fuel sources. If they allow prices to go too high, oil from shale becomes more economical than buying from them. In addition, exploring for other new sources would have a better return on investment if the price of crude went up, and the last thing OPEC wants is new fields being found.
 

Malcolm R

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If you think US prices are high, I'm sure some of our international friends can chime in with amounts that will make you feel much better. :wink:

I just read somewhere that the Canadian costs are about $3.89/gal. And I believe Europe pays over $5/gal. in some countries.
 

Danny R

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I'd have to burn half a tank just to get to the Mall of Georgia and another half a tank to get back.

There are Sam's Clubs all over the region. Many of them have gas stations, and the prices are usually about 5 cents lower than the surrounding area.
 

MarkHastings

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There are Sam's Clubs all over the region. Many of them have gas stations, and the prices are usually about 5 cents lower than the surrounding area.
Sure you save 5 cents a gallon, but if you own your car (not a lease), you'll be doing a LOT of damage to your engine. There's a reason why cheap gas is cheap.

Texaco is one of the most expensive gases, but it's good gas...especially if you have an older car. My old chevy's engine used to knock horribly until I started going to Texaco. In fact, my friends grandfather used to own a Texaco and he said that the guy who owned the Mobile station down the road would go to his Texaco station for gas ;) Think about that.
 

Todd Hochard

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There's a reason why cheap gas is cheap.
I don't think there's much to that urban myth anymore.

1. Much of the gas you'll find at places like Sam's, Costco, Racetrack, etc. is hauled in from brand-name terminals.
2. Today's engine management systems have very tight control over the combustion, and can (and do) adjust for minor variances in fuel quality.

Truth be told, your best place to buy gas, is the station that goes through the most. The octane will be much more consistent, as the lighter hydrocarbons are more likely to be present.

I've used all different types of gas, and I've built, and subsequently torn down, lots of engines over the years. I can't say that brand of fuel has ever made a difference. I have a '95 Accord EX with 117K miles, that has received the cheapest 87 octane I can find since day one (I bought it new), and the engine, quite literally, runs like the day I bought it.

Todd
 

Wayne Bundrick

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I'm not sure if my nearest Sam's Club has gas pumps, but I'm still not going to buy gas from the Wal-Mart corporation.
 

ChadM

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I think the thing you need to be upset about in regards to gas prices is that (at least in NC) about 40 cents per gallon goes to uncle sam. IMHO, that makes the gas portion look like a bargain.

I do not really drive that much but when I do think about paying all that tax it makes me angry.
 

Neil Joseph

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I just read somewhere that the Canadian costs are about $3.89/gal
With an exchange rate of 1.55:1, and with 1 US gallon = 3.785412 litres, and with pricing in Toronto at (cdn) 0.82c/L....

82/1.55 = (US)52.9c/litre

52.9x3.785412 = US$2.00/gallon
 

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