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Re: Bugeye Group..... Re: [midgetsprite] SHELL RANT

To: <Spridgets@autox.team.net>
Subject: Re: Bugeye Group..... Re: [midgetsprite] SHELL RANT
Date: Mon, 6 Feb 2006 19:24:06 -0600
I don't think the usual rules of supply and demand apply to the oil
industry.  Mostly this is because there is no chance of supply increasing
enough to reduce prices.  The producers all sell as much as they can make.
The usual reason for a producer to reduce their prices is to compete with
the other producers, gaining more market share and thus higher prices.  This
won't work with the oil industry because they can't get more product to
sell.  So they just charge whatever they want, within limits.  If Exxon
wanted to charge $10 a gallon, ultimately people would have to buy from them
because the other producers would run out and close their stations.  The
other producers would catch on and raise their prices.  At some point in
time there would be a big uproar, congress would start meddling, and who
knows what would happen.

Right now we are lucky that the oil producers are content with only 10%
profit.  If somebody ever decided a way to up the ante by increasing
production, then we could get to real supply and demand.  There would be
competition, more refineries would be built, and prices would go down.

> The law of supply and demand is what dictates prices.

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