4 ms·

What is being to address the price gouging by companies? Oil and gas companies are seeing record profits, how can it be just inflation that costs are going up?

Victerius 4y ago
The free market normally takes care of price gouging by drawing in new entrants. If the barriers to entry are too high, then price controls or nationalization.
- notch656a 4y ago
  >If the barriers to entry are too high, then price controls or nationalization. Or remove the barriers, like regulation/licensing/taxation.
  - nHD93pTC78g6wvE 4y ago
    The barrier is capital expenditure, not regulation/licensing/taxation. Besides, any competitor entering the market would be expected to make just as much or more profit as the existing companies. Which means they would price their product just the same as the existing companies.
    - notch656a 4y ago
      >The barrier is capital expenditure, not regulation/licensing/taxation. I don't think you can just decide by fiat that things like regulation and licensing aren't barriers. Taxi medallions before Uber comes to mind. >Besides, any competitor entering the market would be expected to make just as much or more profit as the existing companies You also cannot just decide by fiat that adding more competitors mean the same amount or more profit. I don't think it is a very popular economic opinion to believe that adding more competition raises the profit. I do not understand why any rational competitor would expect their profit would be higher with more competition, unless they have some kind of edge.
JamesBarney 4y ago
There is really only one organization that price fixes oil and it's OPEC. Any individual oil and gas company has literally zero influence on the price of oil and gas.
- LetsGetTechnicl 4y ago
  That can't be true if the price of a gallon of gas varies even between gas stations in the same area. Sure there's local, state and national taxes and other fees, but it's clear that gas companies are adding on top of their costs otherwise they wouldn't be turning a profit. "Inflation" is also the perfect cover to raise prices, and it's true of other industries
  - JamesBarney 4y ago
    There is the argument they are price fixing which is not true. There is an argument they are turning a profit. Which is true. But when oil prices are low they lose money hand over fist and lay off most of their workforce. They have to make enough money in the good years to cover the bad years.
deleted 4y ago
[deleted]
ta8645 4y ago
How exactly can a company price-gouge in a free market? First, nobody is compelled to buy anything from them. Second, anyone else is allowed to become a supplier, and easily make a fortune by offering a cheaper price. And the only thing that prevents the above from being true, is oppressive government policies that undermine the freemarket, which are sold to the people as "for their protection".
- zamalek 4y ago
  Unfortunately the (usually imported) gasoline car is somehow heavily tied into the image of the American dream. While I am no fan of Tesla (mostly because of right to repair), it baffles me that a patriot would choose an imported car that uses Russian gasoline over an American-designed car that uses American-produced energy. While it is definitively a free market, it isn't in practicality.
  - lazerpants 4y ago
    Most Americans are using gasoline produced from crude drilled by Americans, Canadians, workers in Saudi Arabia, and Mexicans, that has been refined by Americans, in America, and supporting jobs in those countries. Russia accounted for only 3% of total crude imports before the war. Yes, the environmental impact is negative, but lets not pretend the relatively high wages in oil and gas jobs doesn't help American workers.
- stocknoob 4y ago
  Cartels and predatory monopolies can exist in a free market. It’s not as simple as conjuring up companies with billions of operational supply chain investments into thin air. As Tesla likes to point out, they are one of 2 car companies formed in the last century.
- nHD93pTC78g6wvE 4y ago
  "nobody is compelled to buy anything from them"? Really? How are you going to get to work when your work only pays you enough to live 10+ miles away and there's no public transit (i.e. the vast, vast majority of people in the US)? Or should they just not have a job (and thus no shelter or food either)? The free market is not free. It's a myth. It's a lie. (And before you say Tesla or some other electric car, remember that they are a luxury and priced as such, not to mention that most Americans can't even charge them at home.)

Victerius 4y ago

The free market normally takes care of price gouging by drawing in new entrants. If the barriers to entry are too high, then price controls or nationalization.

notch656a 4y ago
>If the barriers to entry are too high, then price controls or nationalization. Or remove the barriers, like regulation/licensing/taxation.
- nHD93pTC78g6wvE 4y ago
  The barrier is capital expenditure, not regulation/licensing/taxation. Besides, any competitor entering the market would be expected to make just as much or more profit as the existing companies. Which means they would price their product just the same as the existing companies.
  - notch656a 4y ago
    >The barrier is capital expenditure, not regulation/licensing/taxation. I don't think you can just decide by fiat that things like regulation and licensing aren't barriers. Taxi medallions before Uber comes to mind. >Besides, any competitor entering the market would be expected to make just as much or more profit as the existing companies You also cannot just decide by fiat that adding more competitors mean the same amount or more profit. I don't think it is a very popular economic opinion to believe that adding more competition raises the profit. I do not understand why any rational competitor would expect their profit would be higher with more competition, unless they have some kind of edge.

JamesBarney 4y ago

There is really only one organization that price fixes oil and it's OPEC. Any individual oil and gas company has literally zero influence on the price of oil and gas.

LetsGetTechnicl 4y ago
That can't be true if the price of a gallon of gas varies even between gas stations in the same area. Sure there's local, state and national taxes and other fees, but it's clear that gas companies are adding on top of their costs otherwise they wouldn't be turning a profit. "Inflation" is also the perfect cover to raise prices, and it's true of other industries
- JamesBarney 4y ago
  There is the argument they are price fixing which is not true. There is an argument they are turning a profit. Which is true. But when oil prices are low they lose money hand over fist and lay off most of their workforce. They have to make enough money in the good years to cover the bad years.

deleted 4y ago

[deleted]

ta8645 4y ago

How exactly can a company price-gouge in a free market? First, nobody is compelled to buy anything from them. Second, anyone else is allowed to become a supplier, and easily make a fortune by offering a cheaper price. And the only thing that prevents the above from being true, is oppressive government policies that undermine the freemarket, which are sold to the people as "for their protection".

zamalek 4y ago
Unfortunately the (usually imported) gasoline car is somehow heavily tied into the image of the American dream. While I am no fan of Tesla (mostly because of right to repair), it baffles me that a patriot would choose an imported car that uses Russian gasoline over an American-designed car that uses American-produced energy. While it is definitively a free market, it isn't in practicality.
- lazerpants 4y ago
  Most Americans are using gasoline produced from crude drilled by Americans, Canadians, workers in Saudi Arabia, and Mexicans, that has been refined by Americans, in America, and supporting jobs in those countries. Russia accounted for only 3% of total crude imports before the war. Yes, the environmental impact is negative, but lets not pretend the relatively high wages in oil and gas jobs doesn't help American workers.
stocknoob 4y ago
Cartels and predatory monopolies can exist in a free market. It’s not as simple as conjuring up companies with billions of operational supply chain investments into thin air. As Tesla likes to point out, they are one of 2 car companies formed in the last century.
nHD93pTC78g6wvE 4y ago
"nobody is compelled to buy anything from them"? Really? How are you going to get to work when your work only pays you enough to live 10+ miles away and there's no public transit (i.e. the vast, vast majority of people in the US)? Or should they just not have a job (and thus no shelter or food either)? The free market is not free. It's a myth. It's a lie. (And before you say Tesla or some other electric car, remember that they are a luxury and priced as such, not to mention that most Americans can't even charge them at home.)