5 ms·

These articles are just nuts. I work in the lumber manufacturing business. We always sell to the highest bidder. We sell to the highest bidder when prices are h

These articles are just nuts. I work in the lumber manufacturing business. We always sell to the highest bidder. We sell to the highest bidder when prices are high and we sell to the highest bidder when prices are low. How else would we do it? Would we tell the highest bidder “no” and sell our lumber for less? If we did, to whom would we sell? Would we hold a lottery or something? If we did that, we’d sell out immediately and there would be shortages. This narrative of price gouging has taken hold, and Biden very explicitly has accused American corporations of being greedy. But at least for commodities like oil and lumber, and I have to believe most other products, you’re always going to sell the product for the most the market will bear. Prices go down when people stop purchasing (which reliably happens every time prices go up too much). This is all very basic and at least in my business it’s all definitionally true.

jhallenworld 4y ago
Commodities are sold in an auctions like this, but most products in general are not. The selling company has to actively raise the price. In the case of commodities, in a free market, greed should lead to increased production. But oil is at least partially controlled by a cartel. The cartel knows that the price of gas directly influences the US election, so if they don't like the guy in office, they just limit production. The oil company CEOs seem to want to be coddled. They feel bad that there is emphasis placed on solar and wind, so they refuse to increase production.
- legitster 4y ago
  2 things: - It's hilarious that oil companies are now being maligned for not producing enough oil. Damned if you do, damned if you don't I guess. - Oil is something that you can't just turn on or off. Especially when it comes to refining it. US diesel production, for example, was tooled to rely on heavy, sour crude from the Balkans that we no longer get.
  - jhallenworld 4y ago
    >Damned if you do, damned if you don't I guess Hurts them in the long run- the higher the price, the more heat pumps, electric vehicles and solar panels sold. https://www.sulpu.fi/record-high-sales-growth-of-90-recorded-for-heat-pumps-in-the-first-part-of-the-year/ https://www.sulpu.fi/record-high-sales-growth-of-90-recorded... But in the short run, hurts our democracy: https://www.nytimes.com/2022/10/20/opinion/will-gas-prices-doom-democracy.html https://www.nytimes.com/2022/10/20/opinion/will-gas-prices-d...
- hcurtiss 4y ago
  At least in the US, oil production is most certainly a competitive commodity market. Like lumber, buyers are constantly seeking the lowest price and sellers are seeking the highest price. Always, every second. You can see this on the commodities boards. The question of supply is a separate question. No American major is curtailing production to increase price. None of them have that much market leverage. I assure you, if the oil companies (both majors and juniors) thought the capex would pay, they’d make the investment. But two years of high prices cannot justify the cost of a new oil rig with an eight year projected payback. Particularly when the party in power is explicitly promising to outlaw their business model. That means when demand surges as we saw the last couple years, there will be little surge capacity to respond and prices will increase.
  - jhallenworld 4y ago
    >the party in power is explicitly promising to outlaw their business model Citation needed. This is the straw-man argument from the party out of power.
    - hcurtiss 4y ago
      Biden has repeatedly said his intention is to transition our economy away from fossil fuels. If you were an oil company executive, how would you read this page? https://joebiden.com/9-key-elements-of-joe-bidens-plan-for-a-clean-energy-revolution/# https://joebiden.com/9-key-elements-of-joe-bidens-plan-for-a...
      - jhallenworld 4y ago
        The closest thing in this text to a ban is "The legislation must require polluters to bear the full cost of the carbon pollution they are emitting. " This is not a ban, and sounds pretty reasonable to me.

jhallenworld 4y ago

Commodities are sold in an auctions like this, but most products in general are not. The selling company has to actively raise the price. In the case of commodities, in a free market, greed should lead to increased production. But oil is at least partially controlled by a cartel. The cartel knows that the price of gas directly influences the US election, so if they don't like the guy in office, they just limit production. The oil company CEOs seem to want to be coddled. They feel bad that there is emphasis placed on solar and wind, so they refuse to increase production.

legitster 4y ago
2 things: - It's hilarious that oil companies are now being maligned for not producing enough oil. Damned if you do, damned if you don't I guess. - Oil is something that you can't just turn on or off. Especially when it comes to refining it. US diesel production, for example, was tooled to rely on heavy, sour crude from the Balkans that we no longer get.
- jhallenworld 4y ago
  >Damned if you do, damned if you don't I guess Hurts them in the long run- the higher the price, the more heat pumps, electric vehicles and solar panels sold. https://www.sulpu.fi/record-high-sales-growth-of-90-recorded-for-heat-pumps-in-the-first-part-of-the-year/ https://www.sulpu.fi/record-high-sales-growth-of-90-recorded... But in the short run, hurts our democracy: https://www.nytimes.com/2022/10/20/opinion/will-gas-prices-doom-democracy.html https://www.nytimes.com/2022/10/20/opinion/will-gas-prices-d...
hcurtiss 4y ago
At least in the US, oil production is most certainly a competitive commodity market. Like lumber, buyers are constantly seeking the lowest price and sellers are seeking the highest price. Always, every second. You can see this on the commodities boards. The question of supply is a separate question. No American major is curtailing production to increase price. None of them have that much market leverage. I assure you, if the oil companies (both majors and juniors) thought the capex would pay, they’d make the investment. But two years of high prices cannot justify the cost of a new oil rig with an eight year projected payback. Particularly when the party in power is explicitly promising to outlaw their business model. That means when demand surges as we saw the last couple years, there will be little surge capacity to respond and prices will increase.
- jhallenworld 4y ago
  >the party in power is explicitly promising to outlaw their business model Citation needed. This is the straw-man argument from the party out of power.
  - hcurtiss 4y ago
    Biden has repeatedly said his intention is to transition our economy away from fossil fuels. If you were an oil company executive, how would you read this page? https://joebiden.com/9-key-elements-of-joe-bidens-plan-for-a-clean-energy-revolution/# https://joebiden.com/9-key-elements-of-joe-bidens-plan-for-a...
    - jhallenworld 4y ago
      The closest thing in this text to a ban is "The legislation must require polluters to bear the full cost of the carbon pollution they are emitting. " This is not a ban, and sounds pretty reasonable to me.