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> I'm surprised by how short termed is the strategy to actually keep up with 'market' prices. It's supply and demand in action. Each oil company has limited ca

> I'm surprised by how short termed is the strategy to actually keep up with 'market' prices. It's supply and demand in action. Each oil company has limited capacity of production and not much flexibility to increase it in short term. As part of the supply is no longer available, there is less oil available in the market. The market mechanism drives the price up to a level where supply and demand are in balance. So the migration of oil consumers to alternatives is exactly what's supposed to happen in this case. Moreover, a single company does not have a real choice to sell for cheap. First everyone would choose this vendor for their oil needs. But as their stock and production is limited, they would soon run out of oil to sell. Even a cartel or government decision to lower the price does not cut it, because it kills the demand side incentive to find alternatives. Then you'd be in a situation where oil is cheap, but not available.

makomk 4y ago
Yeah, it's just that people are unlikely to realise this because the British press has spent the last year or so lying about this for both partisan reasons (most of them hate the party currently in power) and environmentalist ones (there's been a huge campaign to block new fossil fuel production in order to fight global warming which relies on convincing people that the only reason governments haven't done so is because it'd hurt fossil fuel company profits - admitting that it'd actually increase their profits and make ordinary people worse off would get in the way of that).
- ndsipa_pomu 4y ago
  That's curious as most of the British press fawn over the Tories and come up with excuses for their various failures. Even just recently, the Telegraph published Liz Truss' explanation of why her ideas weren't the problem with her failed premiership - she blames the left-wing economic establishment. Also, it doesn't explain why the plan to help with elevated fuel prices involved borrowing money to pay the companies rather than trying to windfall tax them so that their profits aren't so excessive.
  - makomk 4y ago
    Actually, in a way it does. The idea that the reason the government's plan required borrowing so much money was because they'd refused to impose a proper windfall tax was a lie by the opposition Labour party (that was repeated unchallenged by most of the media, including the BBC): https://www.channel4.com/news/factcheck/factcheck-labour-keeps-repeating-misleading-claim-on-energy-windfall-tax https://www.channel4.com/news/factcheck/factcheck-labour-kee... There's just not enough money there. The actual reason that Labour's plan could be mostly funded from windfall taxes was much more cynical: it ended in April back when energy prices were expected to be even higher then, whilst the government plan extended for two years and cost substantially more as a result. It couldn't just be extended for longer either because a huge chunk of the money came from backdating windfall taxes as far as possible. This worked for Labour because the media was willing to ignore what this would actually mean for consumers - something they didn't do when the Government inevitably caved and did the same thing themselves. Of course, now that April is coming Rachel Reeves and other Labour politicians are claiming that the reason energy prices are going up is because the Tories refused to impose proper windfall taxes and of course Labour would keep the cap past then, and the BBC and others are repeating that claim unchallenged too.
    - ndsipa_pomu 4y ago
      The issue is more likely to do with the investment "loophole" > Companies can reduce their payments if they invest capital in new production in the North Sea – covering everything from hiring vessels and rigs to engineering contracts. https://www.theguardian.com/business/2023/feb/02/why-is-shells-uk-windfall-tax-payment-so-low https://www.theguardian.com/business/2023/feb/02/why-is-shel... I don't know why you're going on about Labour - how are they relevant?
      - makomk 4y ago
        The whole idea that this could all have been funded from a windfall tax pretty much came from Labour, which is how they're relevant. Also, the fact check I linked to specifically addressed the "investment loophole" - closing it's not even close to enough money. The claim that the price cap could be funded from windfall taxes really, heavily relied on Labour playing sneaky tricks with ending their proposed price cap in April and the media not calling them out on it (along with other dodgy accounting tricks, and more recently them pointing to Shell's global profits as proof the existing windfall tax isn't aggressive enough even though they only proposed to tax UK profits).
hinata08 4y ago
>a single company does not have a real choice to sell for cheap. First everyone would choose this vendor for their oil needs. But as their stock and production is limited, they would soon run out of oil to sell. that's exactly a publicity stunt that made Total, in France, for a few weeks after their huge profits hit the news. It turned out to be beneficial for them : It improved their image among citizens. And they avoided that tax on extra profits, that BP will have to pay in the UK. They even had news credit for this. After that stunt, they could go to the media and show everything they were 'doing' for industries, consumers, and investments against climate change. Now the gas is back to expensive levels. But voters got gradually used to it, demand didn't break, and Total still dodged the tax and escaped more regulation. BP used high oil prices to do stock buyback, Total used it to build their image as a 'socially responsible' and stable company. (Btw, the shortage of fuel happened during strikes and other defiance on the government. So Total got away with being dry some of the time. The government somehow ended up being blamed for that.) Now choose where you want to invest. It's fully up to your strategy.

makomk 4y ago

Yeah, it's just that people are unlikely to realise this because the British press has spent the last year or so lying about this for both partisan reasons (most of them hate the party currently in power) and environmentalist ones (there's been a huge campaign to block new fossil fuel production in order to fight global warming which relies on convincing people that the only reason governments haven't done so is because it'd hurt fossil fuel company profits - admitting that it'd actually increase their profits and make ordinary people worse off would get in the way of that).

ndsipa_pomu 4y ago
That's curious as most of the British press fawn over the Tories and come up with excuses for their various failures. Even just recently, the Telegraph published Liz Truss' explanation of why her ideas weren't the problem with her failed premiership - she blames the left-wing economic establishment. Also, it doesn't explain why the plan to help with elevated fuel prices involved borrowing money to pay the companies rather than trying to windfall tax them so that their profits aren't so excessive.
- makomk 4y ago
  Actually, in a way it does. The idea that the reason the government's plan required borrowing so much money was because they'd refused to impose a proper windfall tax was a lie by the opposition Labour party (that was repeated unchallenged by most of the media, including the BBC): https://www.channel4.com/news/factcheck/factcheck-labour-keeps-repeating-misleading-claim-on-energy-windfall-tax https://www.channel4.com/news/factcheck/factcheck-labour-kee... There's just not enough money there. The actual reason that Labour's plan could be mostly funded from windfall taxes was much more cynical: it ended in April back when energy prices were expected to be even higher then, whilst the government plan extended for two years and cost substantially more as a result. It couldn't just be extended for longer either because a huge chunk of the money came from backdating windfall taxes as far as possible. This worked for Labour because the media was willing to ignore what this would actually mean for consumers - something they didn't do when the Government inevitably caved and did the same thing themselves. Of course, now that April is coming Rachel Reeves and other Labour politicians are claiming that the reason energy prices are going up is because the Tories refused to impose proper windfall taxes and of course Labour would keep the cap past then, and the BBC and others are repeating that claim unchallenged too.
  - ndsipa_pomu 4y ago
    The issue is more likely to do with the investment "loophole" > Companies can reduce their payments if they invest capital in new production in the North Sea – covering everything from hiring vessels and rigs to engineering contracts. https://www.theguardian.com/business/2023/feb/02/why-is-shells-uk-windfall-tax-payment-so-low https://www.theguardian.com/business/2023/feb/02/why-is-shel... I don't know why you're going on about Labour - how are they relevant?
    - makomk 4y ago
      The whole idea that this could all have been funded from a windfall tax pretty much came from Labour, which is how they're relevant. Also, the fact check I linked to specifically addressed the "investment loophole" - closing it's not even close to enough money. The claim that the price cap could be funded from windfall taxes really, heavily relied on Labour playing sneaky tricks with ending their proposed price cap in April and the media not calling them out on it (along with other dodgy accounting tricks, and more recently them pointing to Shell's global profits as proof the existing windfall tax isn't aggressive enough even though they only proposed to tax UK profits).

hinata08 4y ago

>a single company does not have a real choice to sell for cheap. First everyone would choose this vendor for their oil needs. But as their stock and production is limited, they would soon run out of oil to sell. that's exactly a publicity stunt that made Total, in France, for a few weeks after their huge profits hit the news. It turned out to be beneficial for them : It improved their image among citizens. And they avoided that tax on extra profits, that BP will have to pay in the UK. They even had news credit for this. After that stunt, they could go to the media and show everything they were 'doing' for industries, consumers, and investments against climate change. Now the gas is back to expensive levels. But voters got gradually used to it, demand didn't break, and Total still dodged the tax and escaped more regulation. BP used high oil prices to do stock buyback, Total used it to build their image as a 'socially responsible' and stable company. (Btw, the shortage of fuel happened during strikes and other defiance on the government. So Total got away with being dry some of the time. The government somehow ended up being blamed for that.) Now choose where you want to invest. It's fully up to your strategy.