Here we go again!
Bush Orders Probe into Gas Prices
For all those of you Conspiracy-theorists out there who think that the current dilemma is the fault of those evil robber-barons at Exxon-Mobil, take time to actually think about a few things:
1) Have you actually looked up the financial data of various oil companies, including their stock price, and compared it with data from 1 year ago, 2 years ago, 5 years ago? You can go to any investment website, like Morningstar.com or MSN Money to find out this information. How different are their profit margins? If these companies are raking in obscene profits, then it stands to reason that their stock price would be through the roof. (And also, would be a good investment opportunity for you.) So, what's the data say?
2) Everyone demands political action when the price of gas gets to high, but how many of you have sat on your lazy asses, never raising a sound when the environmental movement has virtually halted all construction on newer, modern, and more efficient refineries here in America?
This latest move by Bush, if it isn't just for show, (which it probably is, as the polls are indicating) only demonstrates that our own President has no understanding of basic economics.
Then again, economics is a subject that many people seem to lack proper understanding.
posted by Libertarian Jason at 9:05 PM
4 Comments:
nobody is crying foul about housing prices - and most people spend a considerably larger part of their annual income on housing than they do on gasoline.
Why they feel the need to vilify oil is beyond me.
I'm putting together a piece about the lunacy of ethanol - should have it up late this PM>
I'm not so sure I would lay blame on the environmental movement for much of the regulatory climate. Big Oil has a lot of influence on the regulating process and looks to erect barriers to entry into the market.
Secondly, buying a high priced stock is not necessarily a good investment decision. The expected profitability is already accounted for in the price, and people and institutions with more knowledge than you or I have already made their gains.
The solution to high prices is less politics in the pricing mechanism.
Vache -
I blame the Environmental movement in particular because our outdated refinery infrastructure is one of the crowning achievements of their agenda. Sure, there are other factors and causes (have you seen today's article on Mises.org?)...but the Environmental-political agenda is, IMO, the easiest target.
On the stock question...I was merely being rhetorical. Many people who whine about "price gouging" ignore the plain evidence of the stock market. Last fall, when Exxon-Mobil was making their "record profits", their stock price was closer to its 52 week low, than its 52 week high. That suggests that there have been times when the prospects for continued profitability have looked more positive. Yet, these same people insist that E-M are exploiting consumers and lining their own pockets. To that I challenge them to put their money where their mouth is, buy some stock, and reap these gains. The fact is, they won't because their is no exploitation, and profit _margins_ are barely different from what they've historically been.
-LJ
It's very frustrating.
Gasoline prices go up. Politicians and pundits charge the oil industry with price-gouging. Economists rush in to teach the public, the politicians, and the pundits that there ain't no such thing as price-gouging. Eventually gasoline prices drop and the politicians and pundits move on to the next crisis du jour.
Then gasoline prices go up again. Politicians and pundits charge the oil industry with price-gouging. Economists rush in to teach the public, the politicians, and the pundits that there ain't no such thing as price-gouging. Eventually gasoline prices drop and the politicians and pundits move on to the next crisis du jour.
And the cycle repeats. Over and over.
I read somewhere recently that the constant repetition of this cycle reminded the writer of the Bill Murray movie, "Groundhog Day". Very apt!
GMU economist Don Boudreaux has a very pithy post on gasoline prices and greedy oil companies at http://cafehayek.typepad.com/hayek/2005/11/fluctuating_gre.html. I also recommend that readers scroll down through the "prices" category at the Cafe Hayek blog maintained by Boudreaux and fellow GMU economist Russ Roberts. It's at http://cafehayek.typepad.com/hayek/prices/index.html.
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