Yeah, they are making record profits... And? These companies are publicly traded. Since thats the case, who owns them? The share holders. When you own stock in the company and its making record profits, Im sure your stock will be goin way up also. Maybe go buy some stock in them?
And what do you propose to get prices lower? Theres really nothing you can do. Just use the least amount possible. Have friends drive, ride the bus, walk, ride a bike, etc.
What do you suppose Bush does? Set a price ceiling? That would be bad. People would buy so much gas at a lower price that there would be a shortage. Its either pay the high price and have gas if you need it, or have a low price and just flat out not have gas. Now imagine what would happen if there wasnt enough gas? Companies would have to transport all their goods another, more expensive way. Yeah, gas would be cheap but everything else would be crazy expensive.
Its all supply and demand. Demand is crazy high, and supply is getting low, so that drives price up. And seeing that this is an oligopolistic market, there just isnt enough competition to drive price down. What incentive would they have to change anything? There are only a couple companies that sell gasoline, and they all charge about the same price, who why would they lower theirs if they can get away with a higher price?
If a certain company dropped their prices by $0.30/gal, they would make a TON of money. Everyone would buy their gas. That would force all the other companies to drop their price also. Say there is Company A (A) and Company (B). This is what would happen in each scenario:
- They could both charge a low price and would both profit 1billion.
- A could charge a low price, while B charges a high price. A would make 3billion profit, and B would make 500million profit.
- B could charge a low price, while A charges a high price. B would make 3billion profit, and A would make 500million profit.
- They could both charge a high price. In this case, they would each profit 5billion.
According to this payoff matrix, if a SINGLE company would lower price, even a little, it would send all companies prices into a downward spiral. This only works if there is no collusion between the companies.... But what is the incentive they have? Its all discussed in Game Theory and Nash Theory, go read up on it. As you can see they are both charging the high price that I show in the matrix, therefore they are making the highest profits possible.
If they colluded, they would act as a monopoly, charging whatever price they want. But, according to US law, this is anti-competitive behavior, and was made illegal in the Sherman Act. Because this was made illegal, its almost always necessary to charge the low price, because if you charge the high price, while your opponents charge a low price, you will most likely end up out of business. That matrix explains why competition drives down price.
By selling less quantity at a higher price, they make much more profits. It may not be the best decision for those paying the prices, but for them, it just maximises profit.
If they can get away with charging a price and people are still paying for it, why would they charge less? Theres nothing illegal about it. They are selling at a price where marginal revenue equals marginal cost. Thats what every business does, since it maximises profits.
Go take an Economics class or gtfo.
//content.invisioncic.com/y282845/emoticons/fyi.gif.9f1f679348da7204ce960cfc74bca8e0.gif:fyi://content.invisioncic.com/y282845/emoticons/fyi.gif.9f1f679348da7204ce960cfc74bca8e0.gif:fyi://content.invisioncic.com/y282845/emoticons/fyi.gif.9f1f679348da7204ce960cfc74bca8e0.gif:fyi://content.invisioncic.com/y282845/emoticons/fyi.gif.9f1f679348da7204ce960cfc74bca8e0.gif:fyi://content.invisioncic.com/y282845/emoticons/fyi.gif.9f1f679348da7204ce960cfc74bca8e0.gif
Wow, that was really long, sorry. //content.invisioncic.com/y282845/emoticons/crap.gif.7f4dd41e3e9b23fbd170a1ee6f65cecc.gif
And no, Im not doing cliffs. If there is anything incorrect that I wrote (wouldnt surprise me), correct it and explain why..
