Friday, November 04, 2005

Gas Prices

For now I say let people make accusations about price gouging all they want. It appears to me that the markets have functioned just as they should. With already tight inventories and near capacity refinery operations, the Hurricanes certainly created a situation of scarcity. In addition to scarcity there was much fear and uncertainty about the future supply of gas.

In this situation one would expect prices to increase dramatically ( and I believe that prices were already fairly low in inflation adjusted dollars).

While record profits have been reported by the media, what was scarcely mentioned was the fact that the increased prices actually lead to a decrease in consumption and an increase in imports and production. AS a result of these efforts and less than expected damage to refineries prices have now started to drop.

Of course oil companies made huge profits, but the price was taking into account a great deal of uncertainty that turned out not to be a problem.

1 comment:

weblogz said...

When Eggheads Gather
Are public intellectuals especially important anymore? Michael Young The British magazine Prospect recently mixed high- and low-brow culture by conducting an online poll allowing readers to choose the world's ...
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