--- Paul Hunt <paul.hunt1@blueyonder.co.uk> wrote:
> There is no direct connection between wholesale oil price and
> domestic
> prices charged for energy. Like a dog licking its privates (it
> does because
> it can), while the energy companies can charge more for the latter
> on a falling market for the former, they will.
As would anyone in their position. People seek their maximum
utility. Just as gasoline sellers want to keep the price high,
gasoline purchasers want to keep it low. The market is always
seeking an equilibrium between these two forces. As long as
there isn't collusion in groups of sellers (cartels) or buyers
("windfall profits" taxes) the market will find that equilibrium.
If the sellers push the price too high, they'll be stuck with
tank farms full of unsold gasoline. If the buyers push it
too low, they'll be faced with shortages as the price falls
below the cost of production. Look at an analogy from your
own life - suppose your boss called you in and told you the
company was having a hard time finding new employes so he
was going to give you a raise as an incentive to stay on.
Would you say, "Oh heaven's no! I'm already charging too
much as it is, and I'm sure you resent paying so much for me!
I simply cannot accept the money, even though my MG needs
a transmission rebuild and my kids need braces, I just
can't accept another dime!" The chance of that scenario
playing itself out would be... ?
David Breneman david_breneman@yahoo.com
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