George Bush, Republicans and their friends do not appear to be manipulating oil prices
Gas prices have gone down 17% recently, from $3.15 on August 1 to $2.67 today. I've heard and read several opinions that Bush is manipulating gas prices to increase Republican popularity for the midterm election, and supposedly 42% of Americans think Bush controls oil prices.
On one hand I can't rule it out entirely. It's possible, I suppose, ( Read more... )
On one hand I can't rule it out entirely. It's possible, I suppose, ( Read more... )
I agree. That's why I was careful to never say that they're prevented from having any effect whatsoever. I said "I don't think that the White House or their friends are doing very much - or can do very much - due to the realities of the market". Heck, *I* had an effect on the market by whether or not I rode my bicycle to work this morning, but it was not very much of an effect. Bush's effect on oil prices is substantially reduced by the free market, not eliminated entirely. We're arguing a matter of degree, and I claim that the degree appears to be substantially less than 17%.
We don't have a free market in gasoline in the US, and oil companies can dictate retail price to individual retailers.
That's kinda like saying we don't have a free market with cars because car companies can dictate retail price to their dealers. They can, but they don't because we would choose cheaper alternatives from other car producers. Gas consumers can always start filling up from a different oil company, or simply consuming less gas, as consumers did in the early part of this summer. Consumers have a lot of choice. Near my house there's Exxon, Mobil, Texaco, Citgo, Valero, Arco, Shell, 76, and Chevron not to mention the smaller mom-and-pop gas stations. Partly because there are a lot of independently run, independently nationalized petroleum companies in a lot of countries that ship to the US, but mostly because petroleum is a universally attractive fungible good in which contracts and futures are traded in very large quantity in numerous international open markets, the oil market seems to be substantially more resistant to market manipulation than most other markets, products, and commodities I could name.
(Bush *could* manipulate the market intentionally, directly, and publicly by invading another country, increasing fuel taxes, or releasing the strategic petroleum reserve but noboy I've read suggests that he has actually done something like this recently.)
If Exxon thought it was in their best interest to support some House incumbant, they could tell all Exxon gas stations in that incumbant's district to cut their prices by 20%.
I agree. That's the kind of hypothetical that would be easy to prove, and would lend credence to the theory that this is happening. But nobody has claimed that this is happening, let alone provided statistics to demonstrate it. They're just arguing "it's possible". Heck, a LOT of stuff is possible, but that doesn't mean I'm going to believe it.
This doesn't seem to be happening, either. Gas has dropped about 17% in San Francisco and Los Angeles, neither of which are exactly swing districts.
Bush's foreign policies have benefitted both Chavez and Ahmadinejad tremendously, and they may be happy to have him go on doing what he's been doing.
I agree, but that's orthogonal to my point, which is that if anyone were to attempt this argument I would dismiss it for the same reasons that I dismiss the suggestion that Bush is manipulating oil prices. You're introducing additional reasons to dismiss the argument I'm already dismissing.
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I disagree, because US gasoline markets are not "free markets"--there's insufficient competition or demand elasticity.
That's kinda like saying we don't have a free market with cars because car companies can dictate retail price to their dealers.
Car companies can't dictate retail price to their dealers. They can influence retail price by setting wholesale price, and they can give an MSRP, but the dealer decides how much to charge the customer. Exxon or Shell can tell a gas station "Charge $X for a gallon of gas."
That means that an oil company can set prices in a local market, say San Francisco, based on things other than supply and demand. Even if they take a short term loss in SF, they remain profitable in the short term as long as the loss is less than profits from all of the other local markets it operates in..
Gas consumers can always start filling up from a different oil company, or simply consuming less gas, as consumers did in the early part of this summer.
First, this only matters if the oil company in question is unwilling or unable to accept a short-term loss in a specific local market. For the reasons above, that's not a safe assumption in every case.
Second, given the tiny number of oil companies, their control over their retailers, and the complete lack of free entry into gasoline markets, it's pretty easy for them to decide not to compete on price if they don't want to.
Third, some consumers choose to use less gas. Many have little or no practical choice, certainly not in the short term.
Consumers have a lot of choice. Near my house there's Exxon, Mobil, Texaco, Citgo, Valero, Arco, Shell, 76, and Chevron not to mention the smaller mom-and-pop gas stations.
Exxon and Mobil are the same company Chevron and Texaco are the same company. So, you've got 5 of the big six global gasoline companies (ExxonMobil, Chevron, BP/Arco, Royal Dutch Shell, and ConocoPhillips/76), a US oil company (Valero), and the Venezualan government's national oil company (Citgo). Mom-and-pop places are a tiny percentage of the market, and most have their prices set by the refiners they buy from, most of which are owned or controlled by the big six.
So, from a pricing perspective, you've got 7 brand/retailer combinations. How many different brand/retailer combinations are there for bottled water near your house? I bet it's more than 700.
Partly because there are a lot of independently run, independently nationalized petroleum companies in a lot of countries that ship to the US
There are a lot of oil exploration and/or extraction companies. There aren't many refiners.
petroleum is a universally attractive fungible good in which contracts and futures are traded in very large quantity in numerous international open markets
Crude oil is traded in very large quantity in numerous international open markets, though it's not entirely fungible. Gasoline is not traded in anything like an open market.
That's the kind of hypothetical that would be easy to prove
Not necessarily, unless you can get unfettered access to internal corporate communications and financial records.
Heck, a LOT of stuff is possible, but that doesn't mean I'm going to believe it. This doesn't seem to be happening, either.
As I said, I've got no idea if it's happening, or if it's even plausible. My point is that gasoline markets are not "free markets". They may be resistant to manipulation, but if so, it's not because of the "realities of the market".
I agree, but that's orthogonal to my point
I wasn't entirely clear on your main point. You stated that Venezuala and Iran have motive to manipulate oil prices to hurt Bush, but there's no evidence that they actually are. I thought you were implying that since they want to but aren't, it follows that they probably can't. There are several problems with that conclusion, but the first that came to mind was that they probably don't actually want to.
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Fine. Six, ten, whatever. Nowhere in my main post did I ever describe the market as a "free market". I said it was a "market" - which it is - and that competition in the market reduces any single competitor's ability to dictate price - which it does. I have no interest in having a semantic argument concerning at what point the "free market" boolean bit flips to "true".
Car companies can't dictate retail price to their dealers. They can influence retail price by setting wholesale price, and they can give an MSRP, but the dealer decides how much to charge the customer. Exxon or Shell can tell a gas station "Charge $X for a gallon of gas."
Gas prices vary all over Los Angeles - even from Chevron to Chevron. The Chevron in Venice sells gas at a different price than the Chevron in Marina Del Rey, four blocks over. I have no idea whether or not, contractually, they can dictate the same price everywhere, but in practice either the corporation is dictating price-competitive decisions or they're leaving these decisions up to the franchisee. Either way I am not troubled.
That kinda goes back to my original point: there's a difference between whether something is possible, whether it's actually happening, and whether the thing which is possible is causing the thing that is actually happening. In this case I don't think it's very possible, I doubt very strongly that price fixing is happening, and I'm all but certain that such fixing is not caused by electioneering Republicans.
Second, given the tiny number of oil companies, their control over their retailers, and the complete lack of free entry into gasoline markets, it's pretty easy for them to decide not to compete on price if they don't want to.
Again, whether it's "possible" does not mean that it "is happening". I don't see suppliers dictating prices - I see world politics and seasonal demand dictating prices. I'll ask again: Does anyone have an acutal argument in favor of this conspiracy beyond "it's possible"?
Exxon and Mobil are the same company Chevron and Texaco are the same company. So, you've got 5 of the big six global gasoline companies (ExxonMobil, Chevron, BP/Arco, Royal Dutch Shell, and ConocoPhillips/76), a US oil company (Valero), and the Venezualan government's national oil company (Citgo).
Fine, six corporations representing four countries on three continents, and if they were all members of some kind of Republican Booster Cabal we'd see gas prices dropping independent of supply, demand, and crude price. But we don't.
Third, some consumers choose to use less gas. Many have little or no practical choice, certainly not in the short term.
Not all consumers can choose to use less gas, but not all consumers have to choose this for the free market to work. Earlier this year prices went up and people used less gas. You don't need a total boycott to significantly influence price.
So, from a pricing perspective, you've got 7 brand/retailer combinations. How many different brand/retailer combinations are there for bottled water near your house? I bet it's more than 700.
I couldn't think of a weirder comparison. Water is cheap, nonvolatile, nontoxic, falls from the sky, can be sold tax-free, and is sold by thousands of producers in a free market at $1 per 0.125 US gallons ($8/gallon). ($8/gallon) Gasoline is extracted from unstable locations, flammable, toxic, is transported halfway around the world, needs extensive refining, is taxed, and is apparently sold by a power-mad monopoly at $2.70 per gallon. I'd go after the water people first.
Not necessarily, unless you can get unfettered access to internal corporate communications and financial records.
You don't need any inside information to see whether gas prices have declined more in more highly-contested areas. You just look at the gas signs. Granted that doesn't prove causality, but if there's no phenomenon there can be no causation.
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Except it doesn't. As I said, there are too few companies and too many barriers to entry to force competition on price, especially since individual companies can transfer profits across multiple local markets. I don't care that much about the semantics in this case either, but the fact is, gasoline companies can set price in any given local market on any number of things that have nothing to do with supply and demand.
I have no idea whether or not, contractually, they can dictate the same price everywhere, but in practice either the corporation is dictating price-competitive decisions or they're leaving these decisions up to the franchisee.
Oil companies can and do dictate price to individual gas stations, though I would assume that it's not cost effective to dictate exact prices to every gas station in the country every single day.
in practice either the corporation is dictating price-competitive decisions or they're leaving these decisions up to the franchisee.
I don't know that this is true, and I wouldn't assume either way without supporting data. There are any number of reasons to set a given price at a given location, or an average price in a given area. Some may be obvious and some may not be.
Does anyone have an acutal argument in favor of this conspiracy beyond "it's possible"?
I never said there was a conspiracy. You made two arguments:
1) There's no evidence that oil prices are actually being manipulated to influence the upcoming elections.
2) Market forces would prevent anyone from significantly manipulating oil prices to influence the upcoming elections.
Number 2 is false. That's my only point.
we'd see gas prices dropping independent of supply, demand, and crude price. But we don't.
Point me to the study showing the correlation between retail price of gasoline in every contested electoral district and local supply and demand, including all relevant cost inputs (of which crude price is only one). I won't assume there is some conspiracy without evidence (and I haven't seen affirmative evidence), but that's a pretty complex data set to dismiss without supporting evidence as well.
Not all consumers can choose to use less gas, but not all consumers have to choose this for the free market to work.
It only works if enough consumers act that the damage caused by their cumulative actions outweighs whatever benefit the company thinks its getting from its own behavior. Because gas demand is relatively (though not completely) inelastic, gas companies can vary prices a lot with relatively little impact on consumer behavior. If this were not the case, you wouldn't get different prices between two gas stations 4 blocks apart.
I couldn't think of a weirder comparison.
It's a perfectly valid comparison - just because bottled water competes on marketing rather than price doesn't mean that it's not more competitive than gasoline. It just means that consumers are stupid. There are plenty of competitive, free, and open markets in which prices appear to make no sense because consumers prioritize other factors over price.
You can pick any number of other products - beer, frozen pizza, ball point pens. Almost all of them are going to have waaaaaaaaaaaaaaay more than 7 price/retailer combinations in your neighborhood. That's the point.
You don't need any inside information to see whether gas prices have declined more in more highly-contested areas. You just look at the gas signs.
Actually, you have to determine the variance between retail price and the combination of local supply and demand, including all relevant cost inputs. You aren't looking to see if the gas stations cut their prices by 20% of what they were yesterday, you're looking to see if they cut their prices by 20% of what supply and demand suggest they should be.
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the fact is, gasoline companies can set price in any given local market on any number of things that have nothing to do with supply and demand
You mean to tell me that those giant signs with prices are for show? That it's a *coincidence* that there's always a crowd at the station that's a few cents lower? I don't buy it. Even more than cars, gas is a uniform commodity. Gas companies try to create non-price competition (Chevron with Techron™) but in the end it's almost entirely about price and location.
2) Market forces would prevent anyone from significantly manipulating oil prices to influence the upcoming elections.
I never made the absolute claim, and I corrected you the first time you misrepresented me. I said "I just don't think that the White House or their friends are doing very much - or can do very much - due to the realities of the market". We're taking degrees. I think the degree to which individual partisan actors at oil companies can manipulate total market price is significantly less than the 17% drop we've seen.
Point me to the study showing the correlation between retail price of gasoline in every contested electoral district and local supply and demand
That's just it - nobody has done this. Nobody has even released a really bad study correlating only two variables. They're just throwing out conspiracy theories while ignoring what appear to be legitimate explanations.
Because gas demand is relatively (though not completely) inelastic, gas companies can vary prices a lot with relatively little impact on consumer behavior. If this were not the case, you wouldn't get different prices between two gas stations 4 blocks apart.
Total gas demand is inelastic, but we're not talking about total demand, we're talking about competition between producers. The fact that we're having this discussion at all over a measly 17% decrease demonstrates that the public is extremely conscious about gas prices, not even counting the outliers like lockalsh who drive miles out of their way to save a few cents per gallon. When's the last time you heard someone raving that the price of bread, banannas, or pants have dropped 17%?
just because bottled water competes on marketing rather than price doesn't mean that it's not more competitive than gasoline
You don't have to convince me that water is a competitive market, you have to convince me that gasoline isn't. "Because it's not water (or pizza, or pens)" does not hold, um, water for me.
I picked the car comparison because, like gas, you've got less than a dozen major providers (Ford, GM/Chevy, Toyota/Lexus, Honda/Acura, Nissan, Hyundai, Benz/Chrysler, BMW, VW/Audi), a few "mom and pops" (Lambroghini, Tesla), a lot of foreign companies that don't even enter the market but influence prices globally (Fiat, Pugeot/Citroen), and significant barriers to entry. What you don't have is all the non-price competition: BMW convinces its customers that BMWs are worth three times what Hondas are, but Chevron doesn't have a lot of luck convincing its customers that its gas is worth more than a few pennies over Arco. They *only* compete on price and location.
You aren't looking to see if the gas stations cut their prices by 20% of what they were yesterday, you're looking to see if they cut their prices by 20% of what supply and demand suggest they should be.
And yes, it's possible that whatever variable makes people vote republican is the same variable that makes local production and distribution costs rise by the same amount as the conspirators are decreasing prices so that Bush will win the election. But I don't need to disprove the existence of something I don't believe in.
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I never said anything vaguely resembling this. I said that if they want to gasoline companies can set local prices based on things other than supply and demand and remain profitable. They can do so in part because they can set prices in local markets while averaging profits nationally. The fact that there are so few competitors and so many barriers to market entry also allows them to limit price competition through pricing collusion, whether implicit or explicit.
You just said that two stations in LA four blocks apart have different gas prices. If that's the case, and consumers flock to the one that's cheaper, and the stations are not insulated from market forces, how exactly does the more expensive one stay in business?
gas is a uniform commodity. Gas companies try to create non-price competition (Chevron with Techron™) but in the end it's almost entirely about price and location.
To the extent that gas companies do compete, they do so on price and location. That doesn't mean they are competitive.
I never made the absolute claim, and I corrected you the first time you misrepresented me.
You said they can't do very much due the realities of the market. I rephrased that slightly, replacing "can['t] do very much" with "can't significantly manipulate". What exactly is the difference? I didn't characterize your statement as absolute - hence the word "significantly".
That's just it - nobody has done this. Nobody has even released a really bad study correlating only two variables.
Which is why I never claimed there was a conspiracy. You, however, claimed:
we'd see gas prices dropping independent of supply, demand, and crude price. But we don't.
Without such a study, there's no data to either support or refute this assertion; we could be seeing prices drop in excess of supply and demand and not know it. Absence of evidence is not evidence of absence.
Total gas demand is inelastic, but we're not talking about total demand, we're talking about competition between producers.
We're talking about both. Low total demand elasticity is relevant because it facilitates implicit or explicit pricing collusion. As a matter of fact, your very next sentence talks about total demand, not competition:
The fact that we're having this discussion at all over a measly 17% decrease demonstrates that the public is extremely conscious about gas prices
The measly 17% decrease we're talking about is actually just the price one guy paid at the pump. However, you seem to be suggesting it represents a drop in total market average, although it's not clear whether that's intended to be a national average or a specific local market average.
In either case, this seems to be an argument that total demand is actually elastic (because people are conscious of price). "Public consciousness of price", however, doesn't determine elasticity. The change in total quantity purchased in response to a change in prince does.
"Because it's not water (or pizza, or pens)" does not hold, um, water for me.
I never said anything even close to "Because it's not water (or pizza, or pens)". Market competiveness is determined by the number of options available to a consumer when making a purchase (factoring in barriers to market entry). A market with 700 brand/retailer combinations is competitive. A market with 7 isn't.
I picked the car comparison because, like gas, you've got less than a dozen major providers
Again, car manufacturers can't set retail pricing. Each dealer is an independent actor (in many cases, each salesperson at each dealer is an independent actor), making for far more potential brand/retailer combinations than in gasoline. Hell, car dealers have to work hard to keep from competing against themselves.
I don't need to disprove the existence of something I don't believe in.
I never claimed you had to disprove anything. You claimed that you could easily disprove the existence of price manipulation by looking at gas signs. That's simply not true.
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Incomplete consumer knowlege combined with convenience. Some don't know about a gas station 5 cents cheaper on Washington. Some don't care because Washington isn't on the way. And some don't care about a few pennies.
To the extent that gas companies do compete, they do so on price and location. That doesn't mean they are competitive.
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A market with 700 brand/retailer combinations is competitive. A market with 7 isn't.
700 companies would be "more competitive". Also more expensive, since we wouldn't have the same economies of scale. You couldn't exactly build 100x the number of ports and refineries in the US without someone paying for them.
I don't want to get into a semantic argument over when the "competitive" bit flips. Barring "mom and pops" there are less than 700 suppliers for microprocessors, flash RAM, hard drives, carbonated beverages, cell phones, video game platforms, tobacco, and piping hot cream puffs. A few of those manufacturers can "dictate their own price" if they can persuade their customers that their product is "premium" or otherwise lacking acceptable substitutes, but you can't do that with gas.
You said they can't do very much due the realities of the market. I rephrased that slightly, replacing "can['t] do very much" with "can't significantly manipulate".
Sounds like we're both on the same page: market control a matter of degree. I'd still like to see conspiracy theorists give a nod to market forces rather than assume that a Republican conspiracy is the only reason why we're not paying $3.15 anymore.
we could be seeing prices drop in excess of supply and demand and not know it. Absence of evidence is not evidence of absence.
But I *did* point out that world crude prices have dropped 22% while gas prices dropped 17%. That's a price drop within the bounds of supply. Given that I have not been able to find any evidence of a conspiracy, coupled with a market that would hinder one, coupled with reasonable non-conspiracy explanations for market behavior, I am unpersuaded.
The measly 17% decrease we're talking about is actually just the price one guy paid at the pump. However, you seem to be suggesting it represents a drop in total market average
Yes, one guy paid 17%. I've also seen a comparable price drop, from around $3.24 on 7/7 to $2.72 today. (19%) Everyone else I've talked to, informally, is experiencing more or less the same thing. It's far from a scientific analysis, but it's not a bad conclusion for one guy in his spare time.
Maybe I'm just totally insane, but here's how it works for me. If you've got no information at all, one or two people's personal experience is better than ungrounded speculation, a few citations is better, and a fully documented double-blind study is even better. To take issue with personal experience you've got to - at minimum - be able to cite a conflicting personal experience.
Each dealer is an independent actor, making for far more potential brand/retailer combinations than in gasoline.
I actually talked with a Valero station manager last night. Valero sets the wholesale price just like Toyota sets their wholesale price. Local stations set their own pump prices. This seems MORE competitive than Toyota dealerships, where the factory sets the MSRP. You can haggle for a better price at a Toyota dealership, but you can also haggle with a station manager for a better price on gasoline assuming that you were going to buy a large enough quantity.
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In other words, the two gas stations aren't that competitive with each other on price, in large part because of demand inelasticity. Consumers aren't willing to spend the time or energy to know where the cheap gas is or drive the four blocks to get there.
700 companies would be "more competitive"... I don't want to get into a semantic argument over when the "competitive" bit flips.
It's not about the number of companies or manufacturers. It's about the number of options the consumer has. The retail markets for most of the things you've listed are competitive because you can select from a wide variety of combinations of brands and retailers. You may be stuck with AMD and Intel, but you have a huge selection of retailers that sell either or both.
The question of when the "bit flips" in this case isn't semantic. With 7 competitors in a demand-inelastic market, collusion* is relatively easy. With 700, it's not. You don't have to pick a specific number where the bit flips in this particular case because gas is way down at the low end of the spectrum by any measure. There are other characteristics that can make markets competitive with few competitors (self-competition, for example), but that's not the case here.
Sounds like we're both on the same page: market control a matter of degree.
Same page, but it's a pretty big page.
I'd still like to see conspiracy theorists give a nod to market forces rather than assume that a Republican conspiracy is the only reason why we're not paying $3.15 anymore.
Why? I would guess that some do acknowledge that supply and demand play a part but disagree with you over how much. As for the others, they presumably have some explanation for why they don't play a part, don't understand what a market is, or are just flat out crazy.
But I *did* point out that world crude prices have dropped 22% while gas prices dropped 17%.
As I pointed out, crude prices are not the only controlling cost input, and even if the 17% figure represents a national average, it's not dispositive. What matters are supply, demand, and price in specific local markets.
If you've got no information at all, one or two people's personal experience is better than ungrounded speculation
In a great many cases, this is completely untrue. Anecdotal evidence can be useful, but is often no better than ungrounded speculation, and can be a lot worse.
To take issue with personal experience you've got to - at minimum - be able to cite a conflicting personal experience.
If you're talking about interpreting your personal experience or generalizing it to a larger phenomenon, this is just untrue. If you had never met anyone from Tuvalu, and I met two Tuvalans with blue eyes, you're saying that you couldn't challange me if I asserted that all Tuvalans have blue eyes? I would really hope that you'd point out that I was making an assumption based on insufficient information.
I actually talked with a Valero station manager last night.
Coincidentally enough, I was just talking today with a high school friend who spent most of 2003 looking at getting into the gas retail business. It's my understanding from him is that the big gas companies sometimes dictate to retailers and sometimes don't. They also evidently often indirectly control retail price by giving specific dealers almost no margin. I have no direct knowledge, though, nor any information about Valero.
This seems MORE competitive than Toyota dealerships, where the factory sets the MSRP.
Since neither buyer nor seller is bound by MSRP and cars have a relatively huge retail margin, I'd have to disagree. Car dealers have enormous freedom to set their own prices, which is why everyone haggles with car salespeople and almost no one does with gas stations.
* Note that implicit collusion != conspiracy, and is not all that uncommon in a lot of markets.
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This is true of almost any physical good I can think of regardless of elasticity. Shoes, bread, hair gel - most people don't look for the absolute cheapest, they just drive to the store and buy what's availiable. If something is grossly overpriced they notice, but as long as everything is within the range of what they consider a "fair price" most people don't care. It's not worth it to spend a half hour finding the absolute lowest price to save a few cents.
You may be stuck with AMD and Intel, but you have a huge selection of retailers that sell either or both.
How is that different from a huge selection of gas stations? AMD and Intel dictate wholesale prices just as effectively as gas stations.
In a great many cases, this is completely untrue. Anecdotal evidence can be useful, but is often no better than ungrounded speculation, and can be a lot worse.
You can't conflate the general class of all anecdotal evidence with what I'm presenting here. The the lack of refinery-destroying hurricanes this season is not anecdotal, it is fact. The September 15 transition to winter-blend fuels isn't anecdotal, it is on-the-books regulation. The end of the summer driving season in September *is* anecdotal, but it's something that almost everyone that I know has personally experienced almost every summer since I was born no matter where in the country I've lived.
If you had never met anyone from Tuvalu, and I met two Tuvalans with blue eyes, you're saying that you couldn't challange me if I asserted that all Tuvalans have blue eyes?
No, if I was asserting that all Tuvaluans had brown eyes and you said you'd met two with blue eyes I'd have to modify my argument. I could say that maybe the person you met wasn't really a native of Tuvalu, or maybe you were in a club with funny lighting, and I could even accuse you of fabricating your story, but I couldn't simply insist that my speculation and your actual experience were somehow equivalent. I'd have to find a picture of a brown-eyed Tuvaluan or find someone who could credibly claim to have met one before credibility equivalence was restored.
And if neither of us could find any pictures or accounts of anyone from Tuvalu having brown eyes? It wouldn't necessarily prove anything formally, but you'd probably put it into the bin with other unsubstantiated speculation-based theories.
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It can't be true regardless of elasticity--the propensity to change purchasing behavior in response to variations in price is the definition of elasticity.
Shoes, bread, hair gel - most people don't look for the absolute cheapest, they just drive to the store and buy what's availiable. If something is grossly overpriced they notice, but as long as everything is within the range of what they consider a "fair price" most people don't care.
There are a great many master's and PHD theses written entirely on this subject. Not being an MBA, I haven't read any of them, but I've talked with enough MBA's at parties to know that this is a gross oversimplification. Consumers' willingness to adjust their purchasing behavior to differences in price varies a great deal from one product to another; that's why economists and MBAs talk about demand elasticity.
AMD and Intel dictate wholesale prices just as effectively as gas stations.
First, the relevant comparison isn't between AMD/Intel (wholesaler) and gas stations (retailer), it's between AMD/Intel (wholesaler) and the ConocoPhillips/ExxonMobil/BP/etc. (wholesaler). Second, AMD/Intel are only able to dictate wholesale prices as effectively as gas wholesalers if the wholesale demand for chips is as inelastic as it is for gas. I have no idea whatsoever if this is the case. Third, AMD/Intel may be able to influence retail price through wholesale price, but they can't dictate it. There seems to be conflicting evidence as to the degree to which oil companies do this in practice, but they can if they want to, and AMD/Intel can't.
You can't conflate the general class of all anecdotal evidence with what I'm presenting here.
You said, "If you've got no information at all, one or two people's personal experience is better than ungrounded speculation...". "One or two people's personal experience" is pretty much the archetype of the general class of anecdotal evidence.
I couldn't simply insist that my speculation and your actual experience were somehow equivalent.
This is not how you used your personal experience above. You argued that your personal experience of gasoline prices was representative of an entire market ("I met two Tuvalans with blue eyes, therefore all/most Tuvalans have blue eyes.") I don't need personal experience of gas prices to know that's not a good idea.
If someone were speculating that all gas prices had fallen to $2.50 and you had pointed out your personal experience of paying $2.72, your analogy would be apt. Since no one did (that I know of), it's not.
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I understand that you're trying to say that our economic system is ridiculously complex, that there are a lot more gotchas than there appear to be, and that it's difficult to make sweeping generalizations without the sort of qualifiers that only qualified economists would know about in the first place.
What I'm saying is that if a completely unqualified person starts floating conspiracy theories, as another completely unqualified person I'm bringing what I've got to the table, and what little I've got does not in any way support the Flying Spaghetti Republican theory. It doesn't seem like a very good argument if the first completely unqualified person says "you can't say that - you're completely unqualified like me".
You argued that your personal experience of gasoline prices was representative of an entire market.
I argued that my personal experience of gasoline prices seems to be representative of the entire market, as shown by every market I've been able to look at having the same 15-20% price drop, both in regional gas prices and in worldwide contract prices for light sweet crude.
Granted that doesn't prove anything, but one gains confidence in theories by taking a theory's predictions and seeing if they're reflected in real-world observation. I've gained significant confidence in the market-price-drop theory for this reason, and lost significant confidence in the Flying Spaghetti Republican theory for the same reason.
You argued that your personal experience of gasoline prices was representative of an entire market ("I met two Tuvalans with blue eyes, therefore all/most Tuvalans have blue eyes.") I don't need personal experience of gas prices to know that's not a good idea.
No I didn't. I argued that market forces, not Republican midterm election concerns, are causing the drop in gas prices. When I started looking into it I found that my own personal experience with gas prices, coupled with some other guy's personal experience with gas prices, coupled with everything else I could find, supported this.
I'm not saying it's a proven fact, but every time I find a piece of new information it happens to agree. Just this morning someone told me that gas is under $2.00 in Kansas. "Whoah, I bet that means there's a really close race in Kansas and the Republicans are pulling out all the stops to preserve their power." Nope, Chuck Ahner is a pretty marginal challenger to a secure Democratic incumbent.
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It seems like a much better argument than "we're both completely unqualified, so I'm going to make an simplistic assertion about a complex subject that may or may not be supported by the huge volume of writings and evidence on the subject." Moreover, I am just qualified enough to say that if "most people don't look for the absolute cheapest, they just drive to the store and buy what's availiable" were true, economists and MBAs wouldn't spend all the time and energy they do studying the subject.
I argued that my personal experience of gasoline prices seems to be representative of the entire market
There is no national retail gasoline market. There's nowhere that you can go as a retail consumer to buy gas that people from NYC and Chicago and Florida can also go. There are thousands and thousands of local retail gasoline markets. You're basing your pricing assertions on a handful of non-random data points spread among a tiny, non-random sample of a very large group of related but separate and very large data sets, and trying to draw conclusions about all of those data sets in the aggregate. At best, your direct personal experience provides some evidence about the local gasoline market around your home and work--it doesn't even say much about the entirety of LA, never mind all of the relevant local markets around the country.
one gains confidence in theories by taking a theory's predictions and seeing if they're reflected in real-world observation.
Only if you have a whole lot of varied observations. If I were to assess the accuracy of global warming theory based solely on my personal observations of the temperatures in San Francisco over the last two months, I'd be pretty far off. I'd still be pretty far off if I supplemented my observations by talking to a friend in Marin and another in Daly City. I'd still be pretty far off if I also talked to friends in Australia and Finland.
No I didn't.
Yes, you really did. Not only did you, but you just reaffirmed it a few paragraphs above: "I argued that my personal experience of gasoline prices seems to be representative of the entire market..."
Your personal experience, plus some other guy's personal experience with gas prices, plus everything you've cited so far, says almost nothing about what prices even are among the thousands and thousands of local gas markets in the US, never mind what is causing them to be what they are.
everything else I could find
"It's all I could find" is not an effective response to an inability to find enough data to evaluate a position.
Just this morning someone told me that gas is under $2.00 in Kansas...
Do you really not see any of the many reasons why this is both fallacious and irrelevant?
the Flying Spaghetti Republican theory
Your continued insistance on this particular gambit doesn't enhance your argument. On the contrary, I think it signals that it's time for me to withdraw, because:
a) this isn't particularly useful, and
b) as much as I love and respect you, I think you're being intentionally obtuse and kind of a dick.
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That's what frustrates me. This is the Flying Spaghetti Monster of conspiracy theories, with "Gas prices" and "Republicans" replacing "Global Temperature" and "Pirates".
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The FSM is about religious refusal to acknowledge the overwhelming weight of evidence and the absense of significant contrary evidence because there's no "incontroverable proof". I'm trying to point out that this is a case where neither of us seem to have access to sufficient evidence to make a conclusive statement either way.
Put another way, when you say "No one's convinced me that X exists," I agree that "[you] don't need to disprove the existence of something [you] don't believe in." If you say "X doesn't exist," then I think you have some disproving to do. If I ignore a huge body of evidence that X doesn't exist because it's not "proof", you can feel free to mock me with pasta-based satire.
Which is not to say you shouldn't feel free to mock conspiracy theorists whenever the mood strikes.
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No, it's really not.
You have a theory. As you admitted above ("Nobody has even released a really bad study correlating only two variables."), there is insufficient evidence available to us at the moment to determine whether prices in individual local markets are what supply and demand suggest they should be. Hell, we don't even know what prices and pricing trends the individual local markets are, beyond what you and a few people you've talked to have observed. Without such evidence, we can't judge how well your theory fits the facts.
For whatever reason, you don't want to say "I don't have enough data to determine what's going on here." Instead, you're making a default assumption ("market factors are the primary controlling factor") and sticking to it until someone proves otherwise. Scientists don't assume evolution; they assumed as little as possible, and after a relatively objective assessment of a shitload of evidence, they came up with a theory that fits that evidence, and then found another shitload of evidence that further supports the theory.
FSM illustrates the ridiculousness of refusing to acknowledge all of that evidence; until you've got similar shitloads of evidence, it's premature to start making FSM comparisons.
As an aside, I would argue that unless someone's actually claiming mystical action or divine intervention, talking about phantom republicans and supernatural forces veers dangerously close to the ad hominem.
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