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... )
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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