If the Man-in-the-(Occupied)-Street Narrative is Correct…

by Don Boudreaux on December 9, 2011

in Competition, Myths and Fallacies, Prices

greed is taking a holiday on some fronts, as Mark Perry documents.  (But is it a lessening of the greed of suppliers, or of consumers, or of both, that is responsible for this happy recent trend?  Hmmm.  Unclear.)

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{ 25 comments }

Jon Murphy December 9, 2011 at 11:34 am

Actually, Don, this is rather interesting. Crude oil prices have been rising lately, but gasoline prices are falling. Usually, the two move in tandem (crude oil is an input for gasoline).

There are many different reasons for this, ranging from conspiracy (see, the evil oil companies were price gouging us!) to geo-political (we lost Libyan oil supply, so prices have gone up).

But I propose this answer interested in hearing what others have to say:

Crude oil prices fell in fall on fears of weak US and European demand in 2012. Come October-November oil prices began to rise again when the fears of a US and European recession abated (outside of the ordinary seasonal rising trend). Gasoline demand remains muted, however (why, I don’t know). That is keeping gas prices stable (if not declining mildly), while oil prices are rising due to heating demands and a growing US economy.

Thoughts?

Methinks1776 December 9, 2011 at 12:05 pm

Jon, you need to look at inventory builds as well. They come out every Wednesday morning.

Jon Murphy December 9, 2011 at 12:11 pm

Right you are, Methinks. Oil inventories have been in an overall declining trend since about May.

Methinks1776 December 9, 2011 at 1:02 pm

there’s part of your answer.

rjs December 9, 2011 at 12:41 pm

WTI prices are rising because enbridge bought the seaway pipeline from conoco phillips & plan to reverse it, so the oil bottled up in cushing OK will be able to be used by coast refineries…that lowers their cost, but WTI rises to world (brent) prices as that happens…

nailheadtom December 9, 2011 at 11:36 am

Everybody knows that each morning, while he sips on his first cup of coffee, Dick Cheney calls every gas station in the country and tells them what numbers to put on those big signs next to the road. Just ask him why the prices have gone down.

khodge December 9, 2011 at 12:19 pm

Precisely. Clearly Jon has no idea how conspiracies work.

Jon Murphy December 9, 2011 at 12:29 pm

Well, if you’re part of the conspiracy, are you going to admit it? Hypothetically, of course

Dances with Wolves December 9, 2011 at 12:46 pm

My understanding is that falling gas prices are bad for the environment. They may be good for the oil-dependent economy, but at the expense of planet Earth and her other species as well as exacerbate and accelerate global warming. Mankiw wants a hefty pigou tax petroleum products such as gasoline to reduce consumption. Environmental destruction in the name of capitalism, greed, jobs, or whatever else you right-wingers shout must be stopped. Hunting and trapping of wolves and other species must be outlawed everywhere. I really think there is no hope for life on this planet with 7,000,000,000 and counting destructive humans afoot. Bryan Caplan is completely wrong to tell people to have babies. He’d like this procreative family:

http://en.wikipedia.org/wiki/Duggar_family

kyle8 December 9, 2011 at 11:09 pm

Only fi you buy into the silly AGW hogwash. IT is nothing but a scare-hoax perpetrated by a bunch of mostly British scientists (and a few NASA stooges. They have been revealed by their correspondence, of being totally mendacious.

Dances with Wolves December 9, 2011 at 1:03 pm

These lower oil prices my just be temporary. If things get worse with regard to Iran, the price of oil may shoot through the roof.

http://news.yahoo.com/risk-israel-u-strike-iran-tripled-barclays-capital-214018922.html

anthonyl December 10, 2011 at 10:39 am

All prices are temporary.

Speedmaster December 9, 2011 at 1:20 pm

If companies/corporations can simply get rich by being greedy, “gouging”, and otherwise scr*wing customers. Why does any company/corporation ever go out of business?

Jon Murphy December 9, 2011 at 1:46 pm

‘Cause people don’t understand supply and demand.

anthonyl December 10, 2011 at 10:38 am

They can’t, and they do!

kebko December 9, 2011 at 3:10 pm

I see too many charts like that from Mark Perry. He’ll make an argument friendly to my worldview, and then he sticks Albuquerque on the graph, the only purpose of which that I can tell is to remove any facade of objectivity.

Slappy McFee December 9, 2011 at 3:35 pm

Whatever you do, don’t tell Bernie Sanders. He should be releasing his report any second now about how speculators cause the price of gas to only go up.

vidyohs December 9, 2011 at 4:41 pm

On the conspiracy theme, I am surprised that no one sees the possibility of a political conspiracy. Gas prices are going down as we head into the presidential election season………now who can benefit from the good will that can bring if it is played correct, considering all the other piss poor fiscal decisions he has made?

Greg G December 9, 2011 at 4:49 pm

Markets driving prices instead of conspiracy theories? Weird.

vikingvista December 10, 2011 at 1:47 pm

Someone always benefits from anything. I guess that makes everything a conspiracy.

vidyohs December 9, 2011 at 5:13 pm
muirgeo December 9, 2011 at 8:53 pm

If the Man-in-the-(Occupied)-Street Narrative is Correct…
Then a handful of mega banks got bailed out with trillions of fed dollars while homeowners lost their homes.

If the Man-in-the-(Occupied)-Street Narrative is Correct…
These same mega banks have access to cheap money, almost interest free that no one else has access to.

If the Man-in-the-(Occupied)-Street Narrative is Correct…
Big companies best investment of their money is to pay lobbyist to get favored legislation.

If the Man-in-the-(Occupied)-Street Narrative is Correct…
Multinational corporations have a tax incentive to move production off shore.

If the Man-in-the-(Occupied)-Street Narrative is Correct…
The finance industry has over the last 30 years gone from 10% of all corporate profits to 40% of all corporate profits.

If the Man-in-the-(Occupied)-Street Narrative is Correct…
Our military is mostly a for-profit fund-raier to benifit weapons contractors.

There’s so much more… anyone questioning the motives of OWS is pretty much the equivlent of the 1776 King George supporting Tory’s.

http://front.moveon.org/why-is-this-clip-from-august-suddenly-popping-up-all-over-facebook-again/?rc=fb.fan

muirgeo December 9, 2011 at 9:00 pm

If the Man-in-the-(Occupied)-Street Narrative is Correct…

Then libertarians are wrong and Mr. Potter is actually NOT the good guy and George Bailey would be out in the streets with OWS.

http://www.youtube.com/watch?v=O4ne13Zft9Q&feature=player_embedded

muirgeo December 9, 2011 at 9:15 pm
brotio December 10, 2011 at 2:00 am

http://www.youtube.com/watch?v=rXEASHre_Nw

From 3:20 to 3:30 of this video, Yasafi discloses why he can’t be outsmarted…

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