You said: There's no fucking reason gas prices should be this high
The base cost of doing business goes up every year. Thus the cost of gasoline would go up every year if the price of oil was constant. Most businesses apply a standard markup to goods they produce, thus as the price of oil for instance rises, the markup percentage remains relatively constant. Overhead climbs are a fairly constant pace. As oil prices increase, this means that overhead as a percentage of revenue tends to fall. The formula implies a higher profit margin.
Things fluctuate. Businesses have to take the profits when they can. Demand in the short run is relatively inelastic. In the longer run in is more elastic. As prices increase, demand declines. As demand declines, oil company revenue declines, the profit margin remains constant, but overhead as a percentage of revenue increases. The formula implies a lower profit margin.
The moral of that story is that things will equalize. One must have patience. Oil company profits will fall back into line shortly.
You are not even complaining about the real problem. As demand falls, tax revenues will decline. Governments will increase the per gallon tax. This will increase your cost per gallon. If gas were to fall to $10 per barrel, what chance do you think there is that governments would decrease the tax?
The final thing to mention is real profits versus dollar profits. Dollar denominated profits may rise while global profits decline. As the dollar declines, companies require more dollar profits to keep global profits from falling.
As an example, I have invested heavily in non-US securities over the last couple years. Even as investors whose portfolios denominated in dollars net worth have declined, mine has remained relatively constant. I have accumulated unrealized tax liabilities which imply a decrease in my real net worth. The decline is not as great as that experienced by people invested only in similarly performing US securities.
Nearly every war in history has had a large economic cause, why should I believe that this one's any different?
You are correct. Every additional free country improves the worldwide economy. General economic prosperity follows freedom. Economies dependant on exploitation of natural resources tend to be non-free. In the long run a free Iraq could serve as a magnet for economically productive people for the region, much as the US is. This is my hope, not my expectation. Can you blame a guy for wanting people to be able to improve their own situations? I believe this is one area you and I agree on.
Peter |
