Is this Price fixing??

Question

Isn't it concidered price fixing when everytime we have a threat of say a natural disaster, or a Hurricane that all the speculators decide to raise the cost of fuel in a no substancial fear or something happening to the oil rigs in the GULF??? When are the politicians going to address this what should be illeagal action?

I meen , Why can't it be illeagal to commit such actions until after a major natural disaster that caused damages to the oil producing resources?

Answer 1

Maybe they need to build some refineries that aren't affected by hurricanes. like in the deserts of california. This time it missed the gulf, and the spectulators ate it.

Answer 2

It's important in a free market, capitalist system such as ours that we DON'T have price controls, especially in a time of disaster (or suspected disaster).

Price increases are good for several reasons:
1. They encourage an increase in supply to help meet the increased demand. Reasons: Vendors from surrounding areas will want to sell in the higher priced area where they can get a better profit. The market spontaneously reacts to ensure that goods are where they are needed most (versus waiting for endless bureaucrats to fail).
2. Higher prices encourage people to conserve. If the prices stay the same, people start hoarding. When prices go up, you buy less giving others the opportunity to get needed supplies.
3. Predicting higher demand is important in any market if you want your business to survive. If an oil company sells fuel at a lowered cost even though there is good reason to believe that demand will spike soon, they will ultimately fail as a business.

Like so many questions on here, a basic education in economics would have answered your questions. oy! What horrible school systems we have :(

Please read the link below for a much better description from an econ professor about why anti-price gouging laws are bad for US! He is much more eloquent than I'll ever be :)

Answer 3

Supply and demand. If a natural, or other disaster limits the supply of anything, it becomes more valuable. Even if the disaster hasn't cause damage. The damage can be anticipated and the same rush for items can occur.

What you are talking about is called price gouging. But, how different is it than normal supply and demand? Why can the owner of a one of a kind Rembrandt painting sell it to the highest bidder for millions of dollars, yet if he has a dozen gas powered electric generators he isn't allowed to sell them at a high profit without being called a crook?

Answer 4

Well I guess you will support the closing of all financial markets because all financial markets operate on similar rules.

The problem is that people continue to drive when prices go up. If the public would cut back on driving by 20 percent, the oil companies and local gas station owners (they are just as guilty as the big companies) would lower prices to get customers back.

Americans can easily achieve a 20 percent deduction by walking to places that are close, carpooling, and making less trips.

Answer 5

I think that what should happen when we have an impending natural disaster is that all the people who produce oil in the Gulf or Mexico (or own gas stations in potentially affected areas) should close up shop and leave just like everyone else. They should protect themselves and not worry about pumping oil or selling gas. We can all do without a little oil for awhile. (And it's an economic fact that if we use less oil, the price will go down). And when things return to normal, they can go back and charge the pre disaster prices. Isn't that what you would do if something you owned or had control over was about to become more scarce, especially if a storm might case you harm if you stayed and did your job?

Answer 6

It's a plain and simple screw job that's getting bolder and more in your face than ever before. They have always raised prices for the summer family vacation get away travel times, sighting short supplies and high demand as the reason, but now a tropical storm in the wrong place can get fuel prices moving upward by leaps and bounds. This I would like to see regulated at least to a small extent or proof for justified hikes.

Answer 7

How can the politicans address a world wide system ?

The price of oil is not just set in the United States.

Worries about a short fall in gulf oil production effects the world oil market, not just the American oil market.

Because if the Gulf Oil production is effected, that means the US, will be buying more oil on the world market.

Answer 8

No it is not price fixing. Price fixing is when a group of people or companies decide together what a price would be for a particular product/commodity. When speculators drive up prices they are individually motivated to make money. They are not getting together and saying, lets charge "X" amount.

Answer 9

the prices go up when there could be a distaster for the same reason that oranges do. it is all based on speculation and if they think things will be bad they insulate themselves from loss. we are so dependant on oil that it seems they can do what they want, which hey probably can, but it is all supply and demand, if we stop demanding it, it will go down so they can sell the reserves

Answer 10

It will never be addressed because the petroleum industry has one of the more powerful lobbying units in both DC & most state capitols