Bastard, Bastard. I hate you even more now

 

I'm gonna try to match you! The last time I filled up was just before the gas cap went into effect. (How many weeks has it been?) My CS Coupe is at 3/4 tank now. (Yes, I take it to work every day.)

--I'm holding out until Gov. Lingle repeals or suspends the gas cap...

 

I live across the street from work, but I still drive. Oh how lazy I am.

Driving to UH Manoa 5 days a week is taking its toll, tho. I think I fill up every week. Im squeezing it till Monday to try and get cheaper gas.

The gas cap makes for interesting conversation in econ class tho.


Al

 

Im glad I bought a second vehicle because soon my 96 cheroke is going to be the "fuel efficient one"

 

Oh? Please enlighten us . I'm always down for some intellectual diatribe.

 

Let's have it!

 

Huh?

Anyway, just down to basics things. How any type of binding price control doesnt work. It only causes shortages in markets. Lets say the gas is capped at $2.50, but the market price is $2.75, that gas isnt coming to Hawaii. It'll go somewhere else where they can charge $2.75. That means we'll get less gas here. So assuming the demand for gas remains fairly constant and less supply, gas stations can/will increases prices. What we can hope for with the gas cap? That the cap is set above market prices so that it has no meaning.

What about gas stations? How much money do gas stations stand to lose this coming week? Last week, they got their gas for around $2.59 and this week its, $2.09, 50 cents less. So smaller stations are SOL this coming week. They have their expensive gas from last week (which fewer people purchased, especially after the announcement up this coming weeks prices) and now come Monday, are going to have to face selling all grades 50 cents less or just keep prices up in hopes to cut down on losses. If larger gas stations go ahead and lower prices by 50 cents, smaller stations have to follow suit and make losses (retail markup is about 12 cents). These kind of things can lead to stations shutting down. If they do, there is less gas to go around. Less supply, same demand, prices rise.

So why are Hawaii's gas price really high? The ~60 cents of tax that they add on. Retailers only markup about 12 cents. Taxes create revenue for the state and discourage the consumption of gas. One solution, tax the hell out of gas and lower taxes in other areas (unlikely, since any politician who backs this would likely have no support afterwards). Another, lower the gas taxes and increase taxes elsewhere. Knowing that people have a fairly constant demand for gas regardless of price, they can charge us alot of tax. The only real break in gas prices for us would come from a cut in gas taxes.

And gas prices are higher everywhere. Crude oil prices are at record highs and China is demanding much more of it. World supply isn't up to world demand (thanks OPEC) so prices are up worldwide. An upside to higher gas prices--automakers recognize that a more fuel efficient car will sell. We're seeing more hybrids in the market now. Companies will invest more in R&D of alternative fuels and we can hope to see more alternative fuel vehicles in the future. Same for other markets, firms will increase R&D and hopefully be less reliant on oil.

So did I earn a free fill up or what?

Al

 

damn al, you almost sound intelligent! j/k

 

ooo....I learned something new today

 

Bruddah Al,

Excellent insight into this Gas Capped Law! I do believe the Democrats/Republicans who supported this legislation were misguided in their efforts to help the public and to seek reelection support, IMO. I agree with you that in a Capitalistic market, Supply & Demand is the underlying principle that drives the market. To implement price control would only work for the short term, but will create long term consequences that may be difficult to correct/recover.

Your examples are good at providing a glimpse of what this legislation can potentially do to the market. It probably will not control price, but rather increase price due to Supply & Demand. However, to be a Devil's Advocate , what' your view on this legislation curbing anti-trust operations? Or, if Supply & Demand decreases due to increased public use of public transportation, alternative forms of transportations, & increased Hybrid vehicle usage?

Governor Lingle is laughing her butt off at the Manor right now

 

Fill me in on anti-trust legislation. I'm not too familiar with whats been going on in that area.

 

Not really a legislation, but rather an idea. As you know anti-trust is a concept whereby you prevent a gathering of corporations or business entities that sets pricing on consumer products/goods.

So, with that in mind, what do you think will be the effect of the Gas Capped Law in preventing this type of practice?

 

IMO, since the gas-cap law fixes the price that suppliers charge the gas stations...it could be seen as going against the anti-trust laws. Our lawmakers could justify this gas-cap being legal by stating that they're not controlling the prices that the gas stations are charging the consumers. They're just setting the "cap" price.

But, only the suppliers and the gas stations know if they are charging the "cap" price on gasoline. Whether the suppliers are charging the "cap" or not, the gas stations are taking advantage of this law, and charging the consumers more. And, if the suppliers think that the price "cap" is too low...then they just won't deliver any fuel to our gas stations.

So who wins in the end? Not us! (Unless we own stock in the fuel companies.)

Sorry if I'm rambling. It just seems like we're heading towards gov't price controls...

 

Well, we're pretty much stuck in a duopoly situation no? Theres only two refineries in Hawaii. So does a gas cap prevent these two companies from colluding? I don't think so. I don't think the two refineries collude at all. I think that the two companies are just adjusting prices against each other. If Chevron ups its wholesale prices, Tesoro will follow suit. If Tesoro keeps its prices is lower, it'll be hit hard for its cheaper gasoline and might not be able to keep up with the demand. So, technically, this is legal.

So I dont think the gas cap will do anything for the situation.

I'm beat.