VitalAccurateThinking

Fuel Supply Demand in Action

In a story that explains Economics 101 as applied to gasoline, it shows me the basic economic ignorance of the general public. Why do I say ignorance? First of all, it should not have to be explained that when prices go down without an equal decrease in costs, profits go down. We should also not have to explain that when supply shock risk goes down, prices go down.

U.S. refiners are seeing thinner profit margins because pump prices have fallen to their lowest point since March, fuel stockpiles are high, and fears that hurricanes will knock out Gulf Coast refineries again this year have eased.

This big shift suggests that last year's hurricane-fueled earning spike may be nearing its end

I guess I should thank the writer for dumbing down basic economics to dispel this:

While conspiracy theories abound about the 75-cent drop in gasoline prices over the last two months — a survey last week found many voters thought it was the work of Washington politicians seeking re-election — there appears to be a simpler explanation.

According to a Washington Post-ABC News poll released Monday, three in 10 Americans believe sliding gasoline prices are the result of a plot by Washington politicians to influence the outcome of the November midterm elections. Only slightly more attributed the situation to market forces.

I am really sad that citizens of the most successful capitalist society on earth attribute a economic outcome to a conspiracy rather than the most basic and fundamental force of human economic interaction.

Thank you Brett Clanton for writing the article.

posted by Jim VAT @ 7:17 AM