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Gas Prices capped!!

BMXman

I wish I was Canadian
Sep 8, 2001
13,854
0
Victoria, BC
So I just finished watching the news and apparantly Hawaii has instituted a gas cap! The first state to do so. I this really good or bad? I guess it depends on who you ask. Would you want a gas cap in your state?....D
 

Shmoe

Monkey
Oct 23, 2001
217
0
Calgary, Canada eh?
Someone is going to have to take a hit. Pretty simple really. USA/Canada still have it made with gas prices when compared to many other parts of the world.
 

BMXman

I wish I was Canadian
Sep 8, 2001
13,854
0
Victoria, BC
Heath Sherratt said:
Esplain gas cap.
I'm thinking it would be the same thing as a salary cap...looks like they only will be able to raise the prices so much per year as well as there being a maximum amount...D
 

SkaredShtles

I love NEWCASTLE and will ONLY drink NEWCASTLE!!!!
Sep 21, 2003
49,331
3,247
In a van.... down by the river
Heath Sherratt said:
Esplain gas cap.
Hawaii is apparently capping the wholesale price of gasoline in an effort to stabilize prices at the consumer level.

They are going to take an average of the gas price in NYC, LA, and the Gulf Coast and set that as the price per gallon of wholesale.

It's a dumb idea.
 

BMXman

I wish I was Canadian
Sep 8, 2001
13,854
0
Victoria, BC
Heath Sherratt said:
I don't understand how that would be good or bad. Just different.

well one bad thing IMO is....it would help out people who buy big inefficient gas guzzling vehicles....D
 

SkaredShtles

I love NEWCASTLE and will ONLY drink NEWCASTLE!!!!
Sep 21, 2003
49,331
3,247
In a van.... down by the river
Heath Sherratt said:
I don't understand how that would be good or bad. Just different.
There's a whopping disincentive for fuel providers to supply Hawaii in the long run, isn't there? And what happens when the supply of something drops, all else being equal?
 

ito

Mr. Schwinn Effing Armstrong
Oct 3, 2003
1,709
0
Avoiding the nine to five
BMXman said:
well one bad thing IMO is....it would help out people who buy big inefficient gas guzzling vehicles....D
Also, correct me if I am wrong, but it will screw with demand.

Keep the price low and demand goes up. However there is only so much gas that can be provided at a certain price level(correct?). There will be an influx of gas purchases, but it won't help gas stations as they can't make a decent profit off of the product they sell. I'm seeing the oppurtunity for a gas shortage over there. But I could be way off on this one.

The Ito
 

zod

Turbo Monkey
Jul 17, 2003
1,377
0
G-County, NC
Capping gas prices is ignorant at best.....it'll completely screw up supply/versus demand. If the government wants to help then maybe they should CUT AND CAP the $0.50+ per gallon we pay in Federal and State taxes on the sale of gasoline, but I bet they won't do that to their slice of the pie.
 

SkaredShtles

I love NEWCASTLE and will ONLY drink NEWCASTLE!!!!
Sep 21, 2003
49,331
3,247
In a van.... down by the river
narlus said:
if there's a cap, who makes up the difference from market price? that's the key fault in logic as i see it.
Bingo.

What most people fail to realize is that anytime you artificially f*#k with the price of a good *somone* has to pay.

There's no such thing as a free lunch. :D
 

dan-o

Turbo Monkey
Jun 30, 2004
5,407
1,529
If the state is implementing the price-cap, the costs (ie. losses) would probably be taken out of the local tax portion of the price and not out of the pocket of fuel distributors/gas stations.

I don't think it's a bad thing either. By capping the price they can ensure that all levels of the local economy stay in check. Everything you buy is priced in relation to fuel costs. Increased fuel prices make other prices rise (food, clothes, bongs, bike parts, construction...everything) which may lead to an economic slowdown as people burn through disposable income.

My guess is that the move is oriented more towards keeping the local economy flowing and ensuring that the cost of living remains viable for both residents and tourists.
 

SkaredShtles

I love NEWCASTLE and will ONLY drink NEWCASTLE!!!!
Sep 21, 2003
49,331
3,247
In a van.... down by the river
dan-o said:
<snip>

I don't think it's a bad thing either. By capping the price they can ensure that all levels of the local economy stay in check. Everything you buy is priced in relation to fuel costs. Increased fuel prices make other prices rise (food, clothes, bongs, bike parts, construction...everything) which may lead to an economic slowdown as people burn through disposable income.
Maybe in the extreme short run.

If the price of fuel is driven up by market forces then the rest of everything dependent on that cost *should* go up.

Attempting to massage the economy with price controls almost NEVER works.
 

LordOpie

MOTHER HEN
Oct 17, 2002
21,033
1
Denver
SkaredShtles said:
There's a whopping disincentive for fuel providers to supply Hawaii in the long run, isn't there? And what happens when the supply of something drops, all else being equal?
narlus said:
if there's a cap, who makes up the difference from market price? that's the key fault in logic as i see it.
As long as someone can make even the smallest profit, they'll sell to Hawaii. I bet Venuzuela picks up the slack.

SkaredShtles said:
Attempting to massage the economy with price controls almost NEVER works.
Gas might not be a monopoly, but it most certainly is monopolistic... the entry cost is extreme, so it's not like anyone can just start drilling.

All other utilities are price controlled, so I'm not surprised that gas is controlled in some way too.
 

ncrider

Turbo Monkey
Aug 15, 2004
1,566
0
Los Angeles
A gas cap or any type of binding ceiling on a market price is a terrible idea. Anybody remember or heard about the gas crisis in the 70's. Yeah, I wasn't born either, but I've studied the results and causes and can tell you that the shortage was helped largely by a gas cap.

Here is what happens;
If the gas price cap is set below the market clearing price (equilibrium) there will become a shortage in supply. Basically consumers will demand more (at the capped price) than suppliers will be willing to supply. Huge shortages means supper long lines and or no gas. It is simple economics and amazing that one of our states would be stupid enough to repeat it.
 

SkaredShtles

I love NEWCASTLE and will ONLY drink NEWCASTLE!!!!
Sep 21, 2003
49,331
3,247
In a van.... down by the river
dhtahoe said:
This WHOLE gas thing is a scam anyway. The top three oil companys just had record earnings last 1/4...WTF is up with that!!!
Ummmmm.......... have you seen the prices lately? Of course they have record earnings. The product they sell costs a crapload more than it did a couple years ago. :think:
 

Toshi

Harbinger of Doom
Oct 23, 2001
27,591
2,226
SkaredShtles said:
Ummmmm.......... have you seen the prices lately? Of course they have record earnings. The product they sell costs a crapload more than it did a couple years ago. :think:
yeah, but his point is that the prices are rising higher than the costs of production. since the market will bear it it's "fair" but still galling.

moral of the story: invest in oil companies
 

Raaar

Monkey
Sep 13, 2004
121
0
Great thread...
Aint supply & demand a biatch. :oink:

It is all funny in a sick sort of way. Here we are- fat, spoiled Americans complaining about the cost of gas. Meanwhile, the huge SUV's adorn or driveways and our bellies hang over our belts.