Thursday, July 31, 2008

Not sure how I feel about this

I'm all for capitalism, but there's two ways to look at this story: Either the public is really really stupid or EM is really really a bunch of crooks. They're contributing to crippling the economy, but we're helping them do it. I could now go off onto some philisophical tirade about who's more at fault, but I'll leave that to the master.

6 comments:

solobreak said...

When I started racing in 1986, a gallon of gas cost about a buck. A Campy Super Record grouppo was about $450, a complete top of the line bike about $1600.

Now gas is $4, Sram Red is $1600 (yet no pedals, headset, post, or a lot of other stuff you used to get with a group), and a top of the line bike is 6-12k. So what's the big deal? Why is everyone so sensitive to gas prices but oblivious to everything else?

trackrich said...

If you look at basic economics, I think we only recently reached the most expensive gas ever in terms of real dollars and maybe not even... I forget the exact number but the shortages of 20+ years ago had it hands down when you normalized everything.

And BTW I don't buy into the theory that it's different because gas is a "necessity". Granted our society is very reliant on it, but only because we fell into a lifestyle where it was taken for granted.

solobreak said...

Exactly. Who knew you needed and F350 Super Duty just to haul a couple sheets of plywood and a nail gun?

Not long ago I think gas in the US was actually the cheapest it had ever been in "real dollars." In response, people bought 4000 ft2 houses 45 miles from their jobs, Land Rovers to get to Starbucks, and flew around the country to race cx bikes for 45 minutes. What would you do in that situation if you were an oil company?

The *only* issue here to me is that it took a quick jump in prices for conservation to be reconsidered. Really, the incredibly modest conservation measures put in place in the wake of the 73 embargo (CAFE, Energy Star) were responsible for the almost 3 decades of low energy prices that followed.

Follow the money...

Colin R said...

I don't understand why everyone talks about gross profits instead of profit margin. If Exxon was making a 1% profit on its product, then isn't it obvious that a record price for said product would lead to record profit?

That having been said, there's a third way to look at the story -- the public is really really stupid AND EM is a bunch of crooks.

gewilli said...

who cares about Petroleum companies...

seriously... their profit margins are abysmal but their profits are pretty fair ;)

the industry with way way way more fed subsidy and way way way higher profit margins and way way way higher total net profits?

Drug companies.

Hell one Euro company just paid something like 10 billion dollars cash for another company. And they already owned 40% of the company (they went and bought the other 60%).

Tax credits? Who needs tax credits when govt prescription drug programs are funneling billions of dollars to your bottom line? For real.

Who gives a crap about oil. Make it wicked way higher. I think the govt should have a % cut of the price per gallon of gas, not just a few cents on the gallon.

Drug companies are the big evil now.

but hey...

gas is a big problem... oh what's that smell... :-D

Scott Sweeney said...

Not sure if I'm officially made gewilli's acquaintance, but I tend to agree (sadly) on both accounts. Oil companies are applying economics 101 (you remember that one, eh Rich--the dismal science). The rub though is government subsididies...

My wife was in the pharma business for years, and it was fun listening to her try and justify "total research costs" for bringing new products to market...I always asked if the marketing expenses of buying lunch for a whole friggin' medical office EVERY DAY was factored into that equation....that is essentially what drug reps do.