Friday, September 15, 2006

When Prices Go Down?

***draft...please comment***

It's sad hearing many people's explanations as to why gas prices are coming down across the US. Many of these people sound like economists in their explanations citing reasons such as a new oil supply discovered in the Gulf of Mexico and an easing of speculation and fear in the market after the resolution of the Israeli-Lebanonese conflict. Logic seems to prevail when prices go down, but when prices go up, supply and demand, economies of scale and elasiticity fly out the window. This should be funny but it's not some irresponsibly stir up the mob to attack businesses for acting naturally to market conditions.

How does Price Gouging Theory work as gas prices drop? If businesses and their shareholders raise prices and gouge consumers because they're greedy, are we to believe that prices are now coming down because they're feeling generous all of a sudden? We should demand that the people and politicians who rode the high moral horse in their crusades against high gas prices come forward and explain how we owe falling prices to their battles against corporate greed. Fox News host Bill O'Reilly of The O'Reilly Factor once proclaimed that he scared Big Oil into lowering prices. Should we be so naive to believe that our politicians did the same?

It's plain irresponsible to feed on people's natural angry reaction to rising prices to further their political careers and attack the free market that has served us so well.


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