Oil

[Мастер]

It depends on which quality you want, but oil is generally below $30 per barrel now.

We haven't seen prices like this for more than twenty years, and even then, they weren't that low for too long. Prices were higher in March of 1948 than they are now.

I am surprised we are not hearing a public outcry about the evil speculators who must be driving down the price of oil.

[Lance]

BE is concerned about the prices too.

Gas around here is at $1.80 a gallon ($0.47 a liter). There are places in the US where it's half that.

[Blue Monster 65]

I paid $139.9 yesterday and could have taken another $.10 off had I purchased a car wash, too. Pretty interesting - we'll see how long this goes on and when the outcry starts up.

[Enzo]

When gas was $4 a gallon, if it went up 20 cents one day, a whole 5% boost, angry letters appeared in the newspaper wondering why someone didn't investigate the "price gouging". Then when gas dropped to about $2 a gallow, and then it went up 20 cents one day, people wrote in complaining about "price gouging".

SO Now that gas is under a dollar and a half, and it shoots back up to $1.65 one day, who doubts someone will gripe about the price gouging.


I don't want to wash our car...I might not like the color.

[Мастер]

When gas was $4 a gallon, if it went up 20 cents one day, a whole 5% boost, angry letters appeared in the newspaper wondering why someone didn't investigate the "price gouging". Then when gas dropped to about $2 a gallow, and then it went up 20 cents one day, people wrote in complaining about "price gouging".

SO Now that gas is under a dollar and a half, and it shoots back up to $1.65 one day, who doubts someone will gripe about the price gouging.


I don't want to wash our car...I might not like the color.

I've sometimes heard price gouging referred to in other terms, such as "supply and demand".

[Enzo]

GOuging is a real thing. The state recently prosecuted a few companies for gouging with all the shortages due to the virus . But the unwashed masses think a small shift in price is gouging if it occurs when they want to buy the product. Charging $1.10 for a $1 roll of toilet paper is not gouging. Charging $5 for one is.

$4 gas goes up 20 cents they holler gouging. An 80 cent can of corn goes up to 84 cents, no one yells.

[Мастер]

GOuging is a real thing. The state recently prosecuted a few companies for gouging with all the shortages due to the virus .

That's also occasionally called "supply and demand", even if it is also called "gouging" and prosecuted sometimes.

Charging $1.10 for a $1 roll of toilet paper is not gouging. Charging $5 for one is.

I gave some rolls of toilet paper to a friend of mine high up on a mountain. (There's a whole long story here, but I won't go into it.) He traded them for steaks.

Now, I don't think you can trade a couple of rolls of toilet paper for steaks at sea level.

So, was he gouging?

I'm pretty sure I wasn't, I gave them to him for free. I didn't get any steak.

[Enzo]

S&D sets up conditions for gouging. Gouging refers to holding the market hostage when you become the only place with remaining stock. If they are evacuating a city ahead of a hurricane, and widespread power outages result in only one gas station able to pump gas. That guy is not allowed to sell his gas at $100 a gallon. He COULD sell his candy bars for $20 though, they are not "necessities".

[Мастер]

S&D sets up conditions for gouging. Gouging refers to holding the market hostage when you become the only place with remaining stock. If they are evacuating a city ahead of a hurricane, and widespread power outages result in only one gas station able to pump gas. That guy is not allowed to sell his gas at $100 a gallon. He COULD sell his candy bars for $20 though, they are not "necessities".

So it depends on whether someone else on the mountain had toilet paper.

I'm not sure.

[Enzo]

There is pure market freedom, and then there is the added filter of consumer protection.

[Мастер]

There is pure market freedom, and then there is the added filter of consumer protection.

So I've heard from time to time.

I'm a consumer, and I've been subject to "consumer protection" from time to time. I have on some occasions felt I would have been much better off if I weren't being protected. I have also on some occasions benefitted from various consumer protection measures, but wondered why I should. Subsidies for air travel are one of those; as someone who travels more than the average bear, I benefit from government subsidies for airports and the like. But really, why the hell should the taxpayer subsidise my lifestyle?

So the things I tend to think about in the face of consumer protection measures are,

(1) What is the consumer being protected against?

(2) Should the consumer be protected against this thing?

(3) Does the measure protect the consumer from this thing?

For (1), do I take it the thing the consumer is being protected against here is, paying more for something at a time of shortage, than they pay when there isn't a shortage? This one is important; if the purpose of this consumer protection is something else, then there's no point reading the remainder, because I would need to revise the answer to (1) first. Then the answers to (2) and (3) could be modified accordingly, depending on how (1) comes out.

For (2), assuming my answer to (1) is correct, I'm rather ambivalent about this. So the price of something is at a certain level for a while, then this creates some sort of right that it should always be at about that level? Or is it that price increases should only take place slowly, rather than rapidly?

This thread started about oil, which for a while at least was lower than the price it had in 1948. I take it consumers do not need to be protected from the low price of gasoline, even though they've gotten used to paying a much higher price for a long time. I'm also going to guess that I know the number of people who have pulled into the local filling station, and declared, "I don't want to take advantage of this whole coronavirus slowdown, I'd like to pay the price that gasoline was at a few months ago". My guess is a number that begins with "ze" and ends with "ro". So do producers need to be protected against the consumers who are taking advantage of the glut of oil supplies? (I am always surprised at how popular corporate welfare measures are, and not just among the beneficiaries. At least among "glamorous" industries. The idea that airlines should be subsidised seems quite popular. So does the idea that auto manufacturers should be subsidised. I've never heard anyone argue that shoe repair services or toilet brush manufacturers should be subsidised.) The oil suppliers might want to be careful here. If they keep the price too low for too long, maybe they'll be accused of price gouging when things get going again, and the price goes back up. Perhaps they should keep the price high now.

So I'm back to thinking why an increase in the price of toilet paper is something consumers need to be protected against. Sure, they'd like to pay less. Probably they'd like to pay less all the time, not just now. Should the price be regulated permanently? If there were some conspiracy among the toilet paper makers and distributors to keep the price high, by forming some sort of cartel, well, I can see the case for that. Is something like that happening?

Rather, the reason for the shortage (and therefore the high price, if the price is left up to the marketplace) I keep hearing about in the news, and also anecdotally from people I know, is something else. And it's not something the producers are doing; it's something the consumers are doing.

Which brings me to (3). These price gouging measures generally take the form, you can't raise the price of something too much too quickly. So whom does this predict? Well, the proponents of such measures say, the consumer. They pay the price that was prevailing (or maybe a price only a little higher), instead of a much higher price if market forces were allowed to prevail. The detractors of such measures will argue that consumers are often protected from having the product at any price. And I am wondering if that is what is going on here. Sure, if you are able to get toilet paper, and the regulation says the price is $1.50, whereas market forces would set the price at $5.00, then you have benefitted in the amount of $3.50. That's assuming you can get it. This sort of consumer protection certainly does not increase the amount of toilet paper available. Does it actually decrease it? Well, maybe, I'm not sure. So a few possibilities.

a) Shop owner. Should I swim through a river of coronavirus to get to work today, or just stay at home? Toilet paper is at $5.00 per roll, and I've got a bunch of it! Let me make hay while the sun shines! Oh wait, it's illegal to sell toilet paper at that price. Maybe I won't.

Is that happening? I don't know. If it's limited to just one product, maybe not very much, or at all. If it applies to lots of products? I can easily imagine that.

b) Also the shop owner. Wow, people really want toilet paper, they're willing to pay for a lot for it, and I'm running low. Maybe I can have some shipped in from somewhere else that has enough. Or maybe I can have my supplier divert shipments going somewhere else, by offering to pay more. (The US government is currently being accused of doing this by other countries, offering higher prices for masks that have already been promised to some other country.) However, the price of toilet paper is regulated, so if I do this, I can't charge enough (even though the consumers are willing to pay enough) to cover the extra costs. So I won't do it.

Could that be happening? It wouldn't surprise me at all. We've been there before. Medieval England had for a time the death penalty for grain speculation. The result was, whenever there was a local crop failure, lots of people starved, because it was illegal to go buy grain somewhere else and bring it in.

c) The consumers. Based on what I'm hearing, this one is happening. Why is there a shortage at all? Did a toilet paper factory burn down somewhere? I haven't heard about that. Did a freighter loaded with toilet paper sink in the middle of the ocean? I haven't heard that either. Has there been some big contagion of an arse-itching bug, so that everyone is wiping a lot more than previously? I haven't heard that, although this virus apparently does cause diarrhoea in a certain percentage of people. What I have heard, is that people (also sometimes called "consumers") are hoarding toilet paper.

So I wonder, how much toilet paper do people hoard when the price is $1.50, and how much do they hoard when the price is $5.00? Seems to me, the primary beneficiaries of this particular bit of consumer protection are precisely the consumers who created the problem in the first place - the hoarders. Is this a "Hoarders' Welfare Protection" act?

Seems to me that this sort of consumer protection regulation is based more on an emotional response that somebody is taking advantage of a crisis, and needs to be punished for it, rather than because of any substantial benefits it brings. But I do hope the victims of the price gouging managed to fill up on nice cheap gasoline on the way to the courthouse to testify. And maybe on the way back too.

[Enzo]

Well, I freely admit to being an old hippie. Take care of your fellow man, and all that. So I guess that falls under emotional attachment. Imagine you are in Myanmar, and buy a ticket out for tomorrow. Then a coup is announced. The airline decides then to cancel all tickets (or dishonor them, I don't know the proper term) because some rich folks offered to charter the plane out from under the commercial tickets for oh $20 million. I have no idea what that would be in Kyats. Conjures up images of the last helicopter out of Viet Nam back when, and those people on the roof trying to cling to it.

[Мастер]

Well, I freely admit to being an old hippie. Take care of your fellow man, and all that.

Good, maybe you can demonstrate how the policy does indeed achieve the objective of taking care of your fellow man and all that.

I gave my first cut analysis, and it seems to me the primary beneficiaries of the policy in the context in which it came up are the hoarders, and the policy makes the hoarding worse. It might possibly also break some mechanisms that could have eased the shortage a bit.

Now, is that wrong? I didn't spend a huge amount of time on this, maybe I've left something out of the analysis. If I've make a mistake, feel free to point it out.

So I guess that falls under emotional attachment. Imagine you are in Myanmar, and buy a ticket out for tomorrow. Then a coup is announced. The airline decides then to cancel all tickets (or dishonor them, I don't know the proper term) because some rich folks offered to charter the plane out from under the commercial tickets for oh $20 million.

OK, so people had contracts to buy toilet paper, and the shop reneged on those contracts, and sold the toilet paper instead to some rich person? That sounds actionable to me without any price gouging laws.

Now, if I don't have a ticket (which seems to be the analogy appropriate for the toilet paper - the shops aren't reneging on purchases people have already made but not yet picked up, are they?), and I go to the airport, I may well find that tickets are really expensive, because lots of people want to get out.

But, suppose the new coup government decided to protect the people fleeing the coup. So I get to the airport, and the airline tells me, there's an awful lot of demand for flights today. We'd really like to charge a high price, because we can still fill up the aeroplane. But we're not allowed to, so we just have to charge the regular price. As a result, people who have no urgent need or desire to flee the country, and are just going about their routine travel, have taken up a bunch of the seats. We therefore have only a small number of seats available for coup-fleeers.

How am I supposed to feel now?

For what it's worth, something like this actually did happen to me once, although it was a lot less dramatic than a coup. I stayed one extra day.

I have no idea what that would be in Kyats. Conjures up images of the last helicopter out of Viet Nam back when, and those people on the roof trying to cling to it.

I think expensive toilet paper might not be quite at the same level as getting left off the last helicopter out of Saigon. But, let's not sweat the issues with the analogy, and suppose I'm in some sort of bind. Then someone comes along and tells me he believes in taking care of his fellow man, so he's going to help me out. Should I listen to his proposed solution to my predicament, and try to assess whether it actually makes me better off or worse off? Or should I just accept it uncritically, because he says he has good motives?

I think the issue of whether the policy actual solves the problem, or makes the problem worse, is a legitimate issue, and not one that should simply be ignored because the people endorsing the policy claim they are well motivated.

[Enzo]

I think the underlying idea is to prevent profiteering when conditions put society at stress.


As to actionable, sure. That guy with the only gas station in town with power decides to sell his gas at $100 a gallon to the people trying to evacuate. I could sue him, but to do that I have to survive the evacuation and get somewhere to do it. I might even win at some future tome, but seems like it would be pyrrhic. If all the other stations were still operating, then the market adjusts itself, and no one buys the costly gas.

So I suppose my law prevents the gas guy from selling at $100 and forces him to sell at market price, which we can arbitrarily say is $3. These days it is half that. That protects the consumer. I know you are equally concerned over the seller. He had a marketing plan and calculated on selling at $3. SO $100 would be a windfall profit due to widespread misfortune of the community.

Remember Martin Shkreli? he was the hedge fund guy who bought a company making a $13 drug, so he could turn around and sell it for $750.

[MM_Dandy]

Shkreli recently petitioned to be released from prison because he "knows" how to cure (or perhaps prevent - I don't recall the details, and I don't feel like looking it up) COVID-19.

One way hoarding has been addressed has been to limit the volume that can be purchased at a time. Of course, there are many ways to circumvent this.

[tubeswell]

Difficult to look for signs that Covid is having an effect on atmospheric CO2 concentration, but reading through the tea leaves, I see that the observed 1-year rate of increase in CO2 from April 14 2019 - April 14 2020 at Mauna Loa is 1.53ppm increase, compared to an annual growth rate of 2.3ppm over the last ten years. Could be a data anomaly? Or could be sudden flattening of CO2 emissions from transportation?

[Arneb]

Remember Martin Shkreli? he was the hedge fund guy who bought a company making a $13 drug, so he could turn around and sell it for $750.

Now he even has an award named after him. Read the ranking only if you have a strong stomach and are in a relaxed mood. You might start throwing up, or throwing things, after reading it.

[Lianachan]

Here in the Highlands we’ve just had a fourth tap added to our kitchen - so we now have hot and cold water, whisky and oil.

[tubeswell]

Here in the Highlands we’ve just had a fourth tap added to our kitchen - so we now have hot and cold water, whisky and oil.

One of my earliest memories those oil tap and refill can stands at service stations

You can still buy the old-style cans apparently

[g-one]

One of my earliest memories those oil tap and refill can stands at service stations

You can still buy the old-style cans apparently

With a hand pump? I'll try to take a pic of ours and see if it's the same as what you mean.

[MM_Dandy]

We used to buy motor oil and kerosene in 50 gallon drums. But for the life of me, I can't remember what we used to get the kerosene from the drums to the Knipco heaters. The oil, though, we'd pump into a quart mason jar, and we had spouts that could be screwed onto the jars. Like so

[Enzo]

I remember pumps that screwed into the bung hole on the top of the barrel, had a hand crank.

And as late as 1973 I used to walk past a small gas station in LAnsing with racks of those glass bottles with screw on spouts full of oil.

[tubeswell]

One of my earliest memories those oil tap and refill can stands at service stations

You can still buy the old-style cans apparently

With a hand pump? I'll try to take a pic of ours and see if it's the same as what you mean.

Yes - hand pump

[g-one]

I remember pumps that screwed into the bung hole on the top of the barrel, had a hand crank.

Yeah, we have a couple of those hand crank pumps, and an old drum of kerosene. I'd never put the two together but now it makes sense.
Also, there were those spouts that pierced the oil cans, we have one of those somewhere too. (from when the oil came in round cans, like in that scene from The Jerk, 'he hates cans!')