Thursday, April 20, 2006

Harper Full Of Gas

Uh oh the Harpocrite broke another promise. He is telling Canadians to live with high gas prices.

In the 2004 election campaign, and when he was Leader of the Opposition ,he called on the government to eliminate the GST on gas prices. Now he says his teeny tiny 1% GST cut will suffice. Ha, ha, oh thats rich. Rich for gas gouging Big Oil that is sitting on massive reserves in Canada and so do not have to raise the gas prices.

And guess who is really upset with this....why Harpers allies on the right like the Canadian Taxpayers Federation and gasp, the
Blogging Tories. So I guess the honeymoon is now officially over.

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DASawyer said...

You know, I would really like to know exactly how a commercial entity goes about long-term price gouging.

The usual theory is thus. High prices ought to attract competition for production. This results in an expansion of supply, which ultimately results in a reduction in prices. The new production comes either from existing entities, which plough their profits back into production, or from new entities, which take advantage of the greedy nature of existing shareholders, more interested in short-term profits than in remaining competative.

What is your explanation for why does this not happen in the energy market, particularly the gasoline and/or oil markets?


There is an ironic comment on the Free Enterprise website I sometime link to, where they are calling for tax breaks for Big oil to build more refineries. Big Oil extracts, refines, processes and sells the product. So while they are an oligopoly, they share a common monopoly control over oil/gas. With such a monopoly, regardless of competiting corporations, they price fix the market usually by failing to invest in enough refining capacity.

So their current excuse is they have less refining capacity. However they have gas in ample supply, feed stock whose cost was not the same to produce a month or ten ago as the price is selling at now.

The price selling at now is the world price. So old stock is being sold at new prices.

All capitalism functions as monopoly.
And when it fails it asks us to bail it out. One way or the other, higher prices or more tax breaks or a combination of them.