Economics Lesson About Gas Prices
The Ludwig von Mises Institute has an excellent article called Economics 101: The Price of Gas that everyone should read. It explains how much of the price of each gallon of gas goes to those “greedy” oil companies, how much goes to our wonderful, benevolent, altruistic government, and how prices have changed since the 1950’s. It also compares prices in other industries with a critical statistic, called the profit margin. Go read the article, now.
Jason Kratz:
There is one big problem here….while the profit margin of a water utility may be 10% the price of water is not keeping pace with the price of oil/gasoline. So while the percentage may be greater the profits certainly aren’t as large. When we start hearing news reports about the record-breaking profits of water utilities then I’ll be interested but simply pointing out the percentage of profit is pretty irrelevant.
April 29, 2008, 14:52:44That being said there obviously is a lot more to the story than blaming the oil companies but it shouldn’t be difficult to see why people are complaining about oil company profits (whether you agree with the complaints or not) when gas prices are approaching $4.
Jason Kratz:
Oh…and I’d also recommend reading the comments left on that particular post because they’re actually a lot more informative than the article itself.
April 29, 2008, 14:55:59