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March 01, 2004



I don't usually comment on my own posts, especially ones that are a month old, but this is different.

Here comes FOIL, a group claiming to be promoting "patriotic" energy independence. Gee, hard to argue with that concept, huh?

Not that hard when the group issues a press release starting with this catchy little idea: "America has its own energy reserves – ethanol, wind, solar and biomass, to name a few."

Gee, where have we heard THAT before? Sierra Club, check, Earth Liberation Front, check. I could go on, but you get the idea. "FOIL" is promoting some tired old ideas here, and they are the ideas of the greenies.

The greenies, of course, are the ones who brought us this latest round of high gas prices in the first place, by forcing the Soviet of California to adopt new formulations for gasoline that require re-tooling refineries. In California, the refineries are passing on their retooling costs to the buyer, just as any capitalist would.

The fact that the gas prices have risen elsewhere bears some looking into, but that doesn't change the fact that FOIL's call for "renewable" energy is not appropriate to this issue. Appropriate for other users of fuel, but not automotive, trucking, farm or rail users. They all need plain old gasoline and diesel #2 fuel, and no amount of wishing or window stickering is going to change that basic fact of engineering.

Stan Cotton

Army of two take on Big oil.

Two outraged patriots, a Legionnaire and veteran of the ad wars from Boca Raton, Florida and a South Dakota farmer and Viet Nam Fighter jet pilot veteran teamed up to take on America’s foreign oil dependence issue. They have an organization called FOIL. Foreign Oil Independence League, www.joinfoil.org - It should be called outraged.org

Story and visuals attached.



I think you're dead on that the rate of change for the rise in price is because of the rapid spike in spot markets. In the absence of competition or regulation, however, those prices would never drop. They only drop now because there is competition. So when the spot markets drop all the gas folks want to keep their prices up, but some bright guy gets it into his head to lower his prices a little bit (not as much as the initial spike in prices) to undercut the competition. Then others follow suit. Then someone cuts a little again. And the others follow again. And it gets back down more slowly. No mystery there.

So what really needs to happen is some smart gas guy decides to SLASH prices as soon as the spot markets go down. He'll have tons of business until the others follow suit, and you'll see prices dropping as fast as they once spiked.

Joshua O'Keefe

Here are a couple of points that could conceivably support your proposal: The laws of supply and demand function rationally only in the absense of collusion in trust as well as with some flexibiliy in the demand side of the equation. Neither of these are present in utility monopoly, and that (along with the use of public right of way) has been one of the customary reasons for their regulation. The petrochemical fuel supply is, at the demand end, effectively a utility, and at the farthest supply end, pretty darn close to monopoly.

Your observation about the front-end price "rate of delta" is characteristic of a roughly constant demand. There are cultural as well as practical reasons for the United States' demand constancy in fuel, reasons that vary from good to bad, but from a consumer perspective the market isn't free as it is.

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