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Kidicious
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Diety of Kidiverse
Mar 2003
time: 21:21
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quote:
Originally posted by Imran Siddiqui
quote:
You obviously need more explaination since your economics is so weak. See there's a concept, really simple actually, called the law of diminishing utility. Higher gas prices don't affect rich people's utility as much so they aren't concerned with them. |
Um... that isn't exactly true, as JohnT pointed out. I wonder why Asian cars totally dominated the market in the early 80s? Everyone wasn't poor, so why did people buy the less gas guzzling car? Because the price matters, at least in the long run.
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Two reasons. One, gas was much more expensive in the 70s, and people had expectations of high gas prices in the 80s. Two, the American cars built in the 70s were ridiculous in terms of gas milage. The only alternative were japaneses cars that were more gas efficient. That being said poor people tended to buy more gas efficient cars because they really had too. Only wealthy people could afford to buy cadilacs anymore, and so they were mostly the ones who did.
quote:
You usually have a steep demand curve with gasoline in the short run and a much flatter demand curve in the long run (It's an elasticity problem). If gas prices rise high, poor as well as rich will end up getting the cars that use gas less, even if they cost more in the short term.
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Everyones demand curve is different. The wealthier you are the more inelastic your demand for cheap things is, because it's chump change too you. So the wealthier you are the less you are concerned with changes in price for gas at the lower price levels.
quote:
The law of diminishing utility usually applies to those things that increase utility, so the more you got, the less the last unit will be worth to you (compared to the first unit). It doesn't really work that well in the gas market. Even though each dollar at a certain amount is worth as much as each dollar made at less than that amount, it still has value and increased gas prices taking money away still is important, especially since every business must deal with it in some fashion. |
What you are saying doesn't make any sense (that has nothing to do with you, only the topic  ).
I'm refering to the diminishing utility of money. The more you have, the less you are concerned about a small portion of it being wasted. A twenty dollar increase in your gas bill is likely to go unnoticed, and certainly will have little effect on your consumption if you make a decent income.
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Micah Goodman
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quote:
Originally posted by Kontiki
Oh, of course. I just found it funny that within the span of one post, the author could declare that increasing supply won't do anything and then blame Kerry and others for not agreeing to increase supply. |
Your right I should have also added that refining capacity needs to be increased as well. Sense most people do not want a refinery in their back yard the chances of also increasing refining capacity in this country is slim to non existent. I attempted to convey, I guess unsuccessfully, that the prime culprits in high oil prices are a wide range of issues. Some of those are taxes. Democrats as a rule favor high taxes. But I did not state or imply that they are the only reason that prices are high. I also quoted a drop of in production and an increased demand as well. If you took the factual statement of Senator Kerry’s record as political bash then I am sorry to have offended you. But I get tired of people implying that high oil prices are some Machiavellian plot to enrich oil companies.
People pay more for a gallon of spring water than a gallon of gas in this country. Yet I don’t hear people complaining about the evil agenda of big water. The left propagates policies that inflate gas prices. If you honestly believe that high gas prices are a good environmental policy then fine I won’t argue that point with you. But if you then turn around and claim it’s a corporate sponsored scam, then I find the pro environmental arguments dishonest and dogmatic. Please note that I do not mean the statements in this last paragraph to apply to any one single person but to the extreme environmentalists as a group.
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Kontiki
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Canada
Aug 2001
time: 00:21
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Fair enough. I wouldn't classify myself as a hard-core leftist, although I'm sure Ned would disagree. Personally, I'm against opening up ANWAR for drilling, would consider some other areas, for increased refinery construction and capacity (provided they met appropriate environmental regulations) and pretty indifferent over the cost of gas (ie. I don't think it should be a policy point to reduce the cost at the pumps unless there's illegal market manipulation at work). I don't think there's any big oil conspiracy, but at the same time don't think that the oil companies are crying too much over the current state of the union.
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18-10-2004 21:02
'poor' doesn't specifically specify certain people. It means that generally 'poorer' people have more elastic demands for gas.
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Smiley 
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