Viewing Single Post From: Gas prices

Viewing Single Post From: Gas prices
Gohan	Dec 5 2008, 05:37 PM
Posts: 1,888 Group: CZC Newspaper Editor Member #27 Joined: August 5, 2004	Oh! I love this topic... Okay well, where do I begin? scratches chin Well for starters... The Organization of Petroleum Exporting Countries (OPEC)... That about sums up the whole problem right there. You see, Its not Bush's fault gas prices are so high. I dont know where on earth anyone gets that idea; However. Bush could help a little bit, like putting a tariff on the oil. But that wouldn't work because then OPEC would say. "Oh! Your going to tax OUR oil!? Okay. Well, then I guess you don't need it. We'll just stop selling it to you." Two words... "Owch." >< (lol) OPEC is an organization made up of 12 of the worlds greatest producers of oil. (Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela) As of 2008... You know... "This year." We purchase oil from Venezuela, Ecuador, Iraq, Kuwait, and Iran... Venezuela being our biggest seller. Which is all fine in dandy in the long run. Yeah... That's right. It is actually a good thing! Seeing that Venezuela and Iran happen to run their government in the lines of communism. Buying their oil and selling food to them helps keep up a bit of friendly relationship with them. (For now ^_^') The problem is. OPEC was created when Venezuela wished to join with Iran, Iraq, and Kuwait. But Iran and Iraq didnt want to join. When president Eisenhower poped in the picture he helded form OPEC. Which was scrooted in the ways of Capitalism. Eventually the soviets made their own too. Which is known as OECD, which caused the 1973 Oil Crisis. (OECD is no longer running today.) In all. OPEC with its "capital freedoms" has NO COMPETITON! OPEC has no competing organization to fight the price of oil. Meaning, OPEC can charge whatever it wants for oil because its the only global organization that sells it. Still confused? Okay let me help you out with this example. But first I must explain how capitalism works. Capitalism is built on the belief of "free market economy" meaning "No government interferance." Capitalism system works on a thing called supply and demand. If you have more supply than what is demanded. The price of the product goes down. If supply is low and the demand is high. the price goes up. Right now... The supply of oil is low in the world. And the demand that world is giving is high. So OPEC will make prices high to make as much profit as possible. (Thats how Capitalism works) Competition is just a helping factor of capitalism. The more competition there in an a captialist economy... The lower the prices will be. "But how does that work?" Here is the example I will show you: Lets say you have a lemonade stand outside of a construction yard. You set up this stand because you know those workers will be thirsty and will want to buy some refreshing lemonade. Automatically, there is a demand in lemonade! Now, we all know your there to make a profit in your lemonade buisness. Lets say that, 1 glass costs you 5 cents to make. So you sell your lemonade for 10 cents. Which means you make a 5 cent profit. BUT you begin looking around and notice that these people really want your lemonade and to your luck your the only lemonade stand within miles! You instantly realize that instead of charging 10 cents for a glass you could charge 25 cents! And people will still buy your lemonade! Which means you will make a 20 cent profit! By the end of day... You are one rich lemonade seller. The next day you return to the stand and you notice to your right there is another person selling lemonade. But! Instead of 25 cents they sell their lemonade for 20 cents! Instantly! People stop buying your lemonade and start buying your neighbors lemonade! Which means, you begin to lose profit for all the drinks you make. If you dont do something. Your going to fall out of buisness... So, you lower price to 15 cents! Then people come back and start buying yours because its cheaper! THAT'S COMPETITION! ^__^ In all... There is only one OPEC... Which means they can demand as much as they want for oil because they are the only company producing it and the demand for it is so high. BUT... If another OPEC company were to jump into the picture, and start selling their oil cheaper. Countries would start buying their oil instead of the current OPEC's oil. Thus... The current OPEC would have to lower their prices to either the same or a lower price than the other company to make a profit... In order to fix our gas problem we can only do two things. Start another global oil organization to compete with OPEC... Or drill our own oil and not have to rely so badly on OPEC. Other than that... I supose we could just do a third option and just stop driving gas dependent vehicles. Start using solar... electric... hydro. Which in my opinion is the best idea since the world doesn't have much oil left to drill and the polution burning feul gives off. Thats my two-bit on the subect of Gas. Questions? Comments? Concerns? BTW gas is $1.59 here in Southwest Virginia Edited by Gohan, Dec 5 2008, 05:40 PM.


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