We need to massively cut corporate taxes, investment taxes, regulations, and all manner of things to increase supply. The government has been attacking business for so long we are in quite the hole.
Who got the first corporate handouts when COVID decimated travel?
Individual actors will act in their best interest according to the incentive structure in place.
You say price gouging, I say protecting society from itself.
1) Increase prices until demand matches supply.
2) Price controls, usually leading to empty shelves.
3) Rationing.
1 is preferrable in 99% of cases. 2 is always the worst. 3 is needed during extraordinary times, such as when a country is in an all-out war.
The wheat, the trucks, the oil and the labour that make every Oreo have increased in price. (We have amply-documented wheat, energy and logistics shortages worldwide.)
Also, nobody needs Oreos. The concept of “price gouging” is economically illiterate, but the nonsensicality squares when applied to literal candy.
Input costs may rise by x cents but the companies mark up prices by 5x because they can, not because they have a shortage.
Gas prices are way higher than they should be but it’s not all the reasons the oil companies like to point to. They simply point to supply to distract from price gouging. The house is even trying to get the government to investigate that.
Taking contrived narrow minded interpretations of comments and glaringly ignore rather apparent facts and then alluding that the original comment is “nonsensical” and “illiterate” makes your comment seem that it lacks substance and just wants to resort to debate using insults rather than actual facts and context.
These are the same thing. Fuel is a competitive market. If people are paying a premium and producers aren't undercutting each other, it's less likely a conspiracy than math.
The crack spread, i.e. "the differential between the price of crude oil and petroleum products extracted from it," has risen, but not much more than crude [1][2][3]. Given fuel, labor and shipping costs flow gap the traded price of gasoline to the price at the pump, that's not an unreasonable increase.
Pumps aren't making much money. Refineries are doing well. And primary producers are making off like bandits. To the degree intermediaries are profiting it's because people are paying a premium to ensure supply. A hallmark of a shortage.
> house is even trying to get the government to investigate that
It's an election year and people swallow tripe.
Gasoline is unusually transparent in that its primary (crude), intermediate (gas) and final (gas after transport + tax) forms are publicly priced. You can add up numbers to see who's making how much more than whom. If you find a way to take the RBOB, ship it to your town and pay the taxes while undercutting the local gas stations, I'm all ears--there is a thriving market of private petrol shipment for commercial use.
> alluding that the original comment is “nonsensical” and “illiterate”
Never my intention. Price gouging describes short-term, localized increases in prices of essentials. If Oreos prices are increasing nationally, it's not price gouging. Because it's widespread. And they're Oreos.
What it might be is profiteering. But both profiteering and price gouging are closer to philosophy than economics. They're used when we perceive prices to be unfair, with the moral definition of fairness being invoked more than an economic one.
To the degree we can define either, it's a sustained jump in profits following some calamity. (A steady-state seller, noting a jump in demand for e.g. fuel, might raise prices today, temporarily raising their margins, in anticipation of their higher input costs tomorrow.)
Anti-gouging laws are shortage-aggravating, in some cases, inducing [4]. But it leaves us with a society that feels fairer in emergencies. That psychological benefit may be worth the cost paid. But it should be recognized for what it is: paying with shortages for a notion of fairness.
[1] https://en.wikipedia.org/wiki/Crack_spread
[2] https://www.eia.gov/outlooks/steo/marketreview/petproducts.p...
[3] https://www.bloomberg.com/opinion/articles/2022-05-09/crude-...
[4] http://journal.apee.org/index.php/ajax/GDMgetFile/Parte1_202...
Your comments is resorting to quibbling over whether it should be called profiteering or price gouging, the classic insincere debate tactic of derailing things into arguments over semantics rather than substance.
https://www.theguardian.com/business/2022/jul/29/oil-gas-com...
Justifying the record profits by idle speculation of future input is nice. But it’s utter conjecture.
Why would we ever, ever need to cut corporate taxes? If a company re-invensts in equipment, it's workforce, research, or anything at all, they pay no tax. Tax is only applied when they transfer the money to shareholders.
How will enabling corporations to transfer more money to already wealthy shareholders help the economy?
Supply is low due to a global pandemic disrupting trade (and far too many companies relying on 'just-in-time' logistics).
"Massively [cutting] corporate taxes" won't do anything but bolster already soaring corporate profits. A significant amount of that money won't go back into the local economy. It also won't go to improving infrastructure, processes, employee salaries or anything that can improve resiliency or longevity; they've been penny-pinching for decades, and this is the result of it.
Furthermore, 'inflation' of many necessities like grocery, gas, and rent is obviously driven by blatant profiteering.
Racism is defined in many academic circles as "prejudice plus power". Are people 'wrong' if they disagree and think it ought to be defined differently?
Check out what airlines did in the last half of the last decade. Check out what kinds of companies benefited most from the COVID-related handouts, and see what they did with that money.
This is incorrect. Note that governments around the world are also experiencing record levels of inflation and each has their own fiscal policy.
Inflation is an aggregate economic effect driven by a variety of factors—including but by no means limited to government spending. Other things that contribute to inflation:
1. Supply shortages
2. Cost of living
3. Abundance of capital (low interest rates, high wages, etc)
4. Speculation
Basically anything that contributes to groups of people assigning a higher value to the same set of goods or services.
Supply is the most immediately noticeable cause and COVID has disrupted supply chains for some time. It is entirely unsurprising we've seen inflation as a result. Government policy has certainly played a part, but blaming everything on government spending is misleading in that ignores the larger realities of inflation beyond the borders of any nation state.
Given that we base inflation numbers on CPI, inflation exactly is companies raising prices -- well, companies that produce the goods that are included in CPI, anyway.
Yes, we still have to consider the reasoning behind why they are raising prices. Personally, I believe it is more because of supply chain shortages than COVID fiscal policy (though the latter certainly contributes), but I agree that's up for debate.
Why?
Going by what I see as an individual, there are lots of things happening around me that drive prices up that don't have any strong relationship to my government's policy (e.g. bird flu raising poultry prices). I also don't understand how this can be the case simultaneously across multiple governments around the world.