If it takes 100 tourists to pay his bills, taxes, staffing, and other expenses for the day, the next 5 tourists represent the profit. A tourism decline of 10% doesn’t mean 10% less profit, it means the catastrophic inviability of the whole business as it’s currently structured.
In reality most business can do things like cut hours for staff, postpone upgrades or long term maintenance, cut amenities, raise prices etc…
If most businesses were structured in a way that a small decline in customers immediately puts them out of business, any minor economic downturn would be an unrecoverable positive feedback loop for the economy.
I’m not saying a 10% drop won’t put a lot people out of business, but it’s not as much of an existential crisis for the economy as a whole as that story makes it seem.
look up the history of why the fed exists and you’ll see why we have ‘small’ downturns.
Most small businesses fail because they were never serious businesses to begin with. A business closing down after running for a year with no profit isn’t relevant.
They also cannot do much about fixed costs; postponing maintenance typically increases long term maintenance costs; postponing upgrades, cutting amenities, and raising prices may deter even more customers (keep in mind, nearly everyone is feeling the pinch these days). That is assuming that the business isn't doing that already.
But it’s wrong to model businesses as if they have no ability to increase profit per customer and predict catastrophe from minor reductions in customer traffic.
They can and do figure out how to do more with less.
No business chooses to be structured this way.
Keyterms: "marginal cost", "merit order", "market-clearing price".
Making the price go up 10x won't cut consumption by 90% though, maybe only 50%. Trades still need to get to the job, food still has to get delivered to stores and some people who make huge salaries will still drive to work.
During the pandemic fuel demand didn't go down by 50% and yet the price dropped dramatically. Sure office workers stayed home but that's not 80% of the jobs. Think about how much the gas price dropped vs how much traffic was still on the streets. It almost certainly wasn't a linear relationship.
You have a given amount of demand, you fill your knapsack using a simple greedy strategy. You pick the lowest bid, then you pick the next lowest bid and so on, until the knapsack is full.
Now the question is, why is everyone paid as much as the most expensive bid that was needed to fill the order? Because those bidders could simply predict what the most expensive bid is and then set their bid accordingly, if their prediction is too high, you actually made electricity more expensive by not paying everyone the same clearing price. If their bid is too low they get free money simply by predicting a higher price.
So you can just make the system honest and pay everyone the equilibrium price.
Of course, the big question that arises is "what if the last producer needed to clear the market is unreasonably expensive?", then there is suddenly a windfall for all the cheap producers called producer surplus. The opposite is also true when you get rid of these expensive producers, the price collapses down to the second highest bid. This is consumer surplus.
In reality you have two huge players who can cut production at will and set prices based on the least efficient small fish in the pond.
Enjoy your free market
Or, did they improve their efficiency.
Or, have they closed.
It's funny how when you cut off someone's revenue, they get all sorts of cranky, even if it's for a social good.
There's a lot of people who would get gas if only it were available. My house (in NSW), the gas main ends two streets away, they won't connect me unless I paid them some insane amount of money ($100K or whatever) to extend it to us. My father (different part of NSW), his neighbour had gas, but the gas main stopped outside his neighbours house, and it would have cost him thousands to get it extended so he could connect; then his neighbour on the other side paid those thousands, and they extended the gas main right past his front door, and then he could get connected for $500. Anyway, I think the measured demand isn't always the same as the real demand.
Also, there's still a decent chance the Victorian government loses the state election this November–although with Ben Carroll replacing Jacinta Allan, it is less of a sure thing than it was–and the Liberals have already said they will wind back the new gas connection ban.
Yes you can get bottled LPG gas, but it is a pain – you worry about running out, you have to call up and get them to deliver it. With piped gas you just set up a direct debit for the bill and never think about it ever again.
Also, some people prefer gas heaters because it is a different kind of heat. My father replaced his wood combustion heater with a gas one, even though he already had reverse cycle air-conditioning. Maybe just using the air conditioner would have been cheaper (he already has rooftop solar–I don't think he has a battery, but could easily put one in), but it wasn't what he wanted.
For your father's gas heating, this really sounds like an emotional decision. Modern gas heating produces the same heating as reverse cycle, where air is passed over a hot bit of metal and expelled into the room. One bit of metal is heated by an enclosed and externally ventilated flame and the other bit of metal is heated by a heat pump, but the interior side is practically the same. He might be paying hundreds or thousands of dollars a year because the fan in the gas heater happens to blow the hot air more where he wanted it or more where he was used to it.
No, it literally isn't. The reverse cycle air con just blows hot air into the room–it is purely convective. The gas heater console provides radiant heating as well.
Also, the air feels different. Reverse cycle air con tends to deliver a higher volume of air at a lower temperature; gas heaters (especially if we are talking about console units as opposed to ducted systems) tend to deliver less air, but hotter air. It feels different on the skin.
Once that assumption breaks you need to avoid the costs being foisted onto people unexpectedly.
Any reasonable approach is effectively a ban at that point, like paying upfront for the whole expected lifetime cost.