Comments on: Sen. Sanders and energy prices https://www.overlawyered.com/2014/12/sen-sanders-energy-prices/ Chronicling the high cost of our legal system Sat, 20 Dec 2014 01:05:14 +0000 hourly 1 By: VMS https://www.overlawyered.com/2014/12/sen-sanders-energy-prices/comment-page-1/#comment-315423 Sat, 20 Dec 2014 01:05:14 +0000 http://overlawyered.com/?p=50182#comment-315423 I love it when the politicians try to regulate the oil/gasoline market by trying to fix the textbook example of a free market.

Oil and gasoline markets are the freest of markets and tend to be self-regulating. The price that you pay at the pump (excluding taxes which are VERY substantial) is very close to the ideal free-market price.

There was one period back in 1973, when Sheik Yamani was running OPEC and was able to enforce a cutback in production among all OPEC members, so everyone had to pay the monopoly price for crude. This continued for a few years, but as predicted, the monopoly fell apart because of the strong economic incentives for each OPEC member state to cheat on its production.

]]> By: Boblipton https://www.overlawyered.com/2014/12/sen-sanders-energy-prices/comment-page-1/#comment-315381 Fri, 19 Dec 2014 13:48:38 +0000 http://overlawyered.com/?p=50182#comment-315381 Ah, yes, speculators like friends of mine who, every year, buys a contract for heating oil for their house for the winter. The company they deal with offers them a choice: they may purchase the oil at a price based on the current market price or they may pay an extra few cents a gallon, but if the price of heating oil drops, they get a similar reduction in their price. This is achieved by the company purchasing puts on their behalf.

Bob

]]>