35 comments on Hot Gas is a Bunch of Hot Air
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35 comments on Hot Gas is a Bunch of Hot Air
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GAIA Host Collective
From the link you posted above:
That sounds about right. But, as I said if your competitor has installed equipment that allows him to sell a slightly lower volume at the same price, you are probably going to have to follow suit.
And yet, strangely, according to the article (not the report - which I hadn't noticed as a PDF link), 'The recommendations contained in this excerpt were rejected by Industry Minister John Manley.'
The recommendations -
'The Committee recommends that either Automatic Temperature Compensation be removed from use in Canada or, to avoid the losses incurred to install expensive ATC devices, that the 15 degrees Celsius mark be lowered to the average regional temperature in which product is sold at the tank and retail level.'
Strangely, the result in Canada seems to be that the government forced the retailers to make an additional billion dollars over 10 years - and yet, not a peep from the oil industry screaming about such a heavy regulatory burden being forced on them.
I grew up near Washington, D.C., and though I respect facts, it is a stunning lesson when growing older to realize what an increasingly insignificant role facts play in such contexts. Or to put it differently - 100 million dollars in a year in one province is the sort of fact that trumps others, especially with some of that money flowing into the correct hands - for example, I'm sure that Industry Minister John Manley found gainful employment after leaving government.
Oh wait -
'Shortly after Manley announced his retirement from federal politics, Dalton McGuinty, Premier of Ontario and close friend of Manley, appointed him to chair a royal commission on the energy system of Ontario in the wake of the eastern North American blackout of 2003.
On May 26, 2004, Manley was named to the Board of Directors of telecommunications firm Nortel Networks. On January 27, 2005, he was elected to the Board of Directors of the Canadian Imperial Bank of Commerce. He is also chair of the Independent Task Force on the Future of North America, a project of the U.S. Council on Foreign Relations. In March 2005, the Task Force released a report that advocated a North American union, an economic union between Canada, Mexico and the United States which would resemble the European Union.'
http://en.wikipedia.org/wiki/John_Manley_(politician)#Post-political_career
I'm sure no one would question his commitment to the average citizen of Canada, especially if that average citizen just happened to be a fellow board member of Nortel, or the Canadian Imperial Bank of Commerce.
The simple fact remains, that in Canada, such systems were installed, and oil retailers profited at the gross margin, and that in much of the U.S., installing such systems will cause oil retailers to lose revenue, with the added burden of the cost of the system themselves.
It won't change the amount of oil being pumped from the ground, no question.
And such discussions add light to why in a German context, peak oil in terms of prices is not much of a theme. Most Germans expect oil companies to profit as much as possible, in part because most Germans would do the same thing if they were running an oil company - cynicism and no illusions about human nature are often hard to tell apart.
Your broad points are not actually in dispute in my eyes - the retail gasoline pricing/volume system in the U.S. as it exists today does not really require any change. As for motivation - well, it is a business, so it is all about the money. Call me cynical.
Strangely, the result in Canada seems to be that the government forced the retailers to make an additional billion dollars over 10 years
Key point: "seems to be." Prices aren't set in a vacuum. If I only sell you 3/4 a gallon and call it a gallon, I am not going to profit 1/4 a gallon. Price is still going to respond to supply and demand. It doesn't matter. I can call a liter a gallon. The amount you pay at the pump isn't going to make any difference. That's what these analyses can't seem to get.
Also, as pointed out, even if you accept the premise, we are talking about a penny a gallon across the country. And the profit margins for retailers - which are pretty darn slim - already have that factored in.
I think we just see things somewhat differently - in the case of 'cold' gas, the amount sold as a gallon was more than a gallon during colder periods, which meant that after the equipment was installed, a retailer was able to sell 'more' than they had previously, if not in physical quantity, then in terms of money received.
You are welcome to believe that the market then lowered it prices to adjust to this fact, and everything remained unchanged otherwise, apart from recovering the cost of the installed equipment. I'm cynical. There is a reason for weights and measures department, for example, one empirically demonstrated over generations. Though possibly, at some point, we may hear about that unnecessary regulatory burden, since the cost of ensuring that merchants actually deliver the amount they claim to sell is an overhead which can be removed for the benefit of the customers.
And yet, it is never the customers clamoring for higher prices for the merchant's profit, it is the merchant. The customer is always clamoring for lower prices at the merchant's cost. In Canada, it seems as if the merchant benefited by installing such equipment - in the U.S., the customer would seem to benefit (trivially at best). Strangely, in Canada such equipment seems to have been installed, somewhat voluntarily, by retailers. In America, it is being resisted by the retailers.
None of this is a surprise, and I notice neither of us needs to discuss the facts, as they apply equally with 'cold' gas as 'hot.' Except for cold gas, the equipment seems to have been installed at the behest of the oil retailing industry, after appropriate regulatory changes to use 15° C as the Canadian average (which appears inaccurate in terms of Canadian temperatures), as there does not seem to have been a groundswell of populist sentiment from Canadian gasoline customers to pay more for gasoline.
No surprise - everyone has interests they feel worth protecting, and in which facts are used to support their interests. Such tensions are part of the marketplace, after all.