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Friday, May 18, 2007

The inanity of "price gouging"

I've blogged several times about the relationship between supply and demand and its effect on gas prices. Today I found (courtesy of R-Squared) two charts that should lay to rest any theory of price gouging (from testimony to the Senate Committee on Energy). The testimony also discusses how very low oil and gas prices in the 1980s led to underinvestment in refining infrastructure that is needed to meet today's surging demand. Without further ado, here are the charts which should explain why prices are high without "gouging."

Gasoline supply is historically low:

Gasoline demand is high:


Note: to my regular readers, apologies for the profuse use of the word 'inane' lately. It's a passing fad, I hope...

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