Keep the gouging coming!

The ideal monopoly is formed first by underpricing the competition, even at a loss, and then when the competition goes out of business, jacking up the price to whatever the new market will bear, always adjusting to keep competition underpriced.

Fun fun fun article like here:
http://www.washingtonpost.com/wp-dyn/content/article/2007/05/23/AR2007052301465.html Confounding the Experts, A Poll Finds Prices Must Go Way Higher to Alter Driving

I love this line: "The average price that drivers said would compel them to significantly cut back on their driving was $4.38 a gallon. "

A load of nonsense. What would people have said when gas was $2.00/gallon? Probably they'd cut back at $3.50, right?

There's no logical answer to give at what price you'd cut back significantly unless you know what choices were available. What does significant cutting back mean? 5% is sigificant - enough to crash market prices if everyone joined in on the conservation effort.

I've never commuted to work regularly by car, and never really needed to drive more than 4000 miles/year. That's perhaps 85% "discretionary driving" assuming the bare minimums were around basically buying groceries or hauling something too big for my bike, but even groceries are fully carryable by bike on weekly trips.

WELL, back to $3/gallon prices, its fully true, the middle class still will buy their 8oz "sport drinks" or lattes or whatever ritzy beverages along with their gas and think nothing of it.

A funny side effect of high prices is the idea that many people are compensating their increased costs by charging more on credit and not paying the balance off each month. This insideous "option" means people can go much longer before adjusting their lifestyles and balancing their income and expenses.

I imagine an analogy - perhaps a sinking boat. A person starts bailing the front, throwing the water into the back. It might make him feel better for a while to keep his feet dry, but does nothing for the problem, and actually makes it worse, since when he finally does panick, he'll have a much bigger problem and less time to respond to it.

Anyway, I can take a fun middle ground. I conserve by not depending on gas for transportation, and for nondaily travel, like vacations, I see no reason to cut back at all, as long as the gas stations are not dry. Even $10/gallon is a bargain - people expect to spend $1000+ on a week vacation, so what's a little more for gas?

How will this squeeze end I wonder? The "market" says competition will come in - well like plug-in-hybrids. Electricity now costs 1/4 as much as gasoline, so I imagine good incentive for electric transportation to expand, at least in the next 5-10 years.

Until then I guess we'll just keep spending away, and those who are foolish will use credit to pay for the higher prices and hope for the best. I hold little sympathy for them, at least in frustration. If I was bolder, I'd run around evangelizing the "credit free" movement, but I like to do fun stuff too, so I'm sorry.

Okay, really I do worry. I just don't have an answer - we must cut back somewhere sooner or later. Either you choose now while the boat is relatively dry, or choose later when you have to jump overboard and swim to the shore.

I can believe in the market, but I'd take some government leadership too - STARTING with higher gasoline taxes, ending ethanol subsidies, expanding electric travel via light rail and plug-in-hybrids, etc. I'd set goals for U.S. decreased consumption of oil and create adjustable taxes that push the market to the goals, even if we discover it takes $10/gallon gas to get there. Let it be.

Or we can just let the gouging keep coming, and those of us with energy/oil stocks can smile!