Ambrosious
Weaver of Written Worlds
- Joined
- Jun 10, 2000
- Posts
- 6,346
I was talking about Natural Gas here just 5 minutes ago with a contractor. It is high right now and his solution is to let government step in and regulate the pricing. This is how I tried to explain it to him. Tell me if I was talking over his head. I don't think I was.
Me: Pretend you make rubber balls for kids, pretty red rubber balls. You have some of the best rubber balls out there. They cost you 23 cents to make and you charge the little kiddies 25 cents to buy them. I know 2 cents isn't a lot of profit, but if you sell a whole bunch of them, you can make a decent living. Suddenly, due to a drought in the amazon, the cost of rubber skyrockets. The drought killed off some of those rubber producing trees, see. Now there are fewer trees and Firestone is out bidding you. They will pay more for the same amount of rubber.
Still me: Now your little balls cost you 33 cents to make. It costs you 10 cents more to make the EXACT SAME BALLS you have been making all along. Follow me?
Him: Yeah.
Me: So you have to raise your price, right? You expect the kiddies to pay more for your balls since it is costing you more to make them, so how much would you charge?
Him: 35 cents would be fair, I suppose
Me: Right! So the kiddies complain to the government, and they look at your books, and they see that you aren't gouging anyone. You have done nothing more than pass on production cost to the end consumer, right?
Them: Right!
Me: So what does the government decde to do? Order you to lower your prices to 25 cents, because the kiddies feel you are charging too much. So it cost you 33 cents to make the little balls, but you can only charge 25 cents!
Them: They can do that?
Me: Yes, that is why California power companies sold to out of state customers. California limited the amount the companies could charge for power in California.
Them: That's stupid, man!
Me: No, that's the Imperial Federal Government of the United States at their best. The same thing is happening here in GA with natural gas. It cost more to buy it, so the gas companies are passing the cost on to us. Understand?
Them: Those damn gas companies! The government should do something.
Help me.
I don't even want to go into taxes or his employers "contribution" to Social Security. Did I explain this adequately? Can you guys help me clear it up? Or am I fighting a lost cause?
Me: Pretend you make rubber balls for kids, pretty red rubber balls. You have some of the best rubber balls out there. They cost you 23 cents to make and you charge the little kiddies 25 cents to buy them. I know 2 cents isn't a lot of profit, but if you sell a whole bunch of them, you can make a decent living. Suddenly, due to a drought in the amazon, the cost of rubber skyrockets. The drought killed off some of those rubber producing trees, see. Now there are fewer trees and Firestone is out bidding you. They will pay more for the same amount of rubber.
Still me: Now your little balls cost you 33 cents to make. It costs you 10 cents more to make the EXACT SAME BALLS you have been making all along. Follow me?
Him: Yeah.
Me: So you have to raise your price, right? You expect the kiddies to pay more for your balls since it is costing you more to make them, so how much would you charge?
Him: 35 cents would be fair, I suppose
Me: Right! So the kiddies complain to the government, and they look at your books, and they see that you aren't gouging anyone. You have done nothing more than pass on production cost to the end consumer, right?
Them: Right!
Me: So what does the government decde to do? Order you to lower your prices to 25 cents, because the kiddies feel you are charging too much. So it cost you 33 cents to make the little balls, but you can only charge 25 cents!
Them: They can do that?
Me: Yes, that is why California power companies sold to out of state customers. California limited the amount the companies could charge for power in California.
Them: That's stupid, man!
Me: No, that's the Imperial Federal Government of the United States at their best. The same thing is happening here in GA with natural gas. It cost more to buy it, so the gas companies are passing the cost on to us. Understand?
Them: Those damn gas companies! The government should do something.
Help me.
I don't even want to go into taxes or his employers "contribution" to Social Security. Did I explain this adequately? Can you guys help me clear it up? Or am I fighting a lost cause?
