Cost of Diesel Fuel

[TTDegs]

Originally Posted by dudesterlang

TTDEGS aka Gordon Brown I reckon, sounds to me like you feel the extortionate cost of diesel is fair. Higher demand usually brings prices down. The X Box is another example of greed & that was over demand. If everyone hadn't been so eager to queue & buy one maybe prices would have come down.

I'm far from agreeing that the cost of diesel is fair!

I am agreeing that allowing certain groups of people fuel which is artificially low is unfair.

However, what I was pointing out was that if you reduce the price (ie tax) on regual diesel, then you also need to reduce it on all other kinds of fuel too.


The problem with that, of course, is that tax on fuel is a major income stream for the country (note, country, not government).
And until we manage to vote in a government who are able to spend said income in a more efficient manner, then without this income stream, the country would find itself in an even worse state than it is today.

Of course, the alternative to reducing all fuel tax would be to stop people from using red disel altogether, or increase the tax on that to the levels on normal diesel.

But that wouldn't go down to well either



Of course, if anyone has any better ideas, then this thread is as good a place as any to air them!

[TTDegs]

PS - please provide 1 example of any consumer item where increased demand resulted in a price drop.

I will take anything from the last, say, 10 years

But I will ask to exclude items which are now mass produced instead of specialist equipment.
Such as the water feed tile cutter which I bought yesterday.
10 years ago you couldn't get such a thing (easily), but I got mine for £30.


re the 360 - it was exactly because everyone wasn't prepared to queue up and buy one (and even if they did, no guarrantee of getting one) that the prices shot through the roof.
Limited supply, massive demand.
A lot of people who had queued then put them on ebay.
Those people who wish they had queued, started bidding.
Those people who realised that a fast buck was there for the grabbing, also started bidding.
Prices went up.
And up.
Eventually, everyone who was willing to pay over the odds, had one.
Supply equalled demand.
Prices started to drop back down towards RRP.
Now, supply exceeds demand - and surprise surprise, MS release a new model with extra bells (it's black, has HDMI and a big hard disk!), and reduce the price of the base model.
They are hoping to increase demand again.

The difference between a 360 and a gallon of fuel is that you (generally) don't need to replace the 360 once you have it (until the next model comes out anyway).
There is therefore a fairly finite demand.

With fuel, there is a (near) infinite demand.

[dudesterlang]

You gave a perfect example yourself with your tile cutter. We can all find exceptions. Is fuel not mass produced?? More people want tile cutters, so they make more & the price comes down. Whahey, point proved by your good self!!
I could almost guarantee if I asked any supplier or indeed any retailer to buy 1 item or 1000 of the same item there will be a huge discount for the bulk order. If I wanted to buy a custom built car (or anything for that matter) I would have to pay a premium because they are made to order in very low numbers.

[TTDegs]

Originally Posted by dudesterlang

You gave a perfect example yourself with your tile cutter. We can all find exceptions. Is fuel not mass produced?? More people want tile cutters, so they make more & the price comes down. Whahey, point proved by your good self!!
I could almost guarantee if I asked any supplier or indeed any retailer to buy 1 item or 1000 of the same item there will be a huge discount for the bulk order. If I wanted to buy a custom built car (or anything for that matter) I would have to pay a premium because they are made to order in very low numbers.

yes, but again, the tile cutter isn't cheap because it's in high demand, it's cheap because someone cottoned on that if they made them cheaply enough, there was a small profit to be made.

High demand is where you are trying to buy something, but everywhere is sold out.
This is a basic part of demand being greater than supply.
With my tile cutter, there were more than a dozen left on the shelf after I bought it, and there was no queue behind me of people fighting to grab one!
This is a situation where supply exceeds demand.

Bulk orders, or even bulk selling, is a completly different matter, and has nothing to do with supply and demand...

Lets say you invent something - we'll call it a 'super-widget'.
It costs you £2 to make each one.
You find a retailer who agrees that it is the next best thing and wants to buy it from you.
You sign up a contract to supply them with 10 super-widgets.
You sell them 10, at £5 each, and they put it on the shelves at £20 each.

They sell out in 10 seconds flat.
There are riots, and queues, reports in the paper after some schoolkid was mugged for one.

Retailer wants an order of 10,000 units.

You are in a position where demand far exceeds supply.
You get cheaper components from your suppliers, meaning you can make them for £1 (and you hope they don't ask why - read on, as what I'm about to say applies to them too)

Do you:
1) sell them 10,000 units at the original £5, happy with your increased £4 profit each (from £3 profit)
2) sell them 10,000 units at £4, happy to retain the same profit margin as before, even though you know they will still be sold to the customer at £20 (and on ebay at £50)
3) sell them 10,000 units at £10 each, because you know that you are controlling the supply, and that they will still be happy with either the £10 profit they make, or will simply put the customer price up to £25


That is supply and demand!



And back to your car - yes indeed, your hand built car will cost more than a mass produced one - becuase your demand exceeds the car producers supply.
You are willing to pay more for the time and effort which goes into making it.

If no one was willing to pay the extra for hand built cars, then demand would be lower than supply.
These companies would then either have to go out of business, or reduce their prices (possibly to the point where it was not economically viable)

[dudesterlang]

Excuse me while I wake my glass eye.
I'm going to end this because I'm pretty sure no one is interested in it. I know you think you know what you are talking about but unfortunately it is all a load of bulls**t.
I think you need to get out more.
Back to my original point & a lot of others. Fuel is extortionately overpriced & we as motorists are getting the p**s taken out of us. End of!

[TTDegs]

Originally Posted by dudesterlang

Excuse me while I wake my glass eye.
I'm going to end this because I'm pretty sure no one is interested in it. I know you think you know what you are talking about but unfortunately it is all a load of bulls**t.
I think you need to get out more.
Back to my original point & a lot of others. Fuel is extortionately overpriced & we as motorists are getting the p**s taken out of us. End of!

thank you dude - I feel quite firmly put in my place now

indeed back to your original point - what do you suggest we do about it as consumers (other than moan), and if you were given the power to actually do something about it (so assume for the minute that you are either the PM / chanc of ex setting tax levels, or the head honcho at Shell / Esso or wherever, setting the pre-tax price per gallon), what would you do?

[Unknownsoldier]

Originally Posted by dudesterlang

Excuse me while I wake my glass eye.
I'm going to end this because I'm pretty sure no one is interested in it. I know you think you know what you are talking about but unfortunately it is all a load of bulls**t.
I think you need to get out more.
Back to my original point & a lot of others. Fuel is extortionately overpriced & we as motorists are getting the p**s taken out of us. End of!

Come now, play nicely, what TT says rings true, but with the addition of it being a finite resource they will keep prices high to keep demand only slightly above supply, thereby ensuring they can drag out profit for the longest possible time (because if they can drag it out with constantly high prices it will maximise profit), remembering no-one who owns a car can go without fuel and so is stuck having to buy the fuel for it, thereby increasing the demand and therefore the price. Also, with it being a finite source the government is trying to have it's cake and eat it, by lying and saying we keep taxing people on fuel so fewer people will buy it and help save the earth, whilst at the same time saying contrarily thats it's not to stop people buying it but because the prices are increasing everywhere, they will then say.... it's to raise revenue for roads (which surely should be covered by road tax, yet this insufficient). Anyhoo, nuff said.

ATB,
Tom