Dr. Don Boudreaux who writes in the blog "
Cafe Hayek" noted today:
Yesterday, at a gasoline station that I frequently use, I noticed that the price of a gallon of 87-octane gasoline is down 36 percent to $2.17 -- down from $3.39 about six or seven weeks ago.
I guess this fact means that oil-company executives are 36 percent less greedy today than they were in mid-September.
I commented that:
The oil companies were certainly the beneficiaries of a market distorted by speculation about possible oil and gasoline shortages. The subsequent price adjustment to the "compared to what" level reflects what a less speculative marketplace values those commodities. [Another writer had asked "When people complain that "gouging-level" prices are too high, I always want to ask, "compared to what?". What is it that made the original prices okay?"]
The marketplace works... most of the time. It's only when speculators grasp control for awhile that oil and tulips reach untenable positions... and when the "Joe" on the street pays the price for their greed.
Some other people decided it was best to get into a philosophical discussion regarding the differences between "greed" and "market pricing." That's all well and good except the marketplace is not perfect or immune to manipulation or speculation (another term for "greed" to which many "traders" and "investors" succumb). The marketplace does, however, correct those abuses rather dramatically.
